As the coronavirus crisis has dominated headlines, you could be forgiven for forgetting some important changes to running your business since 1 April.
It is understandable because there is so much emergency planning to do at the moment. But that is no excuse for not being aware of the changes and implementing the rules!
Of course, if we look after your payroll we will be implementing the changes automatically. If not, then make sure you don’t fall foul of the new rules.
National Minimum Wage and National Living Wage increases
From 1 April, low-paid workers will earn almost £1,000 more a year with the increase in the National Minimum Wage (NMW) of 6.2%.
The National Living Wage (NLW) is also increasing. Essentially, this is for those employees who are over the age of 25.
How rates will increase:
- The rate for 25+-year-olds (the national living wage) increases from £8.21 to £8.72 per hour
- For 21 to 24-year-olds it is £7.70 to £8.20 per hour
- The rate for 18 to 20-year-olds rises from £6.15 to £6.45 per hour
- The new rate for 16 to 17-year-olds increases to £4.55 per hour
- Rate for apprentices also rises to £4.55 per hour
It is a criminal offence to not pay the correct NMW or NLW. HMRC may also issue a Notice of Underpayment to those employers who fail to pay the correct amounts.
What about furloughed employees?
Employees who are paid NMW or NLW will not see the increase in rates. The rates only apply for those people working during the pandemic.
This is because the government set the furlough payments at the level the employee was being paid on 28 February.
Corporation tax rate
There were plans for the corporation tax rate would be cut by 2% from 1 April 2020. But it was announced in the Budget that the plan was being postponed.
That means corporation tax remains at 19%, overturning the original announcement that was made in the 2016 Budget.
Company cars, vans and fuel
Anyone using a company vehicle will see changes in the benefit in kind tax (BIK) rates. The increase will be based on CO2 emissions published by the Vehicle Certification Agency. To help, HMRC has published a calculator so you know what company car tax you will pay.
Those employees who use a company van will see their BIK increase to £3,490. Meanwhile, if they use the van for personal use, the BIK on fuel will increase to £666.
If you are a director and have your fuel paid for by your company, the BIK will increase. You will be taxed on the cash equivalent value of the benefit each tax year. This amount is fixed and increased by £400 on 6 April to £24,500.
National insurance contributions
The plan to increase the threshold in national insurance contributions (NICs) for employees and the self-employed is going ahead as planned. Those changes will see the threshold before paying NICs increase from £8,632 to £9,500.
Entrepreneur’s Relief changes
Owner-managers planning to sell their business benefit from a reduced rate in capital gains tax (CGT).
Before 6 April 2020, such business owners paid 10% CGT on ‘lifetime gains’ (that is the assets of the business over its lifetime) on up to £10 million.
But that amount was slashed by 90% so that tax rate relief is only given on lifetime gains of £1 million.
If you are unsure about any of the changes being implemented since 1 April 2020, then don’t hesitate to contact us.