Payroll and NHS Pension changes

With the new tax year right around the corner, it’s important to stay on top of the changes HMRC has in store for the coming financial year.

In case you missed it, or need a quick refresher, we’ve outlined the main points to keep in mind.

First, let’s cover a couple of things you should do before we bid farewell to the 2023/24 financial year…

• Make sure to submit your final Full Payment Submission before your employees’ last payday of the year, 5^th
• Don’t forget about your P60s – they need to be produced and distributed, either by paper or ideally electronically, by 31^st

Now, let’s dive into the 2024/25 tax year…

• Make sure that there is a payroll record for each employee which shows the correct tax code – to be used effective 6^th April 2024.
• Ensure your payroll software is up to date with the latest rates and thresholds for tax, National Insurance and student loan repayments.

Payrolling benefits

Are you planning on payrolling benefits in the 2024/25 tax year?

If yes, you need to make sure you have registered with HMRC to payroll benefits before the start of the new Tax year (6^th April 2024). Remember, you can payroll all benefits except for any employer provided living accommodation and beneficial loans, so keep that in mind if any of these apply, as you’ll still need to submit P11Ds.

Expenses and benefits must be reported by 6^th July to be associated with Class 1A National Insurance payment received by the 22nd of July.

Statutory Pay

National minimum and living wages are increasing in April 2024. The new rates are as follows:

The rate for Statutory Maternity, Paternity, Adoption, Parental Bereavement and Shared Parental Pay is increasing to £184.03 per week. The new rate for Statutory Sick Pay is £116.75 per week. All Existing Qualifying rules on the Statutory Pay remain unchanged.

Tax-free earnings threshold 

The tax-free earnings threshold continues to be £12,570, and the standard tax code remains unchanged at 1257L.

Paternity pay and leave

The statutory weekly rate of Paternity Pay is £172.48, or 90% of your average weekly earnings (whichever is lower).

If the baby is due after 6 April 2024, or on or after 6 April 2024 for adoptions, you can take either 1 or 2 weeks’ leave.

If you choose to take 2 weeks, you can take them together or separately. You get the same amount of leave even if you have more than one child (for example, twins).

A week of leave is the same number of days that you normally work in a week. For example, if you only work on Mondays and Tuesdays, then a week of leave is 2 days.

Your leave cannot start before the birth. It must end within 52 weeks of the birth (or due date if the baby is early). The start and end dates rules are different if you adopt.

New NHS pension tiers

As of 1^st April 2024, the NHS Pension Scheme member contribution rates are changing.

The table below shows the updated structure for contribution rates, rounded down to the nearest pound –

Employer contributions

From the 1^st  April 2024 the employer contribution rate is 23.7% of pensionable pay. This is an increase from the previous rate of 20.6%.

Employers remain responsible for paying 14.38% of contributions, with the remaining 9.4% being funded centrally.

Changes to take home pay

With the new structure in place, some members may see a slight change in their take home pay. Many members will continue to pay the same contribution rate they did previously, some will pay less in contributions, and for those who experience a rate increase, it will be a maximum of 0.8%.

The changes will not impact any scheme benefits members expect to receive in retirement.

If you currently outsource your payroll, these changes will already have been picked up and managed by your provider. If you are looking to outsource your payroll, we can help.

Give us a call on 0191 256 9500 or email advice@r-m-t.co.uk to discuss your options.