UK Regulations Affecting Employee Payroll
This year the UK government has implemented several UK Regulations Affecting employee payroll. The Job Retention Scheme that was announced in March 2020 has been gradually changing the employer contribution requirements each month, and in November 2020 announced the scheme would be extended until April 2021. Another highly controversial regulation related to IR35 (off-payroll rules) affecting contractors was postponed in 2020 but will go into effect beginning in April 2021. How does this affect your employee payroll?
The job retention scheme was originally scheduled to end in November, but due to the ongoing COVID crisis, the government decided to extend the scheme to help employers retain workers and avoid layoffs. The scheme has reverted back to the employer contribution levels from March 2020, so employers contribute 20% and the government contributes 80% of wages up to a cap of £2500 per month.
The new IR35 off-payroll regulations scheduled for April 2020 were delayed due to COVID but will now go into effect in April 2021. These regulations were designed to ensure any company hiring contractors that are performing the same work as employees of a company are paying the same amount of tax and National Insurance contributions. This has been very controversial, as many employers don’t fully understand the new rules, and there are severe penalties for non-compliance.
If you have employees in the UK, it is vital to get your payroll operations ready for these changes. Ensuring employees are paid correctly, National Insurance contributions are accurate, and compliance with new IR35 rules is key to avoiding fines and tax penalties. Talk to us today about simplifying your payroll in the UK – click here to get started