All change – employment allowance, minimum wage, sick pay and pensions revised for 2020
A number of changes affecting allowances and payroll for employers comes into effect from 6 April, one of the most complex being the revisions to employment allowance (EA) itself. This could be particularly important as, under the new rules, we are no longer able to automatically claim the allowance for any client.
13th March 2020
Ruth Evans See profile
- Employers will only be eligible for the allowance if your total (secondary) Class 1 National Insurance Contributions (NICs) liability in the previous tax year was below £100,000
- EA will not automatically be put through each year, but must now be claimed annually through your payroll submissions
- In future EA will be classified as ‘de minimis state aid’.
The de minimis state aid rules exempt the government from the approval process under the wider state aid regulations, as long as the scheme only gives small amounts of aid. However, there is a ceiling on how much aid any one organisation can receive under the de minimis rules.
For most businesses this ceiling will be €200,000 over a three-year rolling period, but different levels apply for different sectors (see below), and the level for the agricultural sector is much lower at €20,000. De minimis state aid rules apply if your business engages in economic activity, providing goods or services to the market – and regardless of whether you make a profit. The thresholds are in Euros, so EA will be converted to Euros in April at exchange rates for customs and VAT.
|Business Sector||Ceiling (Euros)|
|Primary Production of
|Fisheries and Aquaculture||30,000|
|Road Freight Transport||100,000|
If your business falls into any of these state aid sectors, you need to check that you would be able to accommodate the full £4,000 EA without exceeding your relevant three-year ceiling, regardless of how much EA you actually claim each year. It looks as though this does not include the Single Farm Payment, but you should have been made aware if any of the aid you have received will be treated as de minimis state aid, and we will need this information.
Note for agricultural businesses: As the maximum threshold for the agricultural sector is only €20,000 for a three year period, if you are receiving the full EA of £3,000 per annum then, depending on the exchange rate, you may only have a balance of circa £8,000 to cover any other funding which is considered state aid. DEFRA’s State Aid Unit has confirmed that the following grants do not count towards the de-minimis limit:
- Water environment grant (WEG)
- Basic payment scheme
- Countryside stewardship
- Countryside productivity
- RDP LEADER grants
- EU/RDP growth program grants.
The majority of forestry grants tend to fall under Countryside Stewardship, but these should be checked.
If you have received funding that is considered state aid you should have received a formal letter that confirms the funding received is considered state aid.
Therefore it’s important to confirm (in writing) to your Old Mill adviser if any of the aid you have received was de minimis state aid – and if so, how much – so that we can make your claim for EA.
The rates for minimum wage, maternity, paternity and sick pay all increased as expected from 6 April (see below), but there have also been significant temporary changes introduced to sick pay in response to the Covid-19 pandemic.
Businesses with fewer than 250 employees will have the cost of statutory sick pay (SSP) for any employee off work with Covid-19 for up to 14 days refunded by the government in full. There will be no need for a doctor’s sick note, as employees will be able to self-certificate if they are following the advice of the NHS 111 service.
If any of your employees take sick leave because of the coronavirus, please keep us informed from the first day of sickness onwards. Record keeping will be crucial, so ensure that you have the self-certificate from your employee, which needs to include dates, symptoms and their signature. The government has yet to confirm how Covid-19 SSP refunds can be claimed, but as soon as they do we’ll let you know.
For ordinary sickness (not coronavirus) please continue to advise us of the dates from the first day of absence, and forward self-certificates for the first seven days, and doctor’s/hospital sick notes from then onwards.
|Age||New rate||Annual salary 37.5 hr week||40 hr week|
|21 – 24||£8.20||£15,990.00||£17,056.00|
|18 – 20||£6.45||£12,577.50||£13,416.00|
Apprentices aged under 19 – £4.15
Apprentices 19 and over in their first year £4.15, after which they revert to the National Minimum Wage for their age.
5 April 2020 – statutory maternity, paternity, shared parental and adoption leave rates increase to £151.20/week.
6 April 2020 – statutory sick pay increases to £95.85/week.
If you receive a re-enrolment letter from the Pensions Regulator, don’t worry – talk to your Old Mill adviser, and we can do this work along with the payroll and complete the new declaration of compliance. This is a three-year cycle, so once it’s completed it’s put to bed for another three years.
To help move towards becoming less paper-based, if you’re interested in having your payslips on the Sage online services, so that employees can access their payslips, P60s and pension letters online whenever they want to, please contact your payroll specialist.