With the new tax year having just begun, Employers should be aware of increases to statutory rates, and new legislation coming into force from 6 April 2018. Below is a brief summary of key changes.
National Minimum Wage
Apprentices: Increasing from £3.50 to £3.70 per hour.
16 and 17 year olds: Increasing from £4.05 to £4.20 per hour.
18 to 20 year olds: Increasing from £5.60 to £5.90 per hour.
21 to 24 year olds: Increasing from £7.05 to £7.38 per hour.
The National Living Wage for workers aged 25 and over will increase to £7.83 per hour.
Statutory Payments
Statutory Maternity Pay, Statutory Paternity Pay, Shared Parental Pay and Statutory Adoption Pay will increase to £145.18 per week.
Statutory sick pay will increase to £92.05 per week.
Week’s Pay
The maximum amount for a week’s pay (used when calculating statutory redundancy payments) will increase from £489 to £508 per week.
Statutory Redundancy Pay
The maximum statutory redundancy payment (or basic award for unfair dismissal) has increased from £14,670 to £15,240.
GDPR
The General Data Protection Regulations (GDPR) will come into effect on 25th May 2018 for all EU member states, including the UK.
Taxation of Termination Payments
New rules regarding the taxation of termination payments will apply from 6th April 2018. Previously, if an employee’s contract did not contain a pay in lieu of notice clause, the employer could categorise the notice payment as part of the termination payment, and therefore exempt from National Insurance Contributions, and tax free up to a limit of £30,000.
However, from 6th April 2018, employers must deduct tax and NI from a portion of the termination payment equivalent to the basic pay that an employee would have earned had the employee served his or her notice period in full, regardless of whether the employee’s contract contains a Pay in Lieu of Notice clause.
