PIXIE PAYROLL Blog

There are just a couple of weeks left of 2024 and it’s been another eventful year. It’s been one of change but then we’ve got used to that recently so perhaps that’s no surprise. So just as it’s nearly time for presents, turkey and Father Christmas, it’s time for our annual review of the year blog.

Change at the top

One of the biggest developments this year in terms of impact on the economy, taxation and payroll is the results of the general election in July and the change in government. Shortly after parliament returned, the King’s Speech outlined some of the legislation the new government is planning which includes a new Employment Rights Bill and a Skills England Bill. You can read more about the speech here.

National Insurance

2024 is another year where National Insurance features in our review of the year. In January, the rate paid by workers fell by 2 percentage points to 10% and then in April it was reduced again to 8% which meant everyone’s take home pay increased a little.

Then at the end of October, the new Chancellor of the Exchequer delivered her first budget which included an announcement that the rate of National Insurance paid by employers will increase to 15% in April 2025 and will be payable on all salaries above £5,000. So while that won’t make a difference to employees’ pay packets, it will add to the cost of employing staff for employers.

Our blog reviewing all the announcements in October’s budget can be found here.

Inflation and interest rates

The cost of living crisis is still with us, but the rate of inflation has been falling this year and there are even some reports that the cost of this year’s Christmas dinner will be lower than last year.

This has meant that The Bank of England has felt able to start reducing interest rates, beginning with a fall of 0.25% in August and a further 0.25% in November.

The Office of National Statistics has just reported that pay rates rose by 5.2% between August and October which suggest that wages are starting to catch up with increased prices. It will be interesting to see how all these interconnected factors play out in 2025.

Pixie Payroll’s year

It’s been another really busy year at Pixie Payroll with new clients joining us and fellow director Phil now working full time in the business. We enjoyed a brilliant summer of cricket thanks to our continued sponsorship of Mullion Cricket Club and player Mathew Davies who was the top wicket taker with 28 wickets – congratulations Mathew! We still have the December payrolls to process but after that, we’ll be enjoying a well-earned break and some family time. Our office will close at 1pm on Tuesday 24^th December and will reopen at 9am on Monday 6^th January. We’d like to wish you all a very Merry Christmas and Happy New Year.

Recently, the conversation around mental health has become much more open, with many high-profile people sharing their experiences but the subject remains hidden in some workplaces. Balancing work and home responsibilities can be very stressful but addressing mental health at work is important not just for the wellbeing of the employees but also for creating a supportive and productive culture. So as we reach quite a stressful time of year with Christmas on the horizon which is often coupled with bad weather and a busy workplace, we thought we’d look at how both employers and employees can prioritise mental health in this month’s blog.

What is workplace stress?

Employees can become stressed, anxious or depressed for many reasons, and not all will be linked to work, but factors such as a heavy workload, lack of support or a poor work culture can lead to poor mental health. It might be noticed that employees have symptoms including:

• Anxiety or worry
• Exhaustion
• Decreased productivity
• Being off sick more
• Making more mistakes or being unable to concentrate

Supporting good mental health at work

If an employee is starting to struggle, it is important to address the situation early on to prevent more severe mental health issues later. So it’s important for employers to create a culture where mental health is prioritised and this can be done in a number of ways:

Encourage openness – it is important that employees know they can raise issues about mental health, that they will receive an empathetic response and that they will feel supported.

Offer mental health resources – these might be workshops, mental health training or signposting to external support. Mental Health First Aid courses can be a really good way of helping employees support each other by spotting the early signs of distress.

Offer flexible working – it’s now the law that employers have to consider flexible working requests but granting them in good time can help support employees’ mental health. More remote working can help support a better work/life balance while varying an employee’s hours might alleviate stress in the short term.

Breaks are important – getting sufficient rest and time away from work is vital to mental health so employers should encourage their employees to take the leave they are entitled to. During a working day, simple things like getting outside for a walk and fresh air – especially at this time of year – or stopping for a stretch can really help an employee’s mood.

Build mental health into training – supporting managers to be good leaders is an important aspect of good mental health in the workplace so additional training specific to helping them support their teams’ mental health is valuable.

How can employees help themselves?

Everyone has a role to play in maintaining good mental health, and that includes employees – or even the self-employed – themselves. Speaking up when feeling overwhelmed, taking regular breaks, practicing mindfulness activities and simply eating well and exercising can all help workers cope with the inevitable stressful moments at work. Overall, creating a workplace that promotes good mental health is the responsibility of both employers and employees and a supportive culture at work will improve outcomes for everyone.

The long-awaited Budget Day is finally here; the first from the new Labour government and the first ever delivered by a female Chancellor of the Exchequer. Some of the measures in the speech today had already been announced but there were nevertheless some surprises and confirmation that there will be no changes to income tax, employees’ national insurance or VAT.

We have summarise some of the business, taxation and employment related measures in this blog post but you can find more information on everything announced today here https://www.bbc.co.uk/news/articles/cdxl1zd07l1o

National Insurance

We’ve quite often found ourselves starting a blog post discussing national insurance in recent years, and this budget is no exception. This time, however, there is no change to the rate that employees pay so workers shouldn’t see a change in their payslips. But the amount employers pay will be increasing in April – up from 13.8% on salaries above £9,100 to 15% on salaries above £5,000. It is estimated this will raise about £25bn a year.

In an effort to offset this for smaller employers, employment allowance will increase from £5,000 to £10,500.

Carers’ allowance

There has been a lot in the news recently about carers’ allowance and about how carers who inadvertently earn more than permitted have been penalised. The Chancellor announced today that the earnings threshold will increase to £195 per week which means carers can still be eligible for the benefit of around £81 a week even if they increase their working hours. There will also be a review into how overpayments are dealt with.

Wage and pension rates

The National Living Wage – the minimum paid to those over 21 – will increase to £12.21 from April; an increase of 6.7%. For those aged 18-20, the National Minimum Wage will rise to £10 per hour. The rate for apprentices will increase to £7.55 per hour.

The new and basic state pension will increase by 4.1% next year.

Income Tax thresholds

The income tax thresholds – the rate at which people start paying tax or move into higher tax bands – are currently frozen which means that more people pay more tax each year as their wages increase. There was speculation that this freeze would be extended but it was confirmed today that the thresholds will start to rise in line with inflation from 2028.

Other measures

Fuel duty will remain frozen and that freeze will be extended for a further year beyond April 2025.

£500m will be allocated to repair potholes in England and money will be made available for rail infrastructure projects. As a contrast, the cap on single bus fares will rise to £3.

There will be a new tax on vaping liquid and a review into the sugar tax on soft drinks. As is normal in a budget, the duty on tobacco and some alcoholic drinks will increase but will reduce on draught drinks such a beer served in pubs.

So, the first Budget is done and the plans of the new government are starting to become clear. If you need any help or information on what the increase in employers’ national insurance means to your payroll, just get in touch.

We posted on our Facebook page recently about sabbatical leave and how employers are increasingly offering it as a way to attract new employees. So we thought we’d take a closer look at the subject for this month’s blog.

What is a sabbatical?

The term originated in an academic setting and was used to describe the time academics took away from teaching for research or travel. But it’s been extended now to mean a period of long-term leave – usually unpaid – from a job for volunteering, travel or study, with the expectation that the employee’s job will be held open for them and that they will return to work, although there is no legal right for the employee to come back to their job.

The term ‘career break’ might also be used but this is usually when an employee resigns from their job although there is a promise to offer re-employment at the end of their break.

Legal status of sabbaticals

There is currently no legal right to take a sabbatical. That means that it’s entirely at the discretion of the employer as to whether a request for a sabbatical might be granted. If the option for a sabbatical is written into an employee’s contract, then it does become legally enforceable.

If an employee is on sabbatical and remains employed, then their rights under their contract are still in place. This includes the fact that they’ll continue to accrue holiday pay and they will be building months and years of continuous service. By contrast, if they’ve taken a career break and so are not employees during the time of their leave, they won’t enjoy any of the benefits of employment.

Granting a request for sabbatical leave

An employer’s first thought when receiving a request for sabbatical leave is the disruption it could cause to the business. The impact it will have will vary so it will be an individual consideration for each employer. Then there’s the financial impact. Sabbatical leave is typically unpaid so it could reduce payroll costs for a while, but this saving could be offset by the additional cost of covering for the absent employee.

But agreeing to a request for sabbatical leave can have benefits too. It can really help with staff retention and recruitment, meaning valued, talented and skilled staff remain in the business rather than leaving to join a competitor. It can also help to bring new skills into the business if the employee has taken the time out to study or train.

From an employee’s point of view, it can boost productivity and make them feel rewarded for hard work and long service.

Writing a sabbatical policy

If an employer is thinking about offering sabbaticals, it would be a good idea to start by writing a sabbatical policy that sets out the criteria for granting a request. These might encompass length of service, seniority or maximum length of the sabbatical. A clear policy will help to make sure any requests are considered fairly and avoid complaints about discrimination.

Offering sabbaticals can have benefits for both employers and employees but there are drawbacks too so it’s something that needs quite a bit of consideration and requests will probably need to be considered on a case by case basis. But it’s definitely a subject that will be coming up more and more in the future.