PIXIE PAYROLL Blog

Earlier this month, some important pieces of new legislation came into force that have a direct effect on employers and employees so for this blog post, we’re looking at them in a bit more detail.

Employment Rights (Flexible Working) Act 2023

Before this new act came into force, employees could only request to make a change to where and when they work after they had been in their job for six months, and they could only make one request within any 12 month period.

The new act, which came into force from 6^th April this year, allows employees to request flexible working from the very first day of their employment and to make up to two requests in 12 months. The definition of flexible working can cover a number of different scenarios that include asking to move to part time or reduced hours or only working during term time to accommodate child care needs. It also includes flexitime, which is when an employee can vary their working hours each day, often within the parameters of daily core hours and so that the contracted hours for each week or month are met. So for example, an employee can work 9am to 3pm on one day but those missing two hours will need to be made up at another time.

An employee can also request to work compressed hours, where all the contracted hours are worked over a shorter time. For example, 40 hours can be worked over four 10 hour days rather than five 8 hour days. This can be useful for an employee but consideration should always be given to staff welfare when working long days.

Finally, flexible working might also include a request to vary the location where the employee is based. Most typically this will be a request to work entirely or partly at home, but it might also be a request to work out of a different office location.

Previously, employers had 3 months to make a decision on a flexible working request but that has now been reduced to 2 months. Employers could also reject a request without giving a reason but the new legislation means that’s no longer the case; employers have to back up a refusal with a full explanation for their decision.

Obviously the impact of this new legislation will be different for each employer and may be difficult to manage in small businesses with only a few employees. But all employers are treated the same under the new law so solutions will need to be found when and if an employee requests flexible working.

Carer’s Leave Act 2023

This is the second major piece of new legislation to come into force on 6^th April and has been designed to support employees with caring responsibilities.

The Act gives employees the right, from their first day of employment, to request leave so they can care for someone they look after. This would normally be a close family member – spouse or civil partner, child, parent or other dependent. They might need care because of age, disability or illness or injury that is likely to be needed for at least three months.

The leave that can be granted under the Act is unpaid and the maximum amount of leave that can be taken is one week per year. This can be combined with other leave such as annual leave or even compassionate leave, but this will be at the discretion of the employer and may not be available to everyone. And many employees may find any amount of unpaid leave difficult to manage.

Employers cannot deny a request for Carer’s Leave but if it would disrupt the business too much, they can postpone it to another time.

Protection from Redundancy (Pregnancy and Family Leave) Act 2023

This is another law that came into force on 6^th April and it extends the protection from redundancy already afforded to those on maternity leave to those who are pregnant or who have recently returned from shared parental leave, maternity leave or adoption leave. It can give up to 18 months protection from redundancy, calculated from the child’s date of birth.

If you need any more information on these new laws, speak to your HR professional or just get in touch.

The Chancellor has announced his measures for the country’s finances in what was the last Spring Budget before the General Election later this year and here’s our traditional blog post detailing the key features.

National Insurance

It feels like National Insurance is something we’ve talked a lot about in recent years as it has been the preferred mechanism for reducing taxation and that is the case again this time. National Insurance rates for both employees and the self-employed will be reduced by 2% from 6^th April 2024 (the start of the new tax year). This is in addition to the 2% reduction that was announced last year which came into effect from January this year.

However, there was no announcement that the amount an employee can earn before paying tax or national insurance will increase so more people will be paying tax on their earnings.

VAT

At the moment, businesses have to register for and start paying VAT once turnover reaches £85,000 but that will be increased to £90,000 from April.

Child Benefit

In recent years, the High Income Child Benefit Charge was introduced which meant if a parent earned over £50,000, then they would be liable for the charge. This did introduce an element of unfairness into the system because it meant a household of two parents earning £49,000 wouldn’t have to pay the charge but another with one parent earning £50.001 would pay the charge. The Chancellor announced he would review this scheme to address this unfairness but, in the meantime, the threshold for paying the charge would increase to £60,000.

Holiday lets

Something that’s going to be relevant to us here in Cornwall was the announcement that tax breaks on furnished holiday lets is going to be scrapped. Currently, owners of furnished holiday lets can claim tax relief on things they buy for the property including furniture and other fixtures. The Chancellor hopes that in abolishing the relief, more holiday lets will be made available for long term rent in an attempt to ease the housing crisis in tourist areas such as Cornwall.

Duties

The cut of 5p on duty on fuel was due to end this month but that cut has now been extended for another year. Tobacco duty will increase and a new tax on vapes will be introduced in October 2026 following a period of consultation.

The freeze on alcohol duty was due to end in August but that will now continue until February next year.

Household Support Fund

The Household Support Fund, which was introduced in 2021 to help the poorest families cope with the cost of living crisis was due to end in March 2024 and although there was no mention of an extension in the Autumn Statement last year, the Chancellor has now announced that it will be extended for another six months.

More information on the measures announced in this year’s Spring Budget, including some things we haven’t had room to mention in this blog, can be found here. If you have any questions about how the change to National Insurance will affect your employees or payroll, just get in touch.

Although one of the best things about my job is that no two days are the same, I thought for the blog post this month, it might be interesting to describe what a day in the Pixie Payroll office might look like, especially now my fellow director and husband Phil is working alongside me full time now.

There’s not much that gets done first thing in the morning until we have a cup of tea. That’s also a good time for us to go over the to do list for the day and priorities the tasks. We manage both weekly and monthly payroll schemes and so although there’s no doubt we’re busier towards the end of each month, we do have payrolls to run each week so ensuring our clients’ employees are paid correctly and on time is always top of the list. That’s also when we might contact our clients to request any missing information such as time sheets, employee information or bank details.

Each day is also filled with emails and phone calls from clients. We might need to add a new employee to a payroll scheme by processing their new starter form and dealing with their P45. We will often prepare a new contract of employment for new employees and have that ready for their first day to ensure our clients are meeting their legal obligations. At the other end of the relationship, we might also be asked to process the paperwork when someone leaves their employer which involves creating the P45 and ensuring they are paid the correct amount up to their last day.

All employees are auto-enrolled in their workplace pension schemes (unless they opt out) and so each day will have a fair bit of pension scheme admin to take care of. As well as enrolling a new employee into the workplace scheme, we might also be asked to prepare a pension forecast if someone is considering retiring. We will refer the employee to the actual scheme administrators for more detailed help and support about their pension but we’re always on hand to help out if needed.

There will be times in each day when focus turns to our own business. We have to keep up to date with any payroll-related bulletins and new information so there’ll be some reading to do. Occasionally, it might be appropriate for us to undertake some training which can often be done remotely from the office but sometimes requires travelling. And of course, we have to continue to work on our business so there might be a bit of marketing, financial management, new business generation and networking to do.

At the end of the day after all that, we’re ready to switch off the computers, relax and enjoy some family time before the alarm goes off the next morning and it all starts again. It’s hard work running our own business, but we wouldn’t swap it for the world!

January is traditionally the time that I look forward and try to anticipate some of the things that are ahead but this time, it’s going to be very hard to predict. It’s an election year this time, so whether we’ll go to the polls in spring or autumn, there are sure to be changes ahead.

But there are some developments that are locked in so here’s a run-down on those.

Minimum Wage

The government has already announced the new rates of National Living Wage and National Minimum Wage that will be coming in from 1^st April 2024.

These will be:

Rate	Rate per hour	% increase
National Living Wage (age 21 and over)	£11.44	9.8%
18-20 year old rate	£8.60	14.8%
16-17 year old rate	£6.40	21.2%
Apprentice rate	£6.40	21.2%

National insurance

The first change in National Insurance has already been implemented with the rate for workers reducing from 12% to 10% on 6^th January. That means everyone should see a little bit more in their pay packets at the end of this month.

Then, going forward, one of the classes of National Insurance that is paid by self-employed people – Class 2 – is being abolished for those making a profit of more than £12,570. Those making less than that already don’t have to pay Class 2 although they can make a voluntary contribution and that will still be the case.

Paternity leave

New rules around paternity leave are coming in to force from 8^th March 2024 for births due after 6^th April 2024.

The changes are:

• New parents can take leave in two blocks of a week each which don’t have to be consecutive or they can take a single two week period of leave
• Four weeks’ notice must be given before taking leave
• The leave can be taken within a year of the birth or the adoption placement

Paternity leave works in tandem with parental leave and you can read our blog that’s devoted to that subject here.

Free childcare

You may have seen in the news recently that free childcare for working parents is expanding this year. From April 2024, parents of 2 year olds will receive 15 hours a week of free childcare. Then in September 2024, children aged from 9 months to 3 years will receive 15 hours a week. Looking further ahead, from September 2025, 30 hours of free childcare will be available to all children under 5.

For more information on free childcare, click here: https://www.childcarechoices.gov.uk/upcoming-changes-to-childcare-support/

Spring budget

The Chancellor’s Spring Budget will be on 6^th March this year and it will be interesting to see what changes are announced then – there are rumours of some tax reductions. We’ll be looking closely at any payroll related initiatives on the day and we’ll be uploading our blog soon after.

As 2024 gets underway, don’t hesitate to get in touch if you have any payroll queries or if one of your resolutions is to pass over your payroll management to someone else – we can help!