PIXIE PAYROLL Blog

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!

I can’t believe it’s December already; it feels like I write these annual reviews far more frequently than just once a year! And as has become the norm over the last few years, it’s certainly been another difficult one for us all. Covid may not still be with us on quite the scale as in previous years, but increasing costs, recruitment issues and business uncertainty have once more presented challenges.

Cost of living

As we did at the end of 2022, we can’t look back on the year without mentioning the cost of living crisis. With inflation still running well above the Bank of England’s target, consumers have seen the cost of everyday items increasing. Other things, like insurance, have seemed to have suddenly jumped in price this year.

High inflation rates have this year filtered into rises such as pensions and benefits, pay rises and even increases in train fares, adding even more costs to businesses’ bottom lines.

There are some signs that the inflation rate is coming down and this month, the interest rate was kept the same for the third month in a row so we could be hopeful for a better 2024.

Taxation

We’ve also seen some taxation changes this year and as in 2022, it’s mostly been in connection with National Insurance. After the rollercoaster of last year which saw a number of rate change announcements, the Chancellor announced another in his Autumn Statement last month (which you can read all about here) and said that the headline rate of NI would fall to 10% from January from 12%. There will be changes to the NI that self-employed people pay too.

Apart from that, and despite many rumours, there were no other tax changes, so we are waiting to see what happens in the Budget next Spring.

Pixie Payroll’s year

We have been kept very busy this year and we’re so grateful to all the new clients which have joined us and entrusted the vital job of payroll management to us. We have also been working with more businesses from outside of Cornwall which is great for us.

We have been helping employers manage pay rises, sickness absence and recruitment throughout the year, as well as an extra bank holiday that we had for the coronation of King Charles III in May. We like to think that hopefully we’ve taken away some of the day to day headaches for our clients.

It’s also been a real pleasure for us to once again be sponsors of Mullion Cricket Club – this year we added sponsoring a player as well as a match ball to our support. We had an amazing summer of cricket no matter the results and it was so rewarding to get behind our village team.

So now 2024 is on the horizon and it’s likely to be another challenging one although with some hope of better times. We’d like to wish everyone a very Merry Christmas and a peaceful New Year.