HMRC and Crown Logo Closeup for Payslip Policy 2019 Legislation

Payslip Policy 2019

HMRC Details Statutory Changes to Payslip Policy Legislation

April 2019 saw the introduction of new legislation from HMRC regarding Payslip Policy, including changes on who is entitled to receive a payslip and what needs to be reflected therein, amongst others.

To understand the changes that are being implemented, let’s understand what the legislation was before this change. The excerpt below is from legislation.gov.uk and outlines the previous version of the Employment Rights Act 1996 (8)

 

Itemised pay statement.

(1)An employee has the right to be given by his employer, at or before the time at which any payment of wages or salary is made to him, a written itemised pay statement.

(2)The statement shall contain particulars of—

(a)the gross amount of the wages or salary,

(b)the amounts of any variable, and (subject to section 9) any fixed, deductions from that gross amount and the purposes for which they are made,

(c)the net amount of wages or salary payable, and

(d)where different parts of the net amount are paid in different ways, the amount and method of payment of each part-payment.”

The changes that have come into effect state that “from 6 April 2019, the statutory right to receive an itemised payslip will be extended to all workers. This right currently only applies to employees, a sub-category of workers.” – as extracted from the Assets Publishing Service Legislative piece which can be found here.

Furthermore, the legislation goes on to state that “…additional information must be shown on a payslip for workers whose pay varies depending on the number of hours they have worked. Where this applies, the number of hours paid for on this basis (ie on the amount of time worked) must be shown. Any other hours do not need to be shown (although of course they can be shown if it would be helpful to do so). For example, where a worker has a fixed salary each month, and works variable overtime with additional pay at an hourly rate, only the hours of overtime need to be shown.”

So, what can we make of these changes? Then vs Now

Previously, only workers explicitly categorised as employees were entitled to receive a payslip. This payslip may also have been rather vague, indicating only “the gross amount of the wages or salary, the amounts of any variable, [and] any fixed, deductions from that gross amount and the purposes for which they are made, the net amount of wages or salary payable, and where different parts of the net amount are paid in different ways, the amount and method of payment of each part-payment.”

The 2019 Payslip Policy changes now make it a legal requirement that all workers (not just employees) receive a payslip in either a physical form, or in a form they can print off. Furthermore, all payslips are now legally required to reflect ‘additional information… for workers whose pay varies depending on the number of hours they have worked’ – which we’ll discuss a little later.

Do note, however, that workers receiving a set monthly income, without being affected by overtime, unpaid leave and SSP, variations do not need to be included in an hourly rate breakdown.

Hourly Paid Workers and Day Rate Workers Payslip Policy

“From April 2019 additional information must be shown on a payslip for workers whose pay varies depending on the number of hours they have worked. Where this applies, the number of hours paid for on this basis (i.e. on the amount of time worked) must be shown.”

“The hours that must be shown on a payslip are a separate matter from the number of hours worked for National Minimum Wage (NMW) purposes (although for workers who are paid by the hour they may well in practice be the same).”

National Minimum Wage for over-25’s is £8.21 per hour.

This translates to:

  • If a worker’s contract stipulates they are paid hourly or on a day rate, this monetary amount (whether it be the hourly pay or daily rate) must be reflected on the payslip. The total amount of ‘units’ they have worked need to be reflected, as well.
  • For a daily rate worker, paid dependent on how many days they work, the hours worked will still need to be included on the payslip.

Paying yourself or your staff as a Limited Company Director – Important things to remember when paying via the PAYE route

  • You must create payslips and submit them to HMRC before paying salaries to your staff or yourself.
  • Tax calculations will form part and parcel of your payslip submission to HMRC; if you’re not au fait with this, your accountant can advise you on the options available and how to make the best use of them (that’s what we’re here for!)
  • From Limited Company Help: “…for staff, you need to take into account National Minimum Wage (NMW) legislation. This doesn’t apply to the company’s directors, however. The current NMW rate for over-25’s is £8.21 / hour (from 1st April 2019). You will then decide how frequently to pay yourself and your staff. Many limited company owners opt for a monthly payroll.”

If you already have a limited company or would like to set one up, we’re here to guide you through every step of the process. Whether you need help setting up a business bank account or someone to handle your payroll, First Freelance is a click away.

But First, Freelance! This is how we can help you with your payroll process; we’ll eliminate every burden of payslip-related red-tape and ensure you’re in the loop all the way:

  • Unlimited sales invoicing on behalf of your Limited Company
  • Access to a secure online portal to record out of pocket expenses
  • Monthly payroll for you as a director
  • Preparation and submission of RTI payroll
  • Preparation and submission of P60, P11d & P11d(b)
  • Class 1A NICs payment notifications
  • Preparation of quarterly VAT returns
  • View of your company tax position and available funds to withdraw 24/7
  • Preparation of board minutes and dividend vouchers
  • Preparation and submission of Annual Return
  • Preparation and submission of Annual Statutory Accounts and CT600 to HMRC
  • Submission of Annual Statutory Accounts to Companies House
  • Accountant references for all purposes e.g. mortgage, VISA letters

The legislative document in reference can be found in the link below:

https://www.gov.uk/government/publications/payslip-policy-a-guide-to-the-2019-legislation

 

Published on: 14 June 2019 - By: First Freelance

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