National Insurance Contributions (NI)
No changes to the rates of income based NI contributions on employment were announced in the Budget.
Class 2 NI will increase from £3.00 per week to £3.05 for 2020-21.
The primary and secondary thresholds (at which employees and employers, respectively, start to pay NI) will increase to £183 and £169 per week, respectively. Note that this means that much lauded in increase in the lower NI threshold to £9,500 per annum (£183 per week) only applies to employees and the self employed, not to employers – their threshold increases to £8,788.
This means that company directors paying themselves the national insurance threshold can have an increase in pay from April 2020 to £732.33 per month (from £719.33). It may be beneficial for some to increase their pay to £9,500 (£791.66 per month) depending on other income.
The upper earnings (or profits for the self employed) limit remains £50,000 (£962 per week), aligned with the point at which 40% tax becomes payable.
Details of the rates of NI can be found here.
Employer’s Employment Allowance
The employment allowance will increase from £3,000 to £4,000 per annum for 2020-21.
A reminder that it was announced in Budget 2018 that, from 2020-21, the allowance will be restricted to companies with employer national insurance bills of less than £100,000.
Statutory Sick Pay
Small and medium sized businesses (with under 250 employees) to reclaim SSP for up to two weeks for employees who have been off work with COVID-19. This will not be an automated refund via the normal PAYE system since the system is no longer set up to refund SSP.
The Minimum Wage rates from 1 April 2020 will be:
- 25+ (National Living Wage) – increases from £8.21 to £8.72 per hour
- 21 to 24 year olds increases from £7.70 to £8.20 per hour
- 18 to 20 year olds increases from £6.15 to £6.45 per hour
- 16 to 17 year olds increases from £4.35 to £4.55 per hour
- apprentices increases from £3.90 to £4.15 per hour
Home working allowance
The maximum flat rate Income Tax deduction available to employees to cover additional household expenses will increase from £4 to £6 per week where they work at home under homeworking arrangements from 6 April 2020.