The tax and legislation changes impacting reward from April 2020

With the arrival of the new tax year, new measures impacting pay and benefits are set to come into effect. Below is a round-up of these measures, along with other tax and legislation changes, that employers need to be aware of from 6 April 2020:

  • The national living wage has increased from £8.21 to £8.72 per hour, an increase of 6.2% on 1 April 2020. This is the biggest increase for employees 25 and above since its introduction in April 2016.
  • The national minimum wage is also set to increase across all age groups; this will see a 6.5% increase for those aged between 21 and 24, a 4.9% increase for those aged between 18 and 20, a 4.6% increase for employees under the age of 18, and a 6.4% increase for apprentices.
  • Employees will have the right to at least two weeks’ leave if a working parent loses a child under the age of 18, or suffers a stillbirth from 24 weeks of pregnancy.
  • Employees whose babies spend an extended period of time in neonatal care will also be provided up to 12 weeks paid leave.
  • The national insurance primary threshold for employees will increase to £9,500 from April 2020. However, the rate at which employees start paying income tax, will remain the same at £12,500.
  • There will be a reduction of most company car tax rates by 2% in 2020/21, applicable to cars first registered from 6 April 2020.
  • The tapered annual allowance threshold for pensions tax relief will be increased by £90,000. The minimum level to which the annual allowance can taper down will reduce from £10,000 to £4,000. This will only affect employees with a total income, including pension accrual, of over £300,000.
  • The lifetime allowance for pension savings will also increase from £1.055 million to £1.073 million.
  • There will be an extension to non-taxable counselling services, including medical treatments, such as cognitive behavioural therapy (CBT)

This follows on from a previous announcement on 4 March 2020 that statutory sick pay would be available from day one if an employee is self-isolating as a result of the outbreak of Covid-19 (Coronavirus). Under normal circumstances, employees have to have been away from work for more than four consecutive days.

In addition, gender gap reporting has been delayed until next year due to the Covid-19 (Coronavirus) pandemic.