As we make our way into the second quarter of 2019 and into the new tax year. Here is an update on the key changes that affect you as an employer and your employees.
This article highlights “National Minimum wage” from April 2019 along with changes to dividend allowance and pension.
Changes in National Minimum Wages
The national minimum wage (NMW) and national living wage (NLW) from April 2019 as follows:
| Age | Rate |
| 25 and over (NLW) | £8.21 / hour |
| 21 to 24 | £7.70 / hour |
| 18 to 20 | £6.15 / hour |
| Under 18 | £4.35 / hour |
| Apprentice | £3.90 / hour |
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The apprentice rate is applicable to an individual who is
- Aged under 19
- Aged 19 or over and in the first year of apprenticeship
Once an apprentice who is aged 19 or above completes his/her first year, they are entitled to the standard minimum wage.
Apprenticeship
Apprenticeship combines practical training in a job with study. Please find more information on apprentice’s eligibility here – www.gov.uk/apprenticeships-guide
Employers who have apprentices aged 16-24 can be entitled to a grant of 1,500.00 per apprentice. For more specific details please contact the National Apprentice Service on 0800 015 600.
Pension Contributions
The below table shows the minimum contributions that the staff and employer must pay towards the pension.
| Date | Employer Contribution | Employee contribution |
| 06/04/2018 – 05/04/2019 | 2% | 3% |
| 06/04/2019 onwards | 3% | 5% |
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Pensionable Allowance
The lower limit qualifying earning band has increased from £6,032 to £6,136, and upper limit has increased from £46,350 to £50,000. This means that qualifying earnings can’t be more than £43,864 for the 2019/20 tax period.
For example, if a worker earns £25,000 their qualifying earnings would be £18,864. Qualifying earnings is the name given to a band of earnings that you can use to calculate contributions for auto enrolment.
Exempt from Auto Enrolment
- A sole director company, with no staff.
- A company with multiple directors, none of whom has an employment contract.
- A company with multiple directors, only one of whom has an employment contract.
- A company which has ceased, enter into liquidation or been dissolved.
Note: You will need to inform Pension Regulator and they will advise accordingly.
Dividend Allowance
The below table shows the maximum dividend tax-free allowance and the rate which will be taxable if there is any dividends earning over the maximum tax-free allowance. This has not changed since last tax year.
| Date | Tax-free Dividend Allowance | Tax implications |
| From 06/04/2018 | £2,000 | Basic rate 7.5% |
| Higher rate 32.5% | ||
| Additional rate 38.1% |
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- The tax-free dividend allowance remains the same at £2,000.
- You won’t pay any tax if you have unused personal allowance which covers your additional dividends
- Any dividends in the basic rate tax threshold (up to £50,000) will be taxed at 7.5%
- Any dividends in excess of the basic rate tax threshold will be taxed at 32.5%
- Any dividends falling within the additional rate tax threshold (income above £150,000 for the period 2019/20) will be tax at 38.1%
Income tax threshold for 2019/20
- Up to £12,500, 0% income tax as this is your personal allowance.
- Income between £12,501 to £50,00, 20% income tax – Basic rate
- Income between £50,001 to £150,000, 40% income tax – Higher rate
- Income above £150,001 – 45% income tax – Additional rate
For more information please contact the Mohammed Jaffer on 0121 455 8055 or email [email protected]
Reference
- www.gov.uk/take-on-an-apprentice/employer-grants-apprentices
- www.gov.uk/national-minimum-wage-rates
- www.gov.uk/government/publications/income-tax-dividend-allowance-reduction/income-tax-dividend-allowance-reduction
- www.thepensionsregulator.gov.uk/director-exemptions-from-automatic-enrolment
