A new year is here and is the time for setting new goals, starting new projects and preparing your business for this new period of time.
2020 will be a really important year for the UK as the divorce with the European Union will occur probably at the end of January. However, other important regulations will take place affecting businesses, especially in the financial and employment fields.
In this post, we’ll briefly explain the new laws that will come into force in 2020 and what it is expected that the Parliament will discuss.
New Laws For 2020
IR35 refers to the tax legislation under which contractors working through an intermediary are taxed.
The new IR35 changes come into force on 6th April 2020 and will be extended to the private sector having impacts on end-clients, recruiters, and contractors working through limited companies.
A good starting point to prepare for these changes is to look at your current workforce to identify those individuals who are supplying their services through personal service companies.
If there are any contractors in the supply chain, talk about their IR35 status. This will give you the opportunity to ascertain any differences in opinion about a contractor’s status at a company level before HMRC involvement.
Statement of terms
There are three important changes to written statements, which will apply from April 6th 2020:
- All workers employed on or after 6th April 2020 will be entitled to a written statement of employment particulars.
- Employees and workers must be provided with their written statement on or before their first day of employment.
- There is additional information that written statements will need to contain, including:
- the hours and days of the week the worker /employee is required to work, whether they may be varied and how
- entitlements to any paid leave
- any other benefits not covered elsewhere in the written statement
- details of any probationary period
- details of training provided by the employer.
To prepare for this change, start reviewing your current contracts and recruitment processes to ensure that all the required information is included. Also, consider putting in place procedures as part of the recruitment process to ensure documentation is issued on or before the first day of work.
Currently, the holiday pay of a worker who has irregular working hours is calculated by averaging the number of hours worked over the previous 12 weeks (known as ‘the pay reference period’).
Under the new regulations, from 6 April 2020, the pay reference period will be 52 weeks or, for those workers who have been working for less than 52 weeks, the total number of weeks they have worked. This change is designed to avoid workers losing out where their working hours are subject to fluctuations such as seasonal variations.
The 2019/20 tax year commences on 6th April 2019 so these are the main changes affecting individuals and businesses:
- The Personal Allowance (the amount you can earn before paying Income Tax) increases to £12,500 (from £11,850). This will lead to a small reduction in tax of £130 a year for most people. The threshold for paying the Higher Rate of income tax (which is 40%) will increase to £50,000 (from £46,350).
- National Minimum Wage and ‘National Living Wage’ amounts increase from 1st April 2019. The minimum hourly rate that your staff is entitled to depends on their age and whether they are an apprentice.
|Year||25 years +||21 to 24 years||18 to 20 years||Under 18 years||Apprentice|
|1st April 2019||£8.21||£7.70||£6.15||£4.35||£3.90|
- The corporation tax rate goes down from 19% to 17% for the 2020 financial year. This lower rate would provide a much-needed boost for SMEs.
- Business rates for companies with a rateable value of £51,000 or less will be reduced by a third between 6th April 2019 and 31st March 2021.
- Benefit in kind (BiK) tax rates are increasing for company cars. The percentage applied to the list price of the car will increase based on the CO2 emissions published by the Vehicle Certification Agency. HMRC has published a ready reckoner you can use to calculate your company car tax.
From 6 April 2020, the Swedish derogation is removed. Once agency workers have satisfied the 12-week qualifying period, they will be entitled to equal pay to workers who are engaged directly by the employer.
Parental bereavement law
The Parental Bereavement (Leave and Pay) Act 2018 is expected to come into force in April 2020. If it does come into force, bereaved parents will have the right to two weeks of leave following the loss of a child under the age of 18, or a stillbirth after 24 weeks of pregnancy.
Organ donation: Opt-out system
From spring 2020, organ donation in England will move to an ‘opt out’ system.
This means all adults in England will be considered to have agreed to be an organ donor when they die – unless of course, they have recorded a decision not to donate or are in one of the designated excluded groups.
Life will generally carry on the same, as the UK will enter a transition period until 31 December 2020, to allow both the government and EU to work out what the future relationship should be.
Almost every aspect of Brexit legislation, from the free movement of people to tariffs and debates about the customs union, is likely to influence how businesses operate. The challenge is knowing what legislation may change, and when.
At Linkilaw, we will inform you of any new laws coming into effect and the legal changes that may affect your business to prepare for it.
Book a call with our legal team and we’ll guide you through every stage of your legal needs.