What are the changes in Payroll this year?

It’s hard to say with any certainty exactly what changes in payroll there will be this year. After all, it’s only March at the moment. However, we have asked our team of payroll specialists for what we might expect. So, to help you stay informed, we have compiled a list of the top ten changes they’re expecting in 2023.

1. Increase in National Living Wage and Minimum Wage

There will be an increase to the National Minimum Wage and National Living Wage rates as of April 1st 2023. So, employers who pay the lowest hourly rate to their employees can expect to be impacted by this.

2. Reduction in Additional Rate Tax Band

The new tax year will bring changes to the 45% additional tax rate threshold. It will be lowered from £150,000 to £125,140. So, more high earners can expect to have to pay more tax.

3. Increase in Statutory Sick Pay

Starting April 6th 2023, the Statutory Sick Pay rate will increase to £109.40 per week. That represents a 10.1% increase from the previous year. So, this change will affect employers who have to provide Statutory Sick Pay to their employees.

4. Increase in Parental Payments

From April 2nd 2023, there will be an increase in Statutory Maternity Pay, Statutory Paternity Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay. The latter will rise to £172.48 per week from £156.66 per week. Subsequently, employers who provide these payments to their employees will be affected by this change.

5. Reduction in Dividend Allowance

Starting April 6th 2023, the tax-free allowance for those who receive dividend income will be reduced from £2,000 to £1,000. Consequently, this change will affect individuals who receive dividend income.

6. Extra Bank Holiday

There will be an additional bank holiday on May 8th 2023 due to the coronation of King Charles III. While we all love an extra holiday this will need to be factored into payroll. So, this change will affect employers who have to provide paid time off to their employees on bank holidays.

7. Review of State Pension Age

In the early part of 2023, there will be a review of the state pension age currently set at 66. With the increase in lifespan, people will spend a larger portion of their lives receiving the state pension. So, reviews of the state pension age will likely be a regular occurrence. Consequently, we can expect to have to adapt to changes in payroll relating to this for some years to come.

8. Reduction in Auto Enrolment Earnings Threshold

Many individuals who belong to ‘under pensioned’ groups and earn less than the £10,000 auto-enrolment threshold may have to depend mostly on the state pension after retirement. Workplace pensions provider, Now Pensions, has proposed the removal of the £10,000 auto-enrolment earnings trigger. This could enrol 3 million employees from under pensioned groups into workplace pension schemes. So, we could well see the the pensions gap be reduced.

9. Replacement of UK GDPR

The Data Protection and Digital Information Bill, which proposes amendments to existing laws like the UK’s General Data Protection Regulation (UK GDPR), was introduced to Parliament on July 18th, 2022. The second reading of the bill has been postponed, with a date yet to be announced. This change will affect the storage and protection of employee data.

10. Technological Advancements

In recent years, we have witnessed significant advancements in technology. And, this trend is expected to continue into 2023 and beyond! Automated processes within payroll departments, including AI-based systems, could be introduced to streamline processes. Also, blockchain technology could be used for secure storage of employee data and payments.

Changes in payroll – the low down

It is important to keep track of changes in payroll each year as they can have a significant impact on businesses and their employees. From changes in minimum wage and statutory sick pay to reductions in tax allowances and increases in auto enrolment earnings thresholds, keeping up with these changes can help ensure compliance with government regulations and ensure fair compensation for employees.

Additionally, with the ongoing advancements in technology and potential changes in data protection laws, it is crucial to stay informed to make the most of new tools and processes to streamline payroll operations. As the government can be unpredictable, especially with frequent changes in tax policies and legislation, staying informed is key to being prepared for future events in the short and long term. We can help you there! So, when you’re ready, we’re ready.

Please do get in touch to see how we can help on 01243 782 423. Alternatively, you can email us from our contact page and someone will be in touch!

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