New tax year changes to payroll legislation

You might call 2022/23 the tax year of constant change – from multiple prime ministers (and cabinet members) to ever-changing payroll legislation.

We have had changes to National Insurance rates and bandings, including the Health and Social Care Levy, as well as proposed plans to reduce the basic rate tax and remove IR35 legislation both scrapped.

But for now, let’s look forward to what is going to happen (under the current chancellor Jeremy Hunt) and the effects this will have on employers in the new tax year 2023-2024, as we prepare to close off the end of this very manic one.

So, what’s in store?

The two key areas of legislation under review relate to the Transfer of Undertakings (Protection of Employment), otherwise known as TUPE transfers, and the Working Time Regulations 1998.

ACAS describes a TUPE transfer as an organisation, or part of it, transferring from one employer to another or a service transferring to a new provider.

While it is unlikely that any significant changes will happen to the TUPE regulations, there are rumours that consultation periods could be brought into line with the redundancy rules, as well as minimising the protections upon transfer, which will mean only some are retained.

Working Time Regulations 1998

When it comes to the review of the Working Time Regulations 1998, a more significant set of changes is likely to take place as the government plans to overhaul these laws – especially around the EU legislation that relates to the entitlement and calculation of holiday pay.

There is also a potential review coming down the line on the entitlement to carry forward leave in periods of sickness, where the current legislation allows up to four weeks of statutory leave carried forward for a period of 18 months.

The reform of holiday calculations under EU law, following the Locke v British Gas case, could also result in aligning UK policies. This could mean reverting to the principle of deemed ‘basic pay’ and excluding other types of payment.

Unfortunately, the outcome relating to the Harpur Trust v Brazel case is not going to change because this amendment has been established under UK legislation.

The final potential amendment is in relation to the maximum 48-hour working week and opt-out measures, where it seems likely that the government will revoke this.

Other areas also under review are the Agency Workers Regulations 2020 and The Part-Time Workers Regulations 2000.

No guarantees

There is no guarantee that the proposals that I have mentioned will take place, the reviews are open and subject to government approval, which, if the previous year has anything to go by, could throw up several more surprises along the way.

This a further example that the everchanging payroll world is one to keep a close eye on! It is critical that employers keep up to date with ever-changing legislation and understand what is required of them.

Westcotts has a dedicated payroll team of experts and specialists who can offer help and advice to businesses about any aspect of their payroll operation, please get in touch.