Key payroll changes to keep an eye on in 2021
If 2020 has taught us anything it’s that you never know what’s around the corner. This year has been one of the wildest rides in recent history and all the plans and predictions we made for the year fell through our fingers in flakes with the pandemic and global recession.
So, when I initially sat down to write this, I thought to myself: “HA! How am I supposed to know what’s going to happen next year when I don’t even know what’s happening next week?!” But digging a little deeper I was able to pinpoint three things that are definitely going to happen next year which those working in payroll need to keep an eye on. It’s always good to be prepared!
1. The end of furlough
Yes, yes, it was due to end in October 2020 but has now been extended to 31 March 2021. The re-instated Coronavirus Job Retention Scheme will give employees on leave 80% of their pay, up to a maximum of £2,500. The scheme is due to be reviewed in January so let’s see what happens. Whatever does happen you can rest assured that BrightPay will update their payroll software so that it can quickly and easy calculate any new claims, as they have been doing throughout the pandemic. BrightPay have even won an award for being COVID Heroes as a result of how they have helped their customers with all things furlough.
2. IR35 will go ahead as planned in 2021
Back in July, an amendment to the Finance Bill, which would have delayed the controversial reforms until 2023/24, was defeated in Parliament. Already delayed once from April 2020 due to coronavirus, the new IR35 rules shift the responsibility for determining the tax status of a contractor from the worker to the organisation.
You would think that with, oh I dunno, millions out of work, a global pandemic and the worst recession of our generation, the government might give workers a wee break but no no, we should know better than that! Workers are already being affected by the upcoming IR35 rules, especially contractors and freelancers who have already been battered by Coronavirus. Basically, this is one to keep a very close eye on and hopefully, there will be more clarity from the courts that will protect workers’ rights and not adversely affect employment.
BrightPay will be able to cater for all the complexities of IR35, streamlining the processing and helping you comply.
3. Increase in taxes
Ok, this one is not solid fact; rather, it’s word on the street, talk around the watercooler, conjecture grounded in logic. The government has, as of 20th September, paid out £39.3 billion to support those on furlough alone. This money has not been sitting in a piggy bank in Downing Street somewhere labelled “in case of emergencies”. Oh no, this has been begged and borrowed from who knows where. (Magician Rishi Sunak is so talented he can make billions of pounds appear from nowhere and make millions of jobs disappear at the same time!) Regardless of where it came from, it’s definitely not free. This money will need to be paid back and I would bet my left butt cheek that it won’t be recouped via corporation tax but from our pay packets.
So, I predict that in 2021, we the people will see an increase in our income tax and NI contributions to fill the void. Should this happen, BrightPay will ensure that they will update their easy-to-use payroll software so, users can process payroll accordingly.
This last prediction I make with my fingers and toes crossed whilst burning sage, covering all the mirrors on my house and rubbing my lucky rabbit’s foot: 2021 will no doubt be better than 2020 - it has to be…. right?!!
Book a demo of BrightPay today to make sure that you are prepared for any payroll changes that 2021 throws our way.
Written by Aoibheann Byrne
BrightPay Payroll Software