Key Payroll Updates for August 2023

Find out the latest updates which may impact your organisation’s payroll team, including mileage rates, tax incentives, neonatal leave and pay, paternity leave and pay, and student loan interest rates.

Mileage rates

Trade Unions and the RAC Foundation are calling for the Government to increase mileage rates in light of the cost-of-living crisis and the fact that they haven’t been updated since 2011. At this point, they increased by just 5p, and that was the first increase since its introduction back in 2002.

Research and analysis has found that those in the lowest paid roles are becoming out of pocket by an average of £6,000 a year because of the mileage rates being out of date and not in line with current living costs.

Tax incentives for occupational health consultation

HMRC have opened a consultation in which it is seeking views from employers on the current benefit in kind exemptions that are in place for occupational health services. It is also seeking views on what to include if HMRC expand benefit in kind exemptions for occupational health services. The consultation closes 12 October 2023, but the Institute of payroll professionals (cipp), has a survey open which runs until 26 September which employers can feedback through.

You can access the survey here.

Neonatal Leave and Pay Act 2023

Back in May this year, the Neonatal Leave and Pay Act become an act of law, however, there was no effective date. This is because Regulations would need to be brought in to bring the substantive provisions in.

The Department for Business and Trade have identified that the likely timeframe for this new legislation to come into force would be April 2025. This is because of the need to update HMRC IT systems, draft guidance and support documents for employers and employees and provide sufficient time for parliament to consider the secondary legislation that is required to bring them into force.

The Government also wish to introduce this new leave and pay entitlement so that it aligns with the start of a new tax year.

Statutory Paternity (Leave and Pay) Bill

The Paternity (Leave and Pay) Bill has been introduced on the back of a government consultation that took place back in 2019. This was paused given the pandemic, but following recent family friendly changes, the Government are now also proposing to make changes to how paternity leave and pay is managed.

This Bill, if passed, would extend eligibility for paternity leave and pay, as currently, it is only available based on a person’s employment status, length of continuous service and level of earnings. It would also make provision for flexibility in the timing of, and notice period for taking the leave. It is anticipated that this Bill would become legislation ready for implementation from 6 April 2024.

Changes to student loan interest rates

The Department for Education (DfE) have confirmed that the student loan plan 2 and plan 5 as well as the post graduate loan (pgl) will have their interest rates increased from 1 September.

The interest rates will be increased in a structured way as follows:

  • Between 1 September to 30 November 2023, interest rates will be 7.3%
  • From 1 December, plan 2 and the PGL will revert to the retail price index plus 3% with plan 5 interest being at the RPI rate.

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