Payroll changes for the 2021/22 tax year and updates in Opera 3 (2.81)

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2020 presented an unprecedented number of challenges for Payroll departments large and small. Businesses had to understand and implement new regimes like furlough quickly and adapt to remote working, with in some cases, entire workforces working from home.

In this blog post we aim to cover the significant payroll changes coming into effect for the 2021/22 tax year which starts on 6th April 2021, and how Opera 3 Payroll has been updated to reflect these changes. The latest release of Opera 3 (2.81) accommodates all the changes needed to process your Payroll Year End.

National Living Wage

The age threshold for the National Living Wage (NLW) will reduce from its current level of 25 years of age to 23 from April 2021. The NLW system table in Opera 3 has
therefore been updated for this age reduction. This age reduction has also been
reflected in Opera’s Payroll calculation and reporting functions.

The minimum and living wage details are as follows:

  • National Living Wage for people aged 23 and over - £8.91
  • National Minimum Wage for people aged 21 to 24 - £8.36
  • National Minimum Wage for people aged 18 to 20 - £6.56
  • National Minimum Wage for people under 18 - £4.62
  • Apprentice rate for those aged under 19, or those over 19 but in the first year of their apprenticeship - £4.30

Scottish Student Loans

Scotland will be raising their student loan earnings threshold to £25,000 from April 2021. This threshold will be for new and existing borrowers and the repayment period has also been reduced to 30 years, previously 35 years which will bring it in line with England and Wales. As a result of this increase, a new Scottish student loan plan, type 4 has been

Personal allowance

The personal allowance and higher-rate thresholds will increase slightly with thec consumer prices index (CPI) in April 2021. They will increase to £12,570 and £50,270 respectively for the 2021/22 tax year.

P60 End of Year Returns

For the 2020/21 tax year, HMRC are no longer providing pre-printed P60 stationery. Therefore, the option to print to HMRC stationery in Opera 3 has been removed. The report can now be printed to plain paper in either colour or monochrome format and uses the approved HMRC substitute P60 design. The P60 design itself has been updated for the 2021/22 tax year and includes the new statutory Parental Bereavement Pay box and new text has also been added to the Certificate by Employer/Paying Office section.

Personal - benefits

The Fuel Type field in the Car and Car Fuel section in the Benefits form in Opera 3 has been uplifted to display all the available fuel types for P11D benefits for the 2020/21 tax year. The options available include:

E | Not applicable

D | All other diesel cars

A | All other cars

F | Diesel cars meeting Euro standard 6d/RDE2

Real Time Information (RTI) – Full Payment Summary (FPS) & Employer Payment Summary (EPS) updates

The Opera 3 RTI file formats have been updated to comply with HMRC specific ‘tax year related fields’ in the file format of the FPS and EPS XML files for the 2021/22 tax year.

Payroll – Job Retention Scheme Assistance Reports

Two new reports (Standard & Excel variants) have been added to this release to handle the Coronavirus Job Retention Scheme (CJRS) from February 2021 to April 2021. Both reports are available from the Payroll, EOY/Special Reports – Advanced Pay/Ded List report.

Off-payroll working in the private sector

Off-payroll working was to be introduced in April 2020 but was subsequently delayed until April 2021. Off-payroll working rules apply if a worker provides their services through an intermediary. An intermediary will usually be the worker’s own personal service company (PSC). They could also be a partnership, a managed service company, or an individual. The rule change ensures that such workers who work in the private sector for medium and large sized organisations, and who would have been an employee if they were providing their services directly to the client, pay broadly the same income tax and National Insurance contributions as employees. These rules are sometimes known as ‘IR35’. The rule already applies within the public sector.

The ‘fee-payer’ (e.g. the private sector client whom the off-payroll worker is working for) will have to deduct income tax and NI contributions from the payment that is due to be paid to the worker. The income tax and NI will then be paid over to HMRC as per other employees. The amount the off-payroll worker is paid will be reduced by the employee’s income tax and NI contributions as deducted by the fee-payer.

Statutory rates, bands, etc.

The latest release of Opera 3 (2.81) will include the usual adjustments to tax and NI bands/rates, statutory payment amounts and auto-enrolment thresholds.

For more information about the Opera 3 Payroll upgrade, or for help implementing the changes, please contact your Pegasus Partner.

Posted On: March 24, 2021