Chartered Accountants & Registered Auditors

Newsletter IconSubscribe to our
newsletter

Your newsletter will be
sent to your email inbox

Bar Separator 1

Bar Separator 2
All initial consultations are free of charge.
Bar Separator 3

Minimum workplace pension contributions rise

Newsletter issue - May 2019.

The minimum contributions employers and their staff must pay into their automatic enrolment workplace pension scheme increased with effect from 6 April 2019.

From that date, the employer minimum contribution has risen from 2% to 3%, while the staff contribution also increased from 3% to 5%. As part of the 'phasing' process, the increases mean that total contributions for employees have gone up from 5% to 8%.

All employers with staff in a pension scheme for automatic enrolment must ensure that they implement the changes and ensure that at least the new minimum amounts are being paid into their pension scheme. This applies whether the employer set up a pension scheme for automatic enrolment or they are using an existing scheme.

The increases do not apply to employers using defined benefits pension schemes.

The amount employers and their staff pay into the pension scheme will vary depending on the type of scheme they have chosen and the rules of that scheme. Staff contributions may also vary depending on the type of tax relief applied by the scheme.

Most employers use pension schemes that from April 2019 will require a total minimum of 8% contribution to be paid. The calculation for this type of scheme is based on a specific range of earnings. For the 2019/20 tax year this range is between £6,136 and £50,000 a year (which equates to between £512 and £4,169 a month, or £118 and £962 a week).

Employers calculating contributions for this type of scheme should include salary, wages, commission, bonuses, overtime, statutory sick pay, statutory maternity pay, ordinary or additional statutory paternity pay, and statutory adoption pay, although some schemes may specify different elements of staff pay.

It is worth reminding individuals that non-earners can still pay £2,880 a year into a pension and receive an automatic 20% boost to their contribution in tax relief. This means that on a contribution of £240 per month, the actual amount invested in the pension scheme will be £300.

Further information on the increase of automatic enrolment contributions can be found here.

 

Book a free consultation

Box Arrow

 

Our partners enjoy meeting clients who are looking to get the most out of their accountant and we take time to understand our clients and their business so can offer assistance to you. Set up a FREE no obligation meeting today.

More More...

Request a Callback

Box Arrow

 

DJM Accountants really know how to give you the most powerful, cost effective yet value for money accounting service so request a call back to connect with a partner who will work with you as your business grows.

More More...

Get a Fixed Quote

Box Arrow

 

No-one likes surprises, especially where bills are concerned. We believe you should always know exactly where you stand with fees. We offer a competitive fixed quote for agreed services, and thats exactly what we charge, not a penny more.

More More...

Reduced Tax Liabilities

Box Arrow

 

Tax is a fact of life, it cannot be avoided or ignored so lets work together to ensure everything is in good order to avoid any surprises. Let us protect your interests and minimise your tax liabilities.

More More...