Sep 2014
18
Scottish PAYE complications - irrespective of independence
Regardless of whether Scotland obtains independence or not, from the 6th of April 2016 the Scottish government will be given the power to vary income taxes.
The power was given under the Scottish Act 1998 that recreated the Scottish Parliment but was never used. Due to the tax powers already given to Scottland, from 2016 accountants believe tax will become more complicated for payroll departments in relation to around 265,000 Scottish employees.
Scottish rates will be 10% lower than the rates set by Westminister and then the Scottish goverment will have the power to add on the ‘Scottish Rate’. Currently in the UK income tax rates are at the 20%, 40% and 45% rates. In comparission to if the Scottish rate is set to 5% the income tax rates for the Scottish people would be 15%, 35% and 40%.
This differs from the existing power given to the Scottish Parliament which permits it to vary the UK basic rate of income tax by just three percentage points either way. The new power increases the variance to ten percentage points, and extends it to all rates of income tax, and not just the basic rate.
What this could mean to the employer:
• Having the ability to vary income tax rates could prove to be a PAYE nightmare for those who have employees working on both sides of the border
• Employers could find themselves having employees on S (tax) Codes which are liable to Scottish income tax. Regardless of where the employer is based the payroll must operate the Scottish rates of income tax rates for Scottish residents.
• Employers could have employees working in both Scotland and the UK doing the same job for the same pay but with different tax rates having to be applied.
The Scottish parliament says it would set the income tax rates in its autumn Budget 2015 and, with this done by 1 December HMRC would be able to incorporate it into tax codes issued around Christmas – ready for April 2016.
That said, a yes vote will create issues over double taxation – new treaties would need to be signed quickly – [certainly] one with England.
Sep 2014
17
HMRC - online penalty warning messages
In order to assist employers keep their records up to date and avoid potential penalties, HMRC issue electronic alerts:
Message - Late Filing Note: Your full Payment Submission (FPS) has been sent late – FPS must be sent on or before the date of the earliest payment on FPS – If you have a valid reason for sending your FPS after any of the payment dates – you must complete the late reporting reason on future FPSs.
Message - Non Filing Notice: HMRC has not received the expected number of FPSs. Check whether any FPSs are still due for the tax period – HMRC works out how many FPSs you are expected to report based on previous filing data. If any FPS is still due, send it as soon as possbile and include a Late Reporting Reason if applicable.
- If you have stopped being an employer tell HMRC
- If you have not paid anyone send an Employer Payment Suymmary to tell HMRC
- If you have changed the amount of time between paying your employees e.g. from weekly to monthly, tell HMRC.
Message - Late Payment Notice – HMRC has not received your full payment when it was due
- Check your payments records against the amounts reported on your FPSs
- Pay any outstanding amounts to bring your payments up to date
- If the date that HMRC received your payment is after the date that the payment is due, make sure that future payments are made on time
- If the amount paid does not match the amount you reported on your FPSs, check your records to find out why
- If you offset anything against the FPS amount, you must send an Employer Payment Summary to correct this
- If you have made a mistake – correct payroll error.
Sep 2014
12
RTI late filing penalties delayed for small employers
Welcome news as the start date for automatic in-year filing penalties for late submission of an RTI return will be delayed until 6 March 2015 for PAYE schemes with less than 50 employees. Late filing penalties for PAYE schemes with 50 or more employees will start on 6 October as originally planned.
HM Revenue & Customs (HMRC) has said that the extra time will give smaller employers, who appear to be experiencing the greatest difficulties with RTI, more time to adjust their processes to comply with RTI requirements. It also gives HMRC more time to update its systems and enhance its guidance and customer support.
HMRC will send electronic generic notification notices to all employers during September so they will know when penalties will start for them.
These notifications will confirm whether HMRC’s records show that the employer has:
• less than 50 employees or
• 50 or more employees
The date on which the number of employees is to be measured is the 6 October but HMRCs count will be based on an earlier date. If an employer has been miscategorised, they will have to write to HMRC’s Employer Office to tell them they have less than 50 employees on 6 October.
The in-year penalty notices will be issued quarterly with the first ones expected in early 2015. Appeals will be accepted where there is a reasonable excuse for submitting the return late; an online appeals service is available for these.
All penalties are due for payment 30 days following the date of the penalty notice. Penalties not paid on time will attract interest.
Sep 2014
8
1st October 2014 extends new rights to UK fathers/ mothers’ partners to attend Ante Natal appointments
Time off for ante-natal appointments: extended to fathers/mothers' partners with effect from 1 October 2014. Fathers/mothers' partners, including agency workers, will be given a new right to take unpaid time off work, of up to a maximum of 6.5 hours each occasion, to attend up to two ante-natal appointments (there will be no service requirement for this, although agency workers must have fulfilled the 12 week qualification period)
A guide for employers and employees available at www.dti.gov.uk/workingparents.
Sep 2014
4
What will happen if you do not report payroll information on time?
HM Revenue and Customs (HMRC) have issued new guidelines for employers explaining about late/non filing penalties, inaccurate reporting and specific charges and how to avoid penalties.
The new guidance explains to employers that penalties will be introduced from 6th October 2014 for anybody that does not report their payroll information on time (late submissions).
These penalties can arise if a Full Payment Summary (FPS) is sent late, if the employer does not send the expected number of FPSs, or if an Employer Payment Summary (EPS) is not send when the employees are not being paid in any given period.
The guidance will also set out the limited circumstances in which a penalty will not be charged.
Sep 2014
3
Multi – Million Pound Payroll Fraud Unravelled
A UK Payroll administrator and his colleague have been jailed for 4 years after an audit was carried out in his London city based company. The Audit uncovered a small accounting discrepancy.
It unveiled more than 20 invented bank accounts which he had created fake companies and temporary staff for. He managed to swindle £2.9m over a 6 year period.
Most of the fortune was spent on casinos, chauffeurs, taxis, a difficult divorce and a Thai wife or fiancée!
For the full story read here: www.payrollworld.com
Aug 2014
29
How to simplify your communications duties in auto-enrolment
Many employers do not realise the amount of work involved in the communications aspect of auto-enrolment. In a recent study, it was revealed that communicating the changes proved to be the most challenging aspect post-staging date, with 19% of employers struggling with communicating changes to employees.
Many payroll software providers are updating their software to assist with auto-enrolment; however very few of them perform communication duties. When deciding on payroll software, employers sometimes forget to consider whether or not it caters for communications. By choosing payroll software that helps with communications, it can make the auto-enrolment process much easier for employers.
With auto-enrolment, you need to write to each member of staff individually depending on their employee category. Eligible jobholders, non-eligible jobholders and entitled workers all have different rights, and so each must receive different letters outlining their entitlements.
If postponement is used, you must also write to the postponed employees to notify them. Furthermore, if you already have a qualifying pension scheme in place you still need to write to staff members who are in the scheme to let them know that they are not affected. After staging, you must also monitor employees and communicate with any employee who becomes eligible for auto-enrolment for the first time or any new starters who are eligible.
It is your responsibility to make sure the right information gets to the right member of staff at the right time. There are time limits in place to ensure that employees have sufficient time to gather information on auto-enrolment so that they can make a well-informed decision.
The necessary communication required can be extremely time-consuming if left to do it on your own. However, by having payroll software that has the necessary letters ready to print for each individual it can make your job much easier.
Aug 2014
27
Withdrawal of HM Revenue & Customs (HMRC) 0845 helpline telephone numbers from December 2014
All HMRC helplines now have 03 numbers, and the majority of calls by customers use those numbers. To help create a smooth transition to the new 03 numbers, and minimise inconvenience for customers, HMRC have continued to use their 0845 numbers.
0845 numbering stops December 2014
In December 2014, the 0845 lines to HMRC helplines will stop being used, and all calls to HMRC helplines will need to be made using 03 numbers.
To prepare for that change, from late August, customers using 0845 numbers to call HMRC helplines will hear a message letting them know that the 0845 line will be closing. The call will still be handled as normal, but customers will be given the relevant 03 number for the helpline.
In December 2014, when HMRC stop using the 0845 numbers, customers who continue using those numbers will hear a message saying that the line is closed. The message will give them the 03 number for the helpline and the call will then end. The customer will need to dial the 03 number to receive the assistance they were looking for.
Aug 2014
19
National Payroll Week – Time to get creative!
From 1st to 5th September 2014, companies across the UK will be celebrating National Payroll Week. This year, NPW focuses on how we are educating the nation, raising financial awareness and the importance of saving for retirement.
The annual campaign has two aspects; to recognise the hard work, effort and invaluable contributions made by payroll staff on a daily basis, and to educate the workforce assisting individuals know more about their pay checks and payroll related aspects.
Across the country, payroll staff ensure that millions of people are paid the right amount at the right time, every pay period. Payroll continues to evolve into a profession that requires multiple skills, from the fundamentals of operating a payroll to implementing complex legislation, such as the requirements for auto-enrolment.
This year, many changes have been made to payroll processes, especially regarding auto-enrolment, which affects almost all employees. NPW is an ideal time to inform employees about auto-enrolment so that they understand the new pension scheme and their entitlements.
All companies can benefit from celebrating NPW as it helps educate your employees on their payslips, what their deductions are and the importance of saving for retirement. Make sure you and your payroll team get involved in the payroll profession's biggest celebration in 2014. You can request a NPW pack –including posters, stickers, and balloons – by emailing [email protected]. CIPP encourages creativity in celebrating NPW and like to hear how companies got involved.
Last year’s theme was “it pays to learn”, with companies celebrating through a range of events including cake sales, team days out, walk-in sessions, payroll quizzes, competitions and volunteering for local charities. Some organisations used the opportunity to introduce changes in their payroll processes, such as e-payslips.
For more information on National Payroll Week visit www.nationalpayrollweek.co.uk
Aug 2014
13
Many SMEs Unaware of Auto Enrolment Burden
As of now, all organisations with 60 or more employees have reached their auto-enrolment staging date. Over the next four years, 1.3 million SMEs will be legally obliged to offer their workforce a pension scheme.
Unfortunately for smaller businesses, many are still unaware of the burdens of preparing for auto-enrolment.
The Shocking Truth
Recent research revealed some alarming statistics regarding how unprepared SMEs really are. According to the research:
• Two-thirds of SMEs (67%) have no idea when their auto-enrolment staging date is
• 49% of respondents understand little or nothing about the changes they need to make
• 32% of respondents felt they do not know enough about auto-enrolment to be able to determine its impact on their company.
It is worrying that so many employers are oblivious to the challenges ahead. A later staging date for SMEs is no reason for inertia; the earlier an employer begins to prepare the easier the transition will be. Planning for auto-enrolment can be a time-consuming exercise and does need considerable preparation. Employers need to consider a number of factors, including:
• How to prepare the company financially
• What pension scheme to opt with
• Using payroll to process pension contributions
Late fees may drive up financial burden
Preparing for auto-enrolment from a financial perspective is critical. Employers must pay contributions to their employees’ pension schemes, which will rise to a minimum of 3% of employees’ basic pay by 2018. However, additional charges may also apply, including potential fines if SMEs are late in setting up their auto-enrolment pension scheme.
Standard Life estimates that it could cost SMEs up to £34,000 to backdate contributions for just three months. The Pensions Regulator has the power to fine employers with less than 250 employees a maximum of £2,500 per day if they don't comply with their new duties on time. Late payment may also lead to employers liable to meet their employees' missed contributions if the employee is unwilling to do so.
All can be made easier...
Although these additional fees pose further risk to SMEs, it is not as dreadful as it sounds. By using a payroll provider, auto-enrolment is made easier and more understandable with less risk of making avoidable mistakes. By finding the right software to suit your company, administration charges can be kept to an absolute minimum.
To avoid penalties and costs, SMEs need to prepare themselves today. In a sea of additional charges and red tape, SMEs are advised to shop around to find the best pension scheme and payroll provider that suits their needs.
Many SMEs are unprepared for the financial burdens lying ahead, and to begin, employers are urged to become aware of their staging date as soon as possible. The earlier you begin to plan and seek expert advice, the less of a headache auto-enrolment will be for your business.
