Budget 2016 - Employer Focus

The main points to be noted by employers from Budget 2016 announced by Chancellor George Osborne are:

• The personal tax allowance will increase by £500 from £11,000 to £11,500 from April 2017

• The higher rate tax threshold will increase to £45,000 from April 2017

• Termination payments over £30,000 which are subject to income tax currently from April 2018 will be subject to Employer National Insurance Contributions (NICs)

• Class 2 National Insurance Contributions for self-employed people will be scrapped from April 2018

• The range of benefits that are subject to income tax and National Insurance Contributions are going to be examined by the government with the aim of limiting the range of benefits subject to income tax and NIC. It is the view of the government that such benefits such as the pension saving, childcare and schemes such as the Cycle to Work will still continue to benefit from the relief of income tax and NIC when provided through salary sacrifice agreements.

• A new discount rate for employers contribution to the unfunded public service pension schemes is set at 2.8% and in 2019-20 employers will have to pay higher contributions into the scheme as a result.

• The rate of tax on loans to directors and participators will increase by 7.5% to 32.5% in April 2016.

Posted byDebbie ClarkeinPayroll Software

BrightPay 2016/17 is Now Available. What's New?

BrightPay 2016/17 is now available (for new customers and existing customers). Here’s a quick overview of what’s new:

2016/17 Tax Year Updates

• 2016/17 rates, thresholds and calculations for PAYE, National Insurance contributions, Student Loan deductions, Statutory Sick Pay, Statutory Maternity Pay, Statutory Adoption Pay, Statutory Paternity Pay, and Statutory Shared Parental Pay.
• The emergency tax code has changed from 1060L to 1100L. When importing from BrightPay 2015/16, L codes are uplifted by 40, while M codes are uplifted by 44 and N codes by 36.
• Full support for Scottish Rate of Income Tax (SRIT) codes.
• The new NI category H is available for apprentices under 25 in qualifying circumstances. Payments to class H employees are not liable to Class 1 secondary NICs.
• With the abolishment of Contracted Out Pension, HMRC have discontinued NI categories D, E, K, I and L. When importing from BrightPay 2015/16, employees in any of these categories are moved into the equivalent non-contracting-out category.
• Support for Plan 1 and Plan 2 Student Loan deductions.
• Ability to process 2016/17 coding notices.
• Eligible employers can continue to claim the £3,000 Employment Allowance which can be used to reduce Employer Class 1 Secondary NICs payments to HMRC.
• Updated P11, P45, P60, P30 and P32 forms.
• Updated RTI submissions in line with the latest HMRC specifications. BrightPay continues to be officially HMRC Recognised for all RTI submission types.

Expenses and Benefits

BrightPay 2016/17 allows you to record all types of reportable expenses and benefits that you provide to your employees:

BrightPay can produce a P11D for sending to HMRC after year end which includes your Class 1A NICs declaration and details of the expenses and benefits provided including cash equivalents.

If you register for payrolling of benefits by 5 April 2016, BrightPay 2016/17 also supports calculating the PAYE on expenses and benefits in each pay period.

We will be back-porting some of the expenses and benefits features to BrightPay 2015/16 to allow you to send your P11D for the 2015/16 tax year. Look out for an upgrade in April/May.

Note: Expenses/benefits and P11D are not available for Free Licence customers.

Construction Industry Scheme (CIS)

BrightPay 2016/17 has full support for paying subcontractors under the Construction Industry Scheme (CIS):

• Add/edit subcontractors, or import from CSV.
• Pay subcontractors tax weekly or tax monthly (all year or part year).
• Customisable basic pay, daily rates, hourly rates, additions, deductions, etc.
• Record cost of materials and VAT.
• Calculate CIS deduction amounts according to subcontractor's tax payment status.
• Print, export to PDF, or email Subcontractor Payment and Deduction Statements.
• Send CISREQ subcontractor verification submissions and apply response data.
• Send CIS300 monthly returns.
• BrightPay tracks the number of unsent CIS submissions, similar to RTI.
• Report on CIS data in BrightPay Analysis (some built-in CIS reports are available)

Note: CIS is not available for Free Licence customers.

Pensions and Automatic Enrolment

If you have not yet entered your Automatic Enrolment Staging Date in BrightPay, you can now connect directly to the Pensions Regulator and retrieve it automatically from within BrightPay.

BrightPay 2016/17 now tracks the number of enrolment/contributions submissions that you have not yet submitted to your pension scheme provider. The number is shown on the main PENSIONS tab, and contributes to the total number shown on the Open Employer screen (which also includes RTI and CIS).

We'll be continuing to update Automatic Enrolment during the 2016/17 tax year and provide dedicated support for more pension scheme providers.

Coming Soon: BrightPay Cloud

BrightPay Cloud will allow you to connect your BrightPay employer data to a web based service that provides:

Secure Online Backup

Automatically backs up your BrightPay data to the cloud. A historical set of backups is maintained. Your data file can be restored from an online backup at any time.

Employee Self-Service

Enables employees to log in to a web-based portal using their PC, Mac or smartphone to retrieve payslips, view their calendar, request annual leave, view/update personal information, and more.

Bureau Client Self-Service

Enables payroll bureaux to provide an online portal not only for their customer's employees (i.e. employee self-service as described above), but also an employer portal for direct use by their  employer customers, enabling them to view payroll reports, P30s, calendar, all employee information, and more.

BrightPay Cloud will work directly with BrightPay 2016/17, but also allow you to upload your BrightPay 2015/16 data to immediately have a full year of historical data to power the self-service features.

BrightPay Cloud will cost £49 per employer per tax year (with discounted bulk pricing for bureaux also available).

We'll have more news very soon. As a BrightPay customer, you'll be the first to know. Watch this space!

Other 2016/17 Changes in BrightPay

• Ability to import employees from an FPS XML file.
• When importing from HMRC Basic PAYE Tools, you can choose to do so from the previous tax year or the current tax year.
• Pension-able gross can be split into separate employee and employer pension-able gross amounts.
• Basic pay, daily pay and hourly pay can now be explicitly flagged as liable/not-liable to PAYE, NICs, employee pension, and employer pension.
• Additional Statutory Paternity Pay is no longer relevant and is removed in BrightPay 2016/17.
• The NIC Upper Accrual Point is no longer relevant and is removed from BrightPay 2016/17.
• New wider range of built-in reports.
• Pension provider enrolment/contributions submissions and file formats have been updated to the latest versions.
• Ability to view submission logs for NEST web service submissions.
• An HMRC payment date is no longer required to be able to progress to the next HMRC pay period. Any pay period can be clicked into at any time.
• Ability to report on HMRC payment amounts in Analysis.
• Employee passwords can be randomly generated.
• Lots of minor improvements throughout the entire BrightPay user interface, as well as the latest bug fixes.

BrightPay 16/17 is the same price as BrightPay 15/16 (including FREE for small employers with up to three employees). Support will continue to be free of charge for all users.

Posted byRoss WebsterinPayroll SoftwareSoftware Upgrade

Late Filing Relaxation of FPS to end on 5th April 2016

Penalties from HMRC will be issued if any late filing of a Full Payment Submission (FPS) from 6th April 2016 onwards.

Currently there is a 3 day relaxation for filing a late Full Payment Submission which is detailed per the HMRC website GOV.UK https://www.gov.uk/guidance/what-happens-if-you-dont-report-payroll-information-on-time

"HMRC won’t charge a penalty if:

• your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday (this applies from 6 March 2015 to 5 April 2016)"

The other circumstances where HMRC will not issue a penalty for late submission of an FPS are when:

• you’re a new employer and you sent your first FPS within 30 days of paying an employee

• it’s your first failure in the tax year to send a report on time (this doesn’t apply to employers who register with HMRC as an annual scheme or have fewer than 50 employees for the tax year 2014 to 2015)

Posted byDebbie ClarkeinHMRCPayroll SoftwareRTI

Increase in National Minimum Wage from 1st October 2016

The Low Pay Commission's (LPC) recommendations for the rates of the minimum wage for employees under 25 and apprentices has been accepted by the Government and this take effects from 1st October 2016.

These include:

21-24 year olds £6.95 per hour an increase of 3.7%

Youth Development Rate - 18-20 year olds £5.55 per hour an increase of 4.7%

16-17 Year Old Rate £4.00 per hour

Apprentice Rate £3.40 per hour an increase of 3%

The Government has introduced the National Living Wage of £7.20 per hour for employees over 25 which takes effect on 1st April 2016.

Posted byDebbie ClarkeinPay/WagePayrollPayroll Software

HMRC's Basic PAYE Tools (BPT) users & Auto Enrolment - Facing your Fear

HMRC's BPT users may be unprepared for auto enrolment as HMRC's payroll tool is basic and cumbersome. Not only is the tool cumbersome - it does not produce payslips leaving the employee without full visibility to payroll and pension deductions.

The Pension Regulator (TPR) recently consulted payroll industry experts, payroll software companies and users of Basic PAYE Tools to see how these users would face their automatic enrolment journey. TPR's consultation examined the current issues of automatic enrolment as well as the lack of functionality for BPT customers to successfully process the employer duties. Basic PAYE Tools lacks automation and functionality to process AE employer duties.

After the consultation The Pensions Regulator concluded that they will provide an Auto Enrolment toolkit for BPT users, but confirmed the tool will be primitive and manual.

Without payroll software tools that cater for auto enrolment duties, users of the TPR's AE toolkit will be in danger of miscalculating contributions. There is also an inherent risk of incorrectly assessing employees who might otherwise be eligible jobholders.

A high proportion of BPT users have said that they will avoid free or low cost commercial software as they are afraid to change. It is natural for these employers to be afraid but they should be aware that they will face penalties and fines if they process automatic enrolment incorrectly. TPR's consultation report explains;

"Current users stated they would be unlikely to stop using the BPT due to a mix of inertia, brand loyalty and the burden associated with switching to an alternative payroll product with built-in automatic enrolment support."

If these users continue to use HMRC’s Basic PAYE Tools, it will leave them with the limited option of the TPR's AE toolkit. TPR also recognises that existing free and paid payroll software is available on the market offering auto enrolment functionality.

The Regulator concluded that BPT users have three options;

• Utilise existing free or low cost commercial software to comply with auto enrolment.
• Use third party (non payroll) providers such as pension providers that offers assessment.
• Use TPR's AE toolkit.

The Regulator continues to recommend that BPT users avail of existing payroll solutions on the market explaining;

"Our tool will mitigate the risk, while being basic enough to not discourage employers from using commercial payroll products."

If TPR's AE toolkit is used, users will need to ensure everything is accurate in line with automatic enrolment, employers will need manually double and triple check all their calculations. Even then, simple errors may have occurred. These errors will also take time to locate and fix.

If BPT users want their information to be correct, they should face their fear and utilise payroll software that is available on the market. If BPT users also want their automatic enrolment process to be streamlined and easy they will need to choose payroll software that can automate the employer duties for them.

BrightPay helps BPT users comply with Automatic Enrolment

An important factor for HMRC customers is time. BPT users are concerned that migrating to another payroll tool will be difficult and time consuming. BrightPay has made this step easy. We have developed a free and easy import feature from HMRC's Basic PAYE Tools into BrightPay, a task which takes less than one minute to complete.

This HMRC specific import tool allows users of Basic PAYE Tools to export their employee data file and import directly into BrightPay. The import facility has been specially designed to recognise information such as company and employee details and cumulative payroll data. Once the import has been completed, users will then be able to open their company file and immediately start processing payroll.

BrightPay offers a free licence for employers with up to three employees. Our standard employer licence is just £89 + VAT / tax year which includes unlimited employees. All of BrightPay's licences have free auto enrolment functionality plus free phone and email support. You can try before you buy too. BrightPay's free 60 day trial offers full functionality and we won't ask you for any credit card details.

Related articles:

• HMRC Basic PAYE Tools users to get Automatic Enrolment tool from TPR
• HMRC users & Auto Enrolment: Manual vs. Automation
• 10 key reasons to move from HMRC Basic PAYE Tools to BrightPay
• TPR introduce Auto Enrolment Toolkit for Basic PAYE Tools users
• How useful will The Pensions Regulator Auto Enrolment Toolkit be?
• Limitations of the AE Toolkit for HMRC Basic PAYE Tools users

Posted byKaren BennettinAuto Enrolment