Jan 2015
22
Auto enrolment - DWP research on opt ins and opt outs
DWP research* (January-July 2014 stagers)
•Opt-ins 1%
•Average opt-out rate of 12% in 1st month after staging (range 5 - 15%)
•Ceasing active membership months 2 and 3 - 2%
•Average scheme participation rose from 43% to 73%
•Most likely to opt-out +50 yrs and part-time workers - opt-out reasons:
–lack of affordability (typically £20-£30k earners)
–some other form of saving and/or pension in place (50% of these earned less £30k)
–insufficient time to save enough (typically over 50 yrs)
–not planning to stay with employer and didn’t want small pot
–a few wary of pensions as a savings vehicle.
* 50 employers and 100 workers who ‘opted-out’ were interviewed. PAYE size range 62-499.
(Information source - The Pensions Regulator)
Jan 2015
20
Calculating Holiday Pay – Updated Guidance
In light of a number of recent court judgements and the resulting changes to regulations, Acas has updated their holiday pay guidance to assist employers in calculating holiday pay.
Several key points that employers should be aware of:
- Guaranteed and normal non-guaranteed overtime should be considered when calculating a worker's statutory holiday pay entitlement but there is currently no definitive case law that suggests voluntary overtime needs to be taken into account.
- Commission should be factored into statutory holiday pay calculations.
- A worker's entitlement to holiday pay will continue to accrue during sick leave (both paid and unpaid). If a worker is unable to take their annual leave in their current leave year because of sickness, they should be allowed to carry that annual leave over until they are able to take it, or they may choose to specify a period where they are sick but still wish to be paid annual leave at their usual annual leave rate.
- There are different rules for calculating holiday pay depending on the working patterns involved: (a) For workers with fixed working hours - If a worker's working hours do not vary, holiday pay would be a week's normal remuneration. (b) For workers with no normal working hours - If a worker has no normal working hours then their holiday pay would still be a week's normal remuneration but the week's pay is usually calculated by working out the average pay received over the previous 12 weeks in which they were paid. (c) For shift workers - If a worker works shifts then a week's holiday pay is usually calculated by working out the average number of hours worked in the previous 12 weeks at their average hourly rate.
- Workers must take their statutory paid annual leave allowance and can only be 'paid in lieu' for this when their employment ends. While workers are in employment, 5.6 weeks of their annual leave (this is the amount all UK workers are statutorily entitled to) must be taken and cannot be 'paid off'. Anything above the statutory allowance may be paid in lieu but this would depend on the terms of the contract. When a worker's employment is terminated, all outstanding holiday pay that has been accrued but not taken (including the statutory allowance) must be paid.
- Work-related travel may need to be factored into statutory holiday pay calculations.
The Government has also introduced regulations to take effect from 1 July 2015 to limit and clarify the maximum amount of back-dated holiday pay that can be claimed. The change will mean that when making claims for a series of backdated deductions from wages, including any shortfall in holiday pay, the period that the claim can cover will be limited to a maximum of 2 years.
Further information in addition to the above can be found on the ACAS website at holiday pay guidance.
Jan 2015
14
HMRC simplifies end of year payroll submissions
Under RTI employers running payroll are required to report their employees’ pay and deductions to HMRC in regular Full Payment Submissions (FPS) through the year. A final end of year FPS (or EPS) must be submitted by 19 April.
Employers will no longer be required to answer extra questions on the payroll submissions they make to HMRC at the end of the tax year.
The seven extra questions, which are only included on the final FPS of the year, were inherited from the old P35 form, which had a submission deadline of 19 May. This gave employers and agents much more time to ascertain the correct answers to the questions, such as whether any special payments have been received in the year from third parties.
Removing the requirement to submit this information at year end will significantly reduce burdens on employers but will most definitely reduce burdens on agents and bureaux, and make a busy time of the year just a little less frantic by removing the mandatory need for the employer (client) to provide confirmation to the answers to seven questions.
The change is expected to take effect from 6 March 2015, avoiding the need to complete the checklist for the 2014/15 tax year.
From 6 March 2015 HMRC will accept a final FPS or EPS for 2014/15 and 2015/16 with or without a completed checklist, but employers should still report the Final Submission for Year indicator.
Dec 2014
30
The Top 5 Payroll Software and other changes for 2015-16
A range of employment changes are set to come into effect in 2015. Employers need to familiarise themselves with these changes to ensure they are processing payroll correctly.
Some of the most significant changes to be aware of include:
1. Family Friendly Changes
a. Shared Parental Leave & Pay
This is brand new legislation which will apply to parents with babies due to be born/placed for adoption on or after 5th April 2015. Eligible parents will have the flexibility to share statutory leave and statutory pay in the child’s first year. Under the legislation, leave and pay may be taken in discontinuous blocks, and also both parents may take leave and be in receipt of statutory pay at the same time. Whilst using payroll software will ease the burden of processing shared parental leave and pay, there is a rigorous application process that must be completed by employees. To be sure you are ready, employers are well advised to familiarise themselves with the regulations early. Further details are available here.
b. Changes to Statutory Adoption Leave & Pay
From 5 April 2015 there will be no service requirement in order for employees to be eligible to take adoptive leave. Additionally, from 5 April 2015 the Statutory Adoption Pay rates will increase; the first 6 weeks will be paid at 90% of average weekly earnings. After that SAP will be paid at the lower of either the weekly standard rate or 90% of average weekly earnings. This will mirror the Statutory Maternity Pay rates.
Finally, primary adopters will now be entitled to paid time off to attend up to five adoption appointments.
c. Rise of child’s age limit for parental leave
The current right to take 18 weeks’ unpaid parental leave before a child’s 5th birthday is to be extended from 5 April 2015, so that leave can be taken up to the child’s 18th birthday.
2. Automatic Enrolment
Auto Enrolment will continue to be rolled out to all employers. Every UK employer has a date on which workplace pensions automatic enrolment applies to them, i.e. a staging date. For most employers that had between 30 and 58 staff on 1st April 2012 their staging date will be during 2015. However staging dates can vary, so employers are well advised to check out their staging date on the Pensions Regulator site http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx
3. New Fit for Work Service
Due to be rolled out during the year, the Fit for Work Service will offer employers access to free occupational assistance for employees who have been off sick for four weeks or more. Employers will also be able to claim up to £500 tax relief on payments for medical treatment for their employees where the treatment has been recommended under the new scheme.
4. Statutory Pay Rates
The usual shifts in statutory rates of pay are scheduled for 2015. Rates for statutory maternity, paternity, and adoption pay will increase from 5 April 2015, as too will statutory sick pay rates. Any changes to the national minimum wage rates will be effective from 1 October 2015.
5. NIC and Under 21s
The abolition of employer NICs for Under 21s comes in to effect from 6th April 2015. Employers will not be required to pay Class 1 secondary NICs on earnings up to £815 per week, for employees who are under the age of 21. Class 1 secondary NICs will continue to be payable on all earnings in excess of £815 per week. This could result in savings to an employer of up to £90 per week for hiring an employee who is under 21!
Dec 2014
23
Auto enrolment with BrightPay: The Movie
Meet John, the small business owner who uses BrightPay payroll software to easily manage his automatic enrolment duties.
In this video, John uses a NEST pension scheme to enrol his employees. However BrightPay is also compatible with NOW: Pensions, The People's Pension, Scottish Widows, and many more.
BrightPay provides everything you need to prepare your clients for Auto Enrolment.
- Staging and employee assessment
- Postponement feature
- Handles employee communications
- Ongoing monitoring and reporting
- Opt - outs and refund options
- Free email and phone support
- Fully compatible with RTI submissions & HMRC payments
- Integration with many pension providers (including tailored CSV preparation)
BrightPay is HMRC approved, RTI compliant and ICB (Institute of Chartered Bookkeepers) accredited.
Dec 2014
18
HMRC Helplines - Which? Survey
The tax office helpline has been branded a 'lottery' with almost a third of callers cut off before they even get to speak to an adviser, according to new research, the DailyMail wrote.
The average waiting time to speak to a real person was 18 minutes - with one person left hanging on the line for 41 minutes.
Consumer champions Which? tested Her Majesty's Revenue and Customs (HMRC) helplines ahead of the self-assessment tax return deadline on January 31st.
Which? researchers made 100 calls to HMRC's self-assessment and general enquiries helplines to see how easy it is to get through to an adviser.
Nearly a third of the calls (29 per cent) were cut off by the automated system before the caller could speak to anyone, with callers being told it was because the helpline was 'very busy'. In the 71 calls where researchers did manage to get past the automated system, they were then put on hold. On average it took 18 minutes to speak to a real person, but one caller was left waiting for 41 minutes.
The Which? researchers found the later in the day they called, the longer the wait and the more likely they were to be cut off.
The automated system also struggled with certain words and phrases. A query about 'my tax code' was fine but when asked 'Do I need to pay tax on premium bond winnings?' it asked if the caller was changing a name, or asking about a VAT surcharge notice.
In a separate survey of more than 1,000 Which? members, one in five (20 per cent) who had contacted HMRC in the last year said they found contacting them difficult, compared with 15 per cent of those who contacted the Department of Work and Pensions, 12 per cent who contacted their local authority and eight per cent who contacted the DVLA.
Richard Lloyd, Which? executive director, said: 'We've found people could face lengthy waits or even be cut off when trying to get assistance from HMRC's helplines. 'With large numbers of people soon to be seeking help with their self-assessment tax return, we want to see HMRC doing more to monitor and improve their call-waiting times.'
Which? said it had shared its findings with the Treasury and HMRC and have also briefed the Public Accounts Committee.
Hopefully this might help them to improve their automated and phone systems in time for the Tax Deadline on the 31st of January.
Dec 2014
17
Statutory payment recovery rates for 2015-2016
The statutory payment recovery rates and NIC threshold for 2015-2016 have now been confirmed.
The Department for Work and Pensions (DWP) have confirmed that the statutory payment recovery rates and NIC threshold will remain the same for 2015-2016:
• 92% if the total Class 1 NICs (both employee and employer contributions) are above £45,000 for the previous tax year,
• 100% plus an additional 3% (NIC compensation rate) if the total Class 1 NICs for the previous tax year are £45,000 or lower.
Dec 2014
16
BrightPay joins Accounting Webs Auto Enrolment Campaign
Since October 2012, employers in the UK are obligated by law to enrol their employees into a pension scheme who fall within a certain age and pay bracket. Employers must also contribute towards this pension. This is called Auto Enrolment which will continue to be rolled out over the next few years with the largest companies already enroled. Employers will need to review their pension provision and make sure they’re complying with these new Auto Enrolment duties correctly.
BrightPay & AccountingWeb
BrightPay and Accounting Web are concerned with the number of small businesses and accountants that do not understand the implications of auto enrolment for their business. To combat the lack of awareness Accounting web have launched their ‘No one gets left behind’ campaign to let payroll bureaus and individual employers know what steps they need to do to comply with their AE duties.
BrightPay is delighted to become an official supporter of this Auto Enrolment awareness campaign. The aim is to help business comply with these new duties so they do not face large fines or put added pressure on their business. Accounting web have produced eight easy to understand, simple steps that explain what you need to know.
As of the start of December over 8,000 accountants are aware of Auto Enrolment due to this campaign. Make sure to share this guide with friends, work colleagues and business associates. Auto Enrolment can be made easy if bureaus have the right payroll software in place to deal with Auto Enrolment.
Help BrightPay spread the word and get the message out there.
Accounting Web - Free Guide
Dec 2014
14
Tax thresholds raised in Autumn Statement
More than 130,000 people will escape the higher rate of tax, as it rises in line with inflation for the first time in five years.
The higher rate threshold – where taxpayers pay a 40 per cent rate – will jump from £41,865 to £42,385 next year, George Osborne announced in the Autumn Statement.
The £100 rise to the personal allowance was also passed on in full to higher rate tax payers.
Mr Osborne said the increase to the higher tax rate threshold was a “down-payment” on the government’s promise to raise it to £50,000 by the end of the decade.
The Chancellor also revealed an increase in the personal allowance – the amount of money that can be earned tax-free every year – to £10,600 from next April, £100 more than the £10,500 expected.
It has also been announced that business who employ apprentices under the age of 25 will no longer have to pay national insurance contributions for them.
Among the other measure announced was an extension of the £2,000 Employment Allowance to carers, freezing Universal Credit work allowances for another year and cutting tax credits when overpayments are certain.
Dec 2014
4
Chancellor announces abolition of Employer National Insurance Contributions for employees under 21 in 2015.
George Osborne revealed the reduction, designed to reduce levels of youth unemployment, alongside other announcements that will affect employers – including an earlier than expected increase in the state pension age and more accessible funding for apprenticeships available directly from HM Revenue & Customs (HMRC).
The removal of employers’ national insurance (NI) contributions for under-21s in April 2015 will follow the introduction of the £2,000 “employment allowance” that comes into force next April. Higher-rate tax payers who are under 21, earning £813 per week or more, will still attract employer NI contributions.
“Employer NI contributions will be removed altogether on a million and a half jobs for young people. We’re not going to leave young people behind as the economy grows,” said Osborne. “We are going to have a responsible recovery for all.”
