Oct 2014
24
Employees' Confusion over Auto Enrolment
As an employer, have you taken the necessary steps to ensure your workforce has an understanding of auto enrolment? A recent study showed that one in four workers had yet to receive any information from their employer concerning automatic enrolment.
The study showed that out of more than 1,000 full time employees there was a significant uncertainty surrounding the changes to pensions, and a startling 6.1m workers in the UK are ‘confused’ over the changes to workplace pensions arrangements. 56% of them find the term auto enrolment confusing and could not say what it relates to.
As the employer, you are an important and effective channel of communication for your staff throughout the automatic enrolment process. The information you present to them can have a real impact.
In your workplace you could:
• Leave messages around on why saving for retirement is important, this can help engage staff with the subject of workplace pensions.
• Staff appreciate an explanation of what automatic enrolment means for them. For example, information about how much they'll contribute and when.
• Details of where staff can find out more on the matter e.g. online articles, email, posters and blogs.
Oct 2014
18
Greater pension flexibility announced for UK
Pensioners will be offered new freedoms to dip into their retirement cash.
In the latest phase of the biggest shake-up of private pensions in a century, the over-55s will be able to withdraw several lump sums from their pension pots instead of just one.
George Osborne’s move raises the prospect of pensioners using their funds almost like bank accounts to invest in property or shares, pay off debts or help children and grandchildren.
The 55 per cent tax charge on pensions left to children and grandchildren is being abolished altogether.
Up until now, retirees were able to take 25 per cent of their pension tax free – a sum fixed on the day they first dipped into their pots.
If you had a £100,000 pot at the age of 55, the maximum you could take tax-free was £25,000. The rest typically went into an annuity.
However, in the Pensions Bill, the Chancellor will announce you can dip into your fund multiple times and have 25 per cent of each slice tax free. The balance would remain invested and grow, again tax free – giving savers an incentive to keep their money invested in the stock market.
Mr Osborne said: ‘People who have worked hard and saved all their lives should be free to choose what they do with their money, and that freedom is central to our long-term economic plan.
‘From next year they’ll be able to access as much or as little of their defined contribution pension as they want and pass on their hard-earned pensions to their families tax-free".
Oct 2014
17
BrightPay at the Bookkeepers Summit
BrightPay directors Paul Byrne and Ross Webster were in London earlier this week for the 5th Annual Bookkeepers Summit. The event is the world's largest one-day seminar dedicated to bookkeepers and the work that they do.
Last Monday, over 500 delegates gathered in the Queen Elizabeth II Conference Centre in Westminster where they enjoyed a full day of presentations from leading speakers including the Minister for Pensions, and representatives from HMRC and The Pensions Regulator. Many of this year’s presentations were focused on auto enrolment.
The day-long event also included a drinks reception, a member’s dinner and an exhibition. The exhibition showcased various software products aimed at Bookkeepers, with BrightPay being one of the 18 stands to visit. The Bookkeepers Summit was one of BrightPay’s busiest exhibitions to date with hundreds of delegates visiting the BrightPay stand.
The event was organised by the Institute of Certified Bookkeepers (ICB) who gave away a Smart car on the day to a lucky winner. Overall, the day was a great success with many describing this year as ‘the best one yet’.
BrightPay also achieved ICB accreditation for its payroll software and the independent report can be downloaded here.
Oct 2014
16
HMRC Awarded new powers to deduct tax from pay packets come 2015
HMRC will be able to deduct up to £17,000 a year from high earners salaries to recover tax debts under new rules that came into affect recently. From April 2015 tax codes will be issued to recover money from those believed to have underpaid income tax, capital gains or National Insurance contributions.
Deductions of £17,000 would only affect those earning over £90,000 and HMRC confirmed it would not deduct more than half the salary of those liable, and it does not affect those earning less than £30,000. HMRC is required to send a letter to the taxpayer explaining their intention to withdraw debts from the taxpayer’s salary, but a taxpayer cannot prevent this from happening unless they make other arrangements to pay. Letters are expected to be issued from January next year.
A spokesperson from HMRC said: “Taxpayers welcome the option to have tax debt collected by instalment. This is a very longstanding feature of the payroll system but the increase n the current threshold will allow more tax debts to be aid in this way.”
The changes are expected to raise £115m in the 2015-16 tax year.
Oct 2014
12
Are you as an employer rewarding your staff enough?
In a recent survey conducted by Tower Watson Global workforce study it has been revealed that 31% of UK employers give bonuses to employees with the lowest performance rating. The group surveyed over 30,000 employees including 1,863 in the UK and found that employers are spreading the pay pot out more thinly in recent years with the effect that it is widening the gap between pay and performance.
Only 39% of UK workers see a clear link between their pay and performance. The research also found that UK organisations are not differentiating pay sufficiently for top staff.
The top consideration for UK staff when deciding to join or stay in a job remains the salary, the research found the UK bosses are falling short on how they deliver pay programmes including basic salary & bonuses. Nearly half (44%) of employees say their organisation does a good job explaining its Pay/Bonuses Programmes but not surprisingly less than half (43%) of people surveyed believe their employer rewards them adequately for breakthrough and innovative ideas and suggestions.
Oct 2014
8
Do you wear a uniform to work?
Uniform tax rebate is not yet widely known, yet it affects almost 43% of the British public. It is a rebate scheme introduced by the HMRC for people who wear a uniform or protective clothing to work. Under the rebate scheme, qualifying employees may be able to reclaim tax from the past four years.
To be able to claim the tax relief, ALL of the following must apply:
· You wear a recognisable uniform that shows you've got a certain job, like a branded T-shirt, nurse or police uniform.
· Your employer requires you to wear it while you're working.
· You have to purchase, clean, repair or replace it yourself. However, you can't claim if your employer washes your kit, provides facilities to do so (even if you don't use them) or pays you for doing this maintenance.
· You paid income tax in the year you are claiming for.
The amount of tax relief an employee can claim will depend on the industry. For tax year 2014/15, the standard flat rate expense allowance (FREA) for uniform maintenance is £60. Therefore basic rate taxpayers can claim £12 back and higher rate payers £24. Some occupations have more specific limits, often where specialist uniforms are required. A full list of occupations and their corresponding allowances can be viewed here.
Employees wishing to claim this tax relief for the first time can do so by filling in form P87 online, printing it out and posting to:
HM Revenue & Customs
Pay As You Earn
PO Box 1970
Liverpool
L75 1WX
Employees should allow five weeks for HMRC to process their claim, who will then confirm in writing how much you are entitled to.
Oct 2014
1
UK Minimum Wage changes from 1st October 2014
The minimum wage is rising today in the biggest increase since the 2008. The new national minimum wage rates from 1 October for England, Scotland, Wales and Northern Ireland are as follows:
• £6.50 per hour for the adult rate - a 19p (3 per cent) increase
• £5.13 per hour for 18 to 20-year-olds - a 10p (2 per cent) increase
• £3.79 per hour for 16 to 17-year-olds - a 7p (2 per cent) increase
• £2.73 per hour for apprentices - a 5p (2 per cent) increase
Vince Cable, the Business Secretary, said the minimum wage was a “vital safety net” for low-paid workers. “As signs of a stronger economy start to emerge, we need to do more to make sure that the benefits of growth are shared fairly across the board,” he added.
Sep 2014
25
Are you claiming your employment allowance correctly?
In April of 2014 the UK Government introduced the Employment Allowance Scheme. This scheme offers businesses and charities a reduction of up to £2000 (max for tax year 14/15) in the amount of employer Class 1 National Insurance contributions (NICS) they have to pay every year from 6th April 2014.
Once employers process their first month’s payroll in April they are required to send an EPS (employment payment summary) to say that you as an employer are going to claim the employment allowance for 14/15. A lot of companies seem to be allowing for the employment allowance scheme in calculating the NI bill for HMRC but have not sent through their EPS which informs the HMRC that the company is taking advantage of the Employment Allowance scheme.
HMRC have announced that they will now issue generic notifications (otherwise known as GNS messages) to employers who may have failed to claim the Employment Allowance.
The intention behind these notifications is to encourage PAYE schemes to check eligibility and to claim their Employment Allowance. HMRC explain that the new notification may be sent to any PAYE scheme which has not so far submitted an Employment Summary in 14/15. HMRC anticipate that these notifications will not be issued before 25th September.
Sep 2014
24
Employees coming to work in UK from abroad – Employer’s General Rules and NICs
Employers must operate PAYE and NICs in the normal way regardless if your foreign employees are working for you on a permanent or temporary basis. You are still treated as their employer and you are responsible for recording, reporting their earnings and PAYE deductions.
Your new employee from abroad will not have a required HMRC P45 so you’ll need to get the following information from them:
Full Name; Gender; Date of Birth: Full Address (incl. Post Code); National Insurance Number (if known).
To process what deductions are taken from their pay you must get an employment declaration and enquire if they have an existing student loan. For further information please click on the following HMRC link: https://www.gov.uk/new-employee-coming-to-work-from-abroad
Employees being paid by another overseas company are called “seconded employees”. If your new employee falls within the definition of a seconded employee, you are responsible for PAYE deductions on their earnings but what tax code to use and what to include in their payroll record are different. If you have a seconded employee on your payroll you must report this to HMRC.
For more information regarding seconded employees and exceptions to the rule please click on the following link http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=2Abcj2SjIsA&formId=7398
Please remember, before employing someone from abroad, you are required to check this new employee has the legal right to work in the UK, please use the following online tool to assist you:
https://www.gov.uk/legal-right-work-uk
Sep 2014
22
Death in employment
In the unfortunate circumstances where an employee dies, your payroll department must calculate the final pay amount owed to the employee. You should make sure this is paid to the deceased employee’s personal representative. You will need to consider whether the employee was;
• Due any outstanding payments of wages
• Due to make any payments from their salary, i.e. student loan or child support
• A member of a company share scheme
• Receiving statutory payments, i.e. maternity pay
• Due any payments for untaken holidays
If an employee has untaken holidays and subsequently dies, a payment instead of holidays can be claimed by the employee’s family or person handling their estate. This was recently confirmed during a European case, though in theory it solely applies to the minimum four weeks’ leave under EU law. Whereas rare in practice, an employee on holidays who then dies could have several years’ untaken holidays.
Payments made after an employee’s death are still subject to the same tax rules. However, Class 1 National Insurance Contributions (NIC’s) – from both Employer and Employee do not have to be made.
The death of an employee terminates the contract of employment automatically by reason of “frustration” i.e. the contract can no longer be performed as envisaged. There is no obligation on the employer to pay notice but salary to the date of death should be paid in the normal way.
