Oct 2014
29
Zero hours contracts - UK legal settlement
Following legal action brought against Sports Direct they will be forced to re-write their Employment Contracts for future zero hours staff to state the roles do not guarantee work.
In a legal settlement aimed at securing better working rights for the retailers 20,000 plus zero hours workers, Sports Direct is required to:
• Produce clear written policies setting out what sick pay and paid holiday its zero hours staff are entitled to
• Re-write its job adverts and employment contracts for future pay zero hours staff to expressly state that the roles do not guarantee work
• Display copies of the new policies in all staff rooms used by zero hours staff across its 400 plus stores in the UK
• Send copies of its equal opportunities policy to all store managers and assistant managers with a written reminder that the policy and principles apply to zero hours staff.
The employees for Sports Direct will now have the right to take holidays and to be paid when they take them. They have the right to statutory sick pay and they will have a right to request guaranteed hours. The changes that have been made mean that there will now be total transparency about what sort of contract is on offer.
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
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.
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.
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.
