<img src="http://www.200summit.com/19574.png" style="display:none;">

The Carval HR Software Blog

Payroll legislation update

Posted by Ann-Christie Marstaller

03/01/17 15:36

The Carval National User Conference 2016 included an informative payroll legislation update presentation by Beverley Smith ACIPP, Policy & Advisory Officer, The CIPP.

The session was very popular with Carval's payroll software users therefore we thought we'd share it with a wider audience. The topics covered included:

  • RTI late filing penalties
  • National Minimum Wage & National Living Wage
  • Student loans
  • Making Tax Digital
  • Simplifying expenses and benefits
  • Apprenticeship levy
  • Gender Pay Gap reporting
  • Holiday pay and leave
  • Termination payments
  • Salary sacrifice
  • Automatic re-enrolment

PAYE- late filing penalties

  • 3 day easement to continue during 2016-17 tax year
  • Risk based approach
  • Statutory filing date not changed
  • Persistent late filing will be noticed
  • ‘Deliberate and persistent’
  • HMRC will continue to review their approach to PAYE late filing penalties beyond 5 April 2017

National Minimum Wage (NMW) & National Living Wage (NLW)

  • NM rates from 1 October 2016:
    • Rate for 21 to 24 year olds from £6.70 to £6.95 per hour
    • Rate for 18 to 20 year olds from £5.30 to £5.55 per hour
    • Rate for 16 to 17 year olds from £3.87 to £4.00 per hour
    • Rate for apprentices from £3.30 to £3.40 per hour                        
  • Accommodation offset from £5.35 to £6.00 a day
  • Alignment of NMW & NLW from 1 April 2017
  • Low Pay Commission consultation
  • Measuring the true cost of the National Living Wage
  • NLW- 60% of Median earnings by 2020 based on no significant economic shocks!

Read: National Minimum Wage compliance information for employers

Student Loans

  • Plan 1 threshold is now £17,495
  • Plan 2- post 2012 borrowing threshold £21,000 which will be frozen for 5 years
  • Starter process- have you adapted to collect data from employee on which plan to use?
  • HMRC have provided a printable Starter Checklist for employers who need them to collect data from employee
  • Employer Prompts- utilising the more rapid flow from real time data
  • The future postgraduate loans- display both on payslips – popular idea but what of the admin burden?

Making Tax Digital

  • Agent Online Self-serve becomes Agent Services
  • Working Together- Talking Points
  • Personal Tax Account (PTA)
    • Government Gateway
    • Verify
    • 2 Step verification
  • Making Tax Digital- 6 consultations

Simplifying Expenses and Benefits

  • From 2016/2017 tax year
    • £8,500 threshold abolished and P9D has been withdrawn
    • Dispensation regime now replaced with a statutory exemption for qualifying expenses- guidance updated
  • Trivial Benefit in Kind statutory exemption- further points:
    • EFRBS Regulations to be amended, and back dated to 6 April 2016. Subject to same £300 cap
    • Non cash vouchers- short period of misalignment with Class 1 NICs
  • Early days for voluntary payrolling- progress so far?
    • Voluntary payrolling v informal payrolling- phasing out
  • Extension to the voluntary payrolling framework to account for tax on non-cash vouchers and credit tokens real time from April 2017
  • New data items to be added to FPS for 2017-2018 to capture company car detail
  • Office of Tax Simplification to research moving employee NICs to annual, cumulative and aggregated basis and moving employer NICs to a payroll basis.

Reporting Gender Pay Gap

This is not equal pay- technical consultation responses being assessed further detail due to:

  • Employers who have 250 more relevant employees as at April 2017
  • A relevant employee- ordinarily works in Great Britain and whose contract is governed by UK legislation

Organisations must report:

  • Overall Gender Pay Gap- mean and median
  • Mean Gender Bonus Gap
  • Proportion of men and proportion of women employees who receive bonuses
  • Gender pay split breakdown between quartile pay bands

 Read: Female mangers suffer 35 percent pay gap

Calculating Holiday Pay

Holiday pay calculation should include guaranteed and non-guaranteed overtime and commission. Furthermore:

  • Outcome of Lock v British Gas appeal
  • Outcome of White & Others v Dudley Metropolitan Borough Council
  • If normal working hours are not specified, calculate using the average of the last 12 weeks earnings
  • This applied to 4 weeks of WTD not 1.6 weeks of WTR
  • CIPP training course
  • Acas guidance http://www.acas.org.uk/holidaypay

Termination Payments

  • Elements of a termination payment over £30,000 will become subject to secondary NICs where they are subject to tax
  • All payments in lieu of notice will be subject to income tax and National Insurance Contributions (NICs) in the same way as other payments of earnings
  • Will come into effect from April 2018
  • Technical consultation to follow

Salary Sacrifice

Government considering salary sacrifice is restricted to:

  • Pension saving
  • Childcare
  • Health-related benefits e.g. Cycle to work scheme
  • Childcare Vouchers and maternity leave
  • Contractual change- needs to be clearly demonstrated
  • Impact on NMW and NLW
  • HMRC clearance service- post scheme setup

 Read: A third of employees would prefer flexible working over a pay rise 

 Automatic re-enrolment

  • Cyclical re-enrolment:
    • On a three-yearly cycle, an employer must put their eligible jobholders, who are no longer active members of a qualifying scheme, back into an automatic enrolment scheme
    • On the re-enrolment date workers will need to be assessed again.
    • If they opted out or ceased membership of a qualifying scheme within the previous 12 months the employer can choose whether to re-enrol.
    • CARD must fall within a 6 month window which starts 3 months before the 3rd anniversary of the staging date.
    • Postponement can only be used at staging
  •  Immediate re-enrolment:
    • If a jobholder, not through their own choice, ceases active membership of a qualifying scheme (e.g. if the scheme ceases being a qualifying one), the employer must put them into an automatic enrolment scheme immediately.

Declaration of re-enrolment deadline

  • Regulations came in to effect 6 April 2016
  • Declaration for Re-enrolment deadline for the declaration after re-enrolment will be 5 months after third anniversary of staging date for the first re-enrolment and of the chosen re-enrolment date thereafter.
  • The replaces the two different deadlines, which depended on whether the employer had anyone to re-enrol

Ignoring Workie will be costly

Workie

Ignoring workplace pensions can result various negative impacts on your organisations, these include:

  • Reputational damage
  • Penalties
  • Putting right accumulated missed payments

However they can be avoided by:

  • Knowing your staging date- or those of your clients
  • Utilise the resources provided by the Pensions Regulator
  • CIPP friends of automatic enrolment

Increased TPR compliance activity

  • 9,929 total cases closed by 30 June 2016- an increase of 2,479 in the last 1/4
  • 3,045 fixed penalty notice issued to 30/06/16- with 861 issued between March and June (an increase on the previous 1/4)
  • 165 escalating penalty notices as at 30/06/16 (38 in this quarter compared with a total of 31 up to 31/12/15!)
  • All whistleblowing reports are followed up

 

streamline payroll processes

Topics: Payroll Software Guides

Discover the tools behind great HR

Carval has been helping organisations streamline their HR and Payroll since 1986. We'd love to help you too! 

Read on to discover ways to:

  • Make your payroll processes accurate and efficient
  • Automate everyday HR admin jobs to drive efficiency and policy adherance
  • Get the time and tools to deliver strategic HR projects that make a difference
  • Deliver a great service to your employees.

Subscribe to Email Updates