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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


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


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Topics: Payroll Software Guides

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