Current HMRC guidance can be found here.
The guidance concerns both the provider of the services (the personal services company) and the payer for the services (the public sector client)
Assume an invoice of £6,000 for services (excluding VAT) issued by Joe Bloggs of ABC Ltd and that the payment falls within the new rules.
If you are the personal services company
Using the example deductions in HMRC's article, as the public sector client has already deducted tax (£1,458) and NIC (£413), you receive £4,129 (excluding VAT).
If you are paying yourself this £4,129 from your company, you will have no further PAYE or NIC liability on it, so, in your payroll system, you should mark the gross payment (£4,129) as not being liable to tax or NIC.
In BrightPay, simply set up a new addition type as per the following screen. Ensure that tax, NIC etc. are all unticked.
When the payroll is finalised, the non taxable pay will appear on the FPS.
If you are the public sector client
Pay Joe Bloggs through your payroll as if he were a normal employee.
When entering Joe Bloggs to your payroll, use starter declaration C - secondary employment. This will put him on basic rate tax. You should also tick that the employee is on an irregular payment pattern.
The payment frequency that you select for Joe Bloggs should match their contract as closely as possible e.g. if he is being paid for a month's work and you put him through the weekly payroll run, this will adversely impact on your NIC figures.
It may be useful to set up a department named “Personal Services Company” and assign Joe Bloggs to that department. This will enable specific reports for this category of employee.
When the contract ends, P45 Joe Bloggs as you would a normal employee.
The public sector client should treat Joe Bloggs as if he were a normal employee for AE purposes, if he falls within the definition of a personal services worker as per TPR's guidance (HMRC's guidance on this is contradictory - they state that Joe Bloggs should not be considered for auto enrolment in all cases). If the contract is a one off, then postponement would be appropriate. If Joe Bloggs is genuinely self employed and does not come within the scope of a personal services worker, then simply mark as exempt when BrightPay flags him for enrolment.
In the payroll of ABC Ltd, if Joe Bloggs is not deemed as a worker in the public sector company, he should be enrolled by ABC. However, in the majority of cases ABC Ltd will be a single director company, so is not deemed an employer for AE purposes.
This article does not cover the treatment of VAT.
Please note that the definition of public sector client, for the purposes of these rules, is quite broad and includes those bodies listed in the Freedom of Information Act 2000. Click here for list. e.g. a GP surgery may fall under the new rules although it is difficult to imagine Joe Bloggs in the above example not being genuinely self employed in this case (unless, for example, Joe Bloggs was a self employed locum who only provides his services to the one GP surgery).
It is also worth noting that the cost for the public sector client will have increased as a result of the employer NIC liability. This may lead to the re-negotiation of contracts in the majority of cases.
BrightPay 2017/18 enables you to produce a CSV payroll journal for import into your accounting software. This feature is accessed via the new Journal button on the payroll toolbar, and provides the following:
Several accounting software providers can accept a direct upload of a payroll journal via an API, negating the need to export/import a CSV file. We plan to add this functionality for supporting providers soon.
Please get in touch if you'd like to see built-in support for any other accounting software providers.
BrightPay 2017/18 includes several new features specifically targeted at accountants, bookkeepers, or other payroll bureau service providers. These bureau features are exclusive to the bureau version of BrightPay.
The columns on the BrightPay startup window can now be customised, and you can order the list of employers on the startup screen by any column. To help make this personalisation more useful, the size and position of the startup window will now be remembered between launches.
The data on the startup window now more reliably updates by itself - you no longer have to open a file to get it to do so.
You can now record the following client information for each employer in BrightPay:
This information can be edited directly from the startup window by right-clicking on an employer and selecting the new View/Edit Client Details menu option (this menu also includes a quick one-click link to set a label colour), or it can be entered via the new Client Details tab in Edit Employer Details when a file is opened in BrightPay.
Perhaps most usefully, these client details can be shown as columns on the BrightPay startup window, enabling you to more effectively manage your client workflows as an individual or across a team.
A new Batch Operation tab on the BrightPay startup window enables you to process or perform a task on multiple employer files with a single click.
The first supported batch operation is to send all outstanding RTI and CIS submissions.
We have a plans to add more batch operations in future.
In BrightPay 2017/18, exported documents and files (e.g. payslips, P30s, reports, pension CSV files, journals, snapshots, etc.) are automatically organised into a separate folder structure for each of your clients by default. (If you don't want this, you can revert back to the previous functionality of exporting all files to a single location in BrightPay Preferences.)
In case you missed it, we launched "BrightPay Cloud" in summer 2016. We have now rebranded this as BrightPay Connect. It works exactly as it has to date, including some further refinements and new features for 2017/18.
We have a detailed web page about BrightPay Connect here. Here's a quick overview of what it's all about:
BrightPay Connect is built for security, reliability and stability, and costs just £49 per employer. Bulk pricing is available for bureaus.
While we have traditionally focused our announcements of new features and updates in each new tax year version of BrightPay, it doesn't mean we're not busy during the rest of the year. In 2016/17, we released many updates and enhancements throughout the tax year, all of which are of course included in BrightPay 2017/18. See our release notes for full details. Here's a quick reminder of the main areas of improvement:
We're already working on our BrightPay 17.1 release scheduled for April 2017, which will contain several improvements and some new features, especially around Auto Enrolment (re-enrolment, ability to more easily switch employees between pension schemes, improved handling of opt-outs, etc.)
Watch this space!
The main points to be noted by employers from Spring Budget 2017 announced by Chancellor of the Exchequer, Philip Hammond are:
• The personal tax allowance will increase by £500 from £11,000 to £11,500 from 6th April 2017 as previously announced, this is in line with the government's goal to have the personal tax allowance at £12,500 by 2020.
• The Dividend Allowance will decrease by £3,000 from £5,000 to £2,000 from 6th April 2018. This means that there is no tax payable on dividend payments up to £2,000 from April 2018 onwards. Any dividends above this allowance will be taxed at 7.5% for basic-rate taxpayers, 32.5% for higher-rate taxpayers and 38.1% for additional-rate taxpayers.
• There were no changes regarding company car and van charges or fuel charges.
• In the Finance Bill 2017, legislation will be introduced by the government about dates where an employee can make a payment in return for a Benefit in Kind they receive, this can reduce the taxable value of the Benefit in Kind. The 6th of July after the end of that tax year has been decided by the government, so if employees make a payment for the BIK before that date, they can reduce the taxable value of the BIK or remove if payment in full is made. This will be for the 2017-18 tax year and following tax years.
• Termination payments over £30,000 which are subject to income tax currently from April 2018 will be subject to Employer National Insurance Contributions (NICs) The first £30,000 of a termination payment will remain exempt from Income Tax and NICs. In the Finance Bill 2017, the tax treatment of termination payments will be clarified and this will include all contractual and non-contractual payments in lieu of notice taxable as earnings and requiring employers to tax the equivalent of an employee’s basic pay if notice is not worked. The changes, including to Foreign Service Relief, will take effect from 6 April 2018.
• The Money Purchase Annual Allowance to £4,000 will be reduced from April 2017, down from £10,000. This restricts the amount of tax relieved contributions an individual can make in a year into a money purchase pension, if they have flexibly accessed their pension savings.
• The Government is carrying out the first statutory review of State Pension Age and the details will be published in their review by 7th May 2017.
• HMRC's compliance team are monitoring employers that are claiming the Employment Allowance, as it has been reported that some employers are using avoidance schemes to avoid paying National Insurance amounts due.
Have you tried our latest Cloud add-on?
BrightPay Connect is our newest add-on for BrightPay that offers powerful automatic backup features and annual leave features. Give your client and their employees online access to their payroll data. Significant discounts available for multiple bulk purchases.
Webinars for Bureaus
BrightPay have designed a number of webinars that are specifically tailored to meet the needs of payroll bureaus. Register for our next free webinar: Surviving Brexit for your Payroll Bureau. With Brexit uncertainty and 750k employers to stage in 2017, how will your bureau survive the fallout of Brexit to stay profitable?
BrightPay Payroll Training - 5th April & 11th April
We have designed training webinars to take you step-by-step through the payroll and auto enrolment process. At the end of the training session, participants will know how they can best use BrightPay to suit their payroll requirements.
BrightPay 2017/18 Release
BrightPay 2017/18 is packed with lots of new features, including a Payroll Journal export to accounts packages, the ability to batch send RTI and CIS submissions for multiple companies and much more.
Important Update for free BrightPay users
Please take time to read this important update for all free BrightPay users.
Risk of County Court Judgement for Employers who ignore Automatic Enrolment Duties
Employers who are persistently ignoring their automatic enrolment duties are being warned by The Pensions Regulator that they could be issued a county court judgement.
Have you tried our sister product, Bright Contracts?
Bright Contracts has everything you need to create and manage up-to-date staff policies and procedures and contracts of employment.
Electronic Notification - HMRC will be sending out email notifications from 18th February up until the 5th March to notify employers that P9 coding notices for the tax year 2017-18 are available to view online. HMRC have advised employers to ensure when logging into their online account to ensure they have the correct tax year selected, 2017-18. And also if the notices are not available that day, to leave it 24 hours and log in the next day and the P9s should be available to be viewed.
HMRC have commenced to send out the P9 paper coding notices and employers should expect to receive them up until the 17th March, although some employers may receive this notifications up until 20th March. If for some reason the employer does not receive the paper coding notice before the 6th April 2017, the employer may contact HMRC Employer Helpline on 0300 200 3200 and request a duplicate. Just to note the duplicate will only be made for the full employer PAYE scheme and no individual tax codes will be sent for individual employees. HMRC have advised that the duplicate requests may take up to 14 working days.
The new tax year will see thousands of Scots having to pay more in income tax compared to their British counterparts earning the same salary.
This follows the announcement that the wage at which Scots will start to pay the 40p income tax rate will remain frozen at £43,000 in tax year 2017-18. For the rest of the UK, this threshold will increase to £45,000 when the new tax year commences in April.
As a result, it is estimated that approximately 370,000 higher rate taxpayers in Scotland will pay up to £400 more than people earning the same in the rest of the UK.
Under devolved powers, Scotland is able to vary the rates of Scottish income tax (SRIT) by up to 10% from those set by the government in Whitehall.
Employers who are persistently ignoring their automatic enrolment duties are being warned by The Pensions Regulator that they could be issued a county court judgement. Employers that ignore penalty notices issued by the The Pension Regulator to them are more likely to be issued with a CCJ. And if an employer does not pay within the 30 day limit of when they received the CJJ, these details will be recorded on their credit record. This may affect their borrowing ability in the future.
According to information from The Pension Regulator nearly 3,000 penalty notices were issued to employers between October and December 2016. In this same timeframe 870 escalating penalty notices were issued to employers. The number of fines have risen in line with the higher amount of employers now reaching their compliance deadline. Due to a small number of employers failing to pay these fines a number of County Court Judgements have now been issued.
The Pension Regulator believe that the smaller employers are leaving things to the last minute for their automatic enrolment duties, but if a compliance notice is issued hurries the employer up to fulfill their duties.The executive director for auto-enrolment at The Pensions Regulator, Charles Counsell , said: “Burying your head in the sand and ignoring your legal duties means your staff are missing out on pensions they are entitled to and your credit rating and reputation could be hit.”
Andy Beswick, managing director of business solutions at insurance firm Aviva, said: “No one wants to see small businesses being penalised for not complying with auto-enrolment. “A workplace pension can be a great asset to an employer when it comes to retaining and attracting key staff. It’s also a legal requirement so ignoring it isn’t an option. “There are a number of pension providers who have worked hard to make auto-enrolment as simple as possible for companies and advisers. With a bit of planning, the process of setting up a workplace pension is not as complicated as most people think.”
Auto Enrolment means that all employers must put certain staff into a workplace pension and pay into it. Employing someone in your home (such as a carer, nanny, or gardener) means that you are an employer and therefore you will have auto enrolment duties to complete. Your staging date is the date the law comes into effect for you. The Pensions Regulator will write to you to notify you of your staging date and tell you what duties need to be completed.
At staging, you must assess the age and earnings of your staff to see if they are an eligible jobholder. Eligible jobholders are those who are aged between 22 and state pension age and earn over £10,000 per year. You must automatically enrol these employees into a workplace pension scheme.
Although software is not a legal requirement for auto enrolment, the Pensions Regulator recommends that you have software in place to simplify the process. Most payroll software enables employers to automate and simplify the employers auto enrolment tasks. It is important that HMRC Basic PAYE Tools users are aware that the software does not and will not cater for auto enrolment. This means that all the auto enrolment tasks must be completed manually, increasing the workload and the risk of errors.
If you have someone who manages your payroll or finances for you, it may be worth contacting them to see how they can help you with your duties. If you manage your own payroll, BrightPay is the perfect tool that will allow you to seamlessly and effortlessly process auto enrolment tasks. BrightPay automates most of an employers auto enrolment tasks, including employee assessment, auto enrolment communications and opt outs & refunds. The software is currently compatible with 17 different pension providers, including direct integration with both NEST and Smart Pension.
BrightPay’s standard employer licence for 2017/18 costs £99 + VAT per tax year. The 17/18 bureau licence is £229 + VAT per tax year. This includes full auto enrolment functionality, free support, and the ability to process payroll for an unlimited number of employees. BrightPay also has a free licence for employers with 3 or less employees. Book a demo today to see how easy it can be to process auto enrolment with BrightPay. The online demo lasts approx 30 minutes and will also include how you can easily process payroll on a day to day basis for employees. In the meantime, why not download a 60 day free trial to find out how your business can benefit from BrightPay.
Employers that wish to payroll benefits in the tax year 2017-18 must register with HM Revenue and Customs (HMRC) using the online Payrolling Benefits in Kind (PBIK) service before 6th April 2017 (if you had not already registered last year). You can register with HMRC using the PBIKs service Payrolling of benefits was introduced from the start of the tax year 2016/17 and will continue for the tax year 2017-18. Employers can account for the tax on benefits provided to employees through PAYE each pay day.
Registering with HMRC allows you to payroll tax on benefits without the need to submit a form P11D after the end of the tax year. P11D(b) returns will still have to be submitted and must include the total values of all payrolled and all non-payrolled benefits.
Using the online service, you can:
• Choose which benefits and expenses you want to include in the payroll for the following tax year
• Add or remove benefits and expenses
• Exclude employees who receive benefits or expenses but don’t want them payrolled. For these employees you must continue to report the benefit or expense on a P11D (you can exclude an employee at any time in a tax year but once you’ve done this you can’t reverse the decision, in year)
The only benefits you won’t be able to payroll are:
• Living accommodation
• Interest free and low interest (beneficial) loans
Tax is collected on benefits and expenses by adding a notional value to your employee’s taxable pay in payroll, tax is then deducted or repaid as usual as per the employee’s tax code. Payrolling Benefit In Kind functionality was incorporated into BrightPay 2016-17 and will continue in BrightPay 2017-18.
On the 1st April 2017 the minimum and living wage will increase again. Going forward the rate will then change every April, starting in 2017.
The National Minimum Wage (NMW) is the minimum pay per hour most employees are entitled to by law. An employee's age and if they are an apprentice will determine the rate they will receive. The National Living Wage is the national rate set for people aged 25 and over.
|Rates from 1 October 2016 are:||Rates from 1 April 2017 will be:|
|25 yrs old and over||£7.20 per hour||£7.50 per hour|
|21-24 yrs old||£6.95 per hour||£7.05 per hour|
|18-20 yrs old||£5.55 per hour||£5.60 per hour|
|16-17 yrs old||£4.00 per hour||£4.05 per hour|
|Apprentices under 19 or 19 or over who are in the first year of apprenticeship||£3.40 per hour||£3.50 per hour|