The main points to be noted by employers from Budget 2016 announced by Chancellor George Osborne are:
• The personal tax allowance will increase by £500 from £11,000 to £11,500 from April 2017
• The higher rate tax threshold will increase to £45,000 from April 2017
• Termination payments over £30,000 which are subject to income tax currently from April 2018 will be subject to Employer National Insurance Contributions (NICs)
• Class 2 National Insurance Contributions for self-employed people will be scrapped from April 2018
• The range of benefits that are subject to income tax and National Insurance Contributions are going to be examined by the government with the aim of limiting the range of benefits subject to income tax and NIC. It is the view of the government that such benefits such as the pension saving, childcare and schemes such as the Cycle to Work will still continue to benefit from the relief of income tax and NIC when provided through salary sacrifice agreements.
• A new discount rate for employers contribution to the unfunded public service pension schemes is set at 2.8% and in 2019-20 employers will have to pay higher contributions into the scheme as a result.
• The rate of tax on loans to directors and participators will increase by 7.5% to 32.5% in April 2016.
BrightPay 2016/17 allows you to record all types of reportable expenses and benefits that you provide to your employees:
BrightPay can produce a P11D for sending to HMRC after year end which includes your Class 1A NICs declaration and details of the expenses and benefits provided including cash equivalents.
If you register for payrolling of benefits by 5 April 2016, BrightPay 2016/17 also supports calculating the PAYE on expenses and benefits in each pay period.
We will be back-porting some of the expenses and benefits features to BrightPay 2015/16 to allow you to send your P11D for the 2015/16 tax year. Look out for an upgrade in April/May.
Note: Expenses/benefits and P11D are not available for Free Licence customers.
BrightPay 2016/17 has full support for paying subcontractors under the Construction Industry Scheme (CIS):
Note: CIS is not available for Free Licence customers.
If you have not yet entered your Automatic Enrolment Staging Date in BrightPay, you can now connect directly to the Pensions Regulator and retrieve it automatically from within BrightPay.
BrightPay 2016/17 now tracks the number of enrolment/contributions submissions that you have not yet submitted to your pension scheme provider. The number is shown on the main PENSIONS tab, and contributes to the total number shown on the Open Employer screen (which also includes RTI and CIS).
We'll be continuing to update Automatic Enrolment during the 2016/17 tax year and provide dedicated support for more pension scheme providers.
BrightPay Cloud will allow you to connect your BrightPay employer data to a web based service that provides:
Automatically backs up your BrightPay data to the cloud. A historical set of backups is maintained. Your data file can be restored from an online backup at any time.
Enables employees to log in to a web-based portal using their PC, Mac or smartphone to retrieve payslips, view their calendar, request annual leave, view/update personal information, and more.
Enables payroll bureaux to provide an online portal not only for their customer's employees (i.e. employee self-service as described above), but also an employer portal for direct use by their employer customers, enabling them to view payroll reports, P30s, calendar, all employee information, and more.
BrightPay Cloud will work directly with BrightPay 2016/17, but also allow you to upload your BrightPay 2015/16 data to immediately have a full year of historical data to power the self-service features.
BrightPay Cloud will cost £49 per employer per tax year (with discounted bulk pricing for bureaux also available).
We'll have more news very soon. As a BrightPay customer, you'll be the first to know. Watch this space!
BrightPay 16/17 is the same price as BrightPay 15/16 (including FREE for small employers with up to three employees). Support will continue to be free of charge for all users.
Penalties from HMRC will be issued if any late filing of a Full Payment Submission (FPS) from 6th April 2016 onwards.
Currently there is a 3 day relaxation for filing a late Full Payment Submission which is detailed per the HMRC website GOV.UK https://www.gov.uk/guidance/what-happens-if-you-dont-report-payroll-information-on-time
"HMRC won’t charge a penalty if:
• your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday (this applies from 6 March 2015 to 5 April 2016)"
The other circumstances where HMRC will not issue a penalty for late submission of an FPS are when:
• you’re a new employer and you sent your first FPS within 30 days of paying an employee
• it’s your first failure in the tax year to send a report on time (this doesn’t apply to employers who register with HMRC as an annual scheme or have fewer than 50 employees for the tax year 2014 to 2015)
The Low Pay Commission's (LPC) recommendations for the rates of the minimum wage for employees under 25 and apprentices has been accepted by the Government and this take effects from 1st October 2016.
21-24 year olds £6.95 per hour an increase of 3.7%
Youth Development Rate - 18-20 year olds £5.55 per hour an increase of 4.7%
16-17 Year Old Rate £4.00 per hour
Apprentice Rate £3.40 per hour an increase of 3%
The Government has introduced the National Living Wage of £7.20 per hour for employees over 25 which takes effect on 1st April 2016.
HMRC's BPT users may be unprepared for auto enrolment as HMRC's payroll tool is basic and cumbersome. Not only is the tool cumbersome - it does not produce payslips leaving the employee without full visibility to payroll and pension deductions.
The Pension Regulator (TPR) recently consulted payroll industry experts, payroll software companies and users of Basic PAYE Tools to see how these users would face their automatic enrolment journey. TPR's consultation examined the current issues of automatic enrolment as well as the lack of functionality for BPT customers to successfully process the employer duties. Basic PAYE Tools lacks automation and functionality to process AE employer duties.
After the consultation The Pensions Regulator concluded that they will provide an Auto Enrolment toolkit for BPT users, but confirmed the tool will be primitive and manual.
Without payroll software tools that cater for auto enrolment duties, users of the TPR's AE toolkit will be in danger of miscalculating contributions. There is also an inherent risk of incorrectly assessing employees who might otherwise be eligible jobholders.
A high proportion of BPT users have said that they will avoid free or low cost commercial software as they are afraid to change. It is natural for these employers to be afraid but they should be aware that they will face penalties and fines if they process automatic enrolment incorrectly. TPR's consultation report explains;
"Current users stated they would be unlikely to stop using the BPT due to a mix of inertia, brand loyalty and the burden associated with switching to an alternative payroll product with built-in automatic enrolment support."
If these users continue to use HMRC’s Basic PAYE Tools, it will leave them with the limited option of the TPR's AE toolkit. TPR also recognises that existing free and paid payroll software is available on the market offering auto enrolment functionality.
The Regulator concluded that BPT users have three options;
The Regulator continues to recommend that BPT users avail of existing payroll solutions on the market explaining;
"Our tool will mitigate the risk, while being basic enough to not discourage employers from using commercial payroll products."
If TPR's AE toolkit is used, users will need to ensure everything is accurate in line with automatic enrolment, employers will need manually double and triple check all their calculations. Even then, simple errors may have occurred. These errors will also take time to locate and fix.
If BPT users want their information to be correct, they should face their fear and utilise payroll software that is available on the market. If BPT users also want their automatic enrolment process to be streamlined and easy they will need to choose payroll software that can automate the employer duties for them.
BrightPay helps BPT users comply with Automatic Enrolment
An important factor for HMRC customers is time. BPT users are concerned that migrating to another payroll tool will be difficult and time consuming. BrightPay has made this step easy. We have developed a free and easy import feature from HMRC's Basic PAYE Tools into BrightPay, a task which takes less than one minute to complete.
This HMRC specific import tool allows users of Basic PAYE Tools to export their employee data file and import directly into BrightPay. The import facility has been specially designed to recognise information such as company and employee details and cumulative payroll data. Once the import has been completed, users will then be able to open their company file and immediately start processing payroll.
BrightPay offers a free licence for employers with up to three employees. Our standard employer licence is just £89 + VAT / tax year which includes unlimited employees. All of BrightPay's licences have free auto enrolment functionality plus free phone and email support. You can try before you buy too. BrightPay's free 60 day trial offers full functionality and we won't ask you for any credit card details.