The Pension regulator has published an updated forecast report for the number of employers due to become subject to automatic enrolment duties over the next four years. The update shows around 30,000 medium sized employers reach their “Staging Dates” between April 2014 and the end of this tax year. The forecast sets out their expectations of when medium, small and micro employers are likely to become subject to the new automatic enrolment duties (their staging date).
It is being provided to assist pension providers, advisers and other intermediaries with capacity planning but should only be used as a broad indicator. The forecast is based on PAYE information as at 1st April 2012. The forecast is only an estimate of the number of employers PAYE schemes expected to become subject to the automatic enrolment duties. It is based on a number of assumptions and the number of employers actually falling within the duties will vary depending on a number of factors.
The CIPP has launched what should become a successful forum for collecting information regarding pensions auto enrolment , called “The Friends of AE”.
Its central aim is to be “a joint capacity crunch task force” and is open to any organisation that wants to work together on the practical issues facing employers through sharing ideas, experiences , problems and solutions.
It is free to join The Friends of AE and the people most likely to benefit from the membership are:
• People who provide any services or solutions to the pensions auto enrolment marketplace
• If you are an employer that has already staged and would be happy to share your knowledge and insight into the process of auto enrolment.
• If you are an employer that has not yet staged and would like to be more informed and have access to the experience and advise of others that have already staged.
By the time the summer of 2017 arrives there will be in and around 135,000 companies staging per month so the CIPP feel that payroll, pension software and intermediary industries need to collaborate to help employers brace for the operational impact of auto enrolment and that is what The Friends of AE is all about.
The low pay Commission has recommended that the adult NMW rate should increase 3% on 1st October 2014 from £6.31 to £6.50 per hour.
The other recommendations from the LPS are:
- The adult rate to increase by 3% to £6.50 per hour
- The Youth development rate to be increased by 2% to £5.13 per hour
- The rate for 16 – 17 year olds to be increased by 2% to £3.79 per hour
- The apprentice rate to be increased by 2% to £2.73 per hour
- The accommodation offset to be increased by 3.5% to £5.08 per day
The minimum wage has risen faster than other wages since the worldwide economic slowdown, and the wages of the lowest paid are higher relative to those of workers from previous decades. However in day to day living ,the minimum wage has fallen because minimum wage and average wages have been exceeded by inflation. The LPC have published an executive summary of its 2014 report together with a letter from the LPC to ministers. The government is expected to publish the full 2014 report of the LPC during the next few weeks.
The LPC believe that the economic recovery should this year allow an increase in the real value of the minimum wage, the first increase for at least 5 years. The LPC are recommending that the adult rate should increase by 3% on 1st October from £6.31 to £6.50 an hour. The LPC believe this is likely to increase the number of jobs covered by the minimum wage by over a third to around one and a quarter million.
There are different types of payments made to employees when they are being made redundant and they are all treated differently. Some types of leaving payments are tax-free , some taxable in full and others are taxable over £30000. Most redundancy payments are tax free up to £30,000 and are not liable for NICs. Employers must remember that separate rules apply for working out the PAYE tax and NICs due.
For NICs purposes payments on redundancy are either wholly liable to NICs or not liable at all. Outstanding payments for salary and holiday pay are treated as earnings for the purposes of tax and NICs.
To see a list of PAYE tax and NIcs rules covering the most common types of one-off leaving payments, for help with these payments you should read the HMRC publication CWG2 (Employer further guide to PAYE and NICs).
For taxable redundancy payments where you have shown the date of leaving on a previous FPS and have provided the employee with a P45 – the payments must be shown as payments after leaving by completing the following steps:
- Deduct PAYE Tax using code OT on a week1/Month 1 basis.
- Calculate NICs if appropriate – help can be found in HMRC Publication CWG2
- Include this additional payment and the tax deducted on the FPS and in the pay and tax in this period- ensure the revised YTD figures include the additional payment. If you make a payment after leaving in a different tax year the YTD figures on the FPS should only reflect the additional payment.
- Make sure that the employee is given written confirmation of the payment (Payslip , letter or other printable document) which clearly shows the date of the payment, the gross amount, any PAYE Tax or NICs deducted and that the payment is a post-leaving payment.
- The original date of leaving should be put on the payment after leaving and the employee must not be given another P45.
HMRC have recently introduced a new way of handling calls on some of their helplines and they are looking for Employers to offer their feedback through a short survey.
The new system is called Intelligent Telephony Automation or ITA. HMRC say that this new technology will help improve the handling of calls, instead of being offered different options or pressing different buttons the system will recognise and react to what the customer says. The customer will be put onto the correct adviser for their question even if they have called an incorrect telephone number.
HMRC are also automating elements of the security process, based on the information that the customer provides the system, the adviser will know why they are calling and whether or not the customer has passed security. HMRC are hoping that this will speed up the time that advisers spend with customers and it will allow them to focus on the issue and the call could be completed a lot quicker.
This new system will prompt customers to say a few words and the reason for their call. It is designed to recognise key words or phrases such as Maternity/RTI/P45 and can forward the call onto the correct Adviser or ask further questions if required. HMRC say the system has been widely tested with all accents from all over the UK. The HMRC would like customers that have called the helpline and have used the ITA system to complete a short survey by Friday 29th November to give their feedback and to see if there are any ways that the system could be improved.
With the increased amount of students entering the workplace owing close to £30000 (for tuition fees averaging £9000 a year along with living costs) it could be many years until a student debt is repaid. Once an employee has commenced employment student loan deductions will be taken at source from their pay and sent by their employer to HMRC so the sooner this begins the sooner the student loan is paid off.
When should an employer begin taking student loan deductions ?
1. When a receipt is received from HMRC of a start notice SL1 informing the employer from when they should start taking the student loan deduction.
2. The employee has a P45 from a previous employer and there is a yes ticked beside liable for student loan or any other mark at item 5 on the P45.
3. If the employee does not have a previous P45 they must complete a starter checklist (similar to a P46 form) one of the questions asks if the student has a student loan that has not been fully repaid and is not being repaid directly to the students loan company. If the employee answers yes student loan deductions are now due.
Where an employee does not provide a P45 to their new employer and a starter checklist is filled out the employee may not admit to having to pay a student loan so the preferred option to set up a new employee would be to receive the P45 from the previous employer or a start notice SL1 which they would receive from HMRC.
A “quirk” in the tax system that occurs once every 20 years has resulted in Asda staff owing more than £12m in outstanding tax to HMRC.
The supermarket’s 170,000 employees were affected by the payroll anomaly that occurs for companies with four-weekly payroll systems, where 14 payments are made in a tax year rather than the usual 13. Most of the employees were paid 14 times between 6th April 2012 and 5th April 2013 – the 2012/13 tax year – rather than the usual 13 times.
The payroll provider, said: “This is an anomaly within HMRC and there is no means of getting round it by payroll providers.”
Following the incident HMRC posted advice on its website on “dealing with ‘week 53’ payments”. When completing a Full Payment Submission it says: “Do not change the final tax code to week 1 if the only reason you have used week 1 is to calculate a payment on week 53."