Andy Agathangelou Head of Pensions, CIPP. www.cipp.org.uk and Founding Chair, Friends of AE. www.friendsofae.org.uk is scheduled to meet with The Pensions Minister, Steve Webb next week.
One of the reasons is to explain the level of support there is in the market for a data standard for AE, which pretty much everybody feels would be a jolly good idea. The good news is that PAPDIS, the Pensions and Payroll Data Interface Standard is going to be launched on 9th October, so despite all sorts of hurdles the power of collaboration is winning and as a result implementing AE compliantly will be that much less demanding, especially for SME’s and Micro’s.
“What we need to do now is to accelerate the rate of adoption of PAPDIS in the marketplace, so we get to “tipping point” pretty pronto.” Agathangelou comments – “The more support we can show there to be for a free and open data standard for AE that people can use, if they want to, the more we can accelerate its adoption in the market. The more it is used, the more successful it will be and then we have a virtuous spiral that benefits us all.”
There is an Old Chinese proverb “if you want to move a mountain, you start with one man picking up a small stone”
“So, please pick up your stone, so we can move our mountain!” If you have an opinion, please get in touch with Andy Agathangelou and make your opinion heard – and your stone can help move a mountain.
Nick Day, Managing Director of JGA Recruitment comments “I want there to be a free and open data standard for AE that we can all use, if we want to, because ultimately, it will alleviate employer workloads. Automatic Enrolment is already complex enough and we have seen first-hand the administrative burden and impact it has had on employers across all industry sectors. If there are options to streamline and ease Auto Enrolment’s byzantine process, these options should be implemented. Surely, simplicity and clarity is what everyone wants.”
Tweet using the hashtag #friendsofae #pensions #autoenrolment
Follow @CIPP_UK for updates and information.
JGA often hear about employees having to make additional payments to HMRC for underpaid tax, or in the more fortunate cases, employees receiving a refund for overpaid tax.
Tax errors can occur for a number of different reasons; one common cause is the incorrect allocation of a tax code, especially for new employees.
To resolve the issue of incorrect tax codes, HMRC have created an online tool to help employers and payroll providers get the correct tax code from day one for new employees.
To work out the tax code for a new employee you need to collect certain information that will normally be found in a P45, so it’s important that you ask them to bring this information with them on day one. This information will also be required to assign a starter declaration, a key requirement for any payroll software.
On some occasions you will find that a P45 is not available and with the P46 forms no longer be used, the HMRC advise that you ask new starters to complete the HMRC new starter checklist.
So once you have obtained all of the necessary information you can simply use the online tool to ensure that the correct tax code and starter declaration are assigned, avoiding the need for any payroll adjustments at a later date, making life easier for everyone.
The tax code tool can be found at the following address: – https://www.gov.uk/new-employee-tax-code
According to Salary & Hiring Demand analysis carried out Payroll & HR recruiter James Gray Associates, Reading has seen an incredible uplift in demand for Payroll Administrators over the last 12 months.
Hiring Demand for Payroll Administrators in Reading has doubled over the last 12 months – from 42 payroll administrator vacancies being advertised to 86 vacancies – an increase of 104.8% in the last 12 months.
One of the reasons for this demand for payroll administrators has been a move by many high-profile, multi-national, household names with a significant market presence to outsource their Payroll & HR functions to Payroll & HR expert providers. The proof is always in the pudding and by providing an effective and efficient payroll services to organisations, these outsuourced payroll bureaux ensure the accurate and timely payment of employees’ salaries. Ultimately, outsourcing Payroll & HR services lowers the cost of HR service delivery, improves the quality of HR processes and enables business agility.
Nick Day, Managing Director of James Gray Associates comments “Payroll Administrators and Payroll Mangers with specific software experience are in demand as a result of this move by large organisations to outsource their Payroll and HR functions to experts – often enhancing business performance.”
Nick continues, “Payroll Administrators with specific skill sets and payroll software user experience with products such as Resourcelink, ADP Freedom or iTrent have a real advantage when applying for payroll administrator jobs. We always advise experienced payroll administrators to join organisations such as the CIPP, Payroll Alliance or IAB to develop transferable skills and make themselves more employable and add more value to their current and prospective employers.“
Significant employment law changes are anticipated for 2017, amid the ongoing uncertainty resulting from the Brexit referendum.
Large compliance projects for data protection and gender pay gap reporting will dominate the HR agenda in 2017. Employers are likely to see costs increase as the apprenticeship levy and additional fees for sponsoring foreign workers are introduced, and tax savings for employee benefits are significantly reduced.
Employers will also continue to deal with the implementation of restraints to public-sector exit payments and new trade union balloting rules in 2017.
1. General Data Protection Regulation compliance efforts underway
Although the EU General Data Protection Regulation (GDPR) does not come into force until May 2018, the scope of the changes under the new Regulation means that preparing for the GDPR will be high priority for employers in 2017.
Employers will need to carry out audits of employee personal data that they collect and process to ensure that it meets GDPR conditions for employee consent.
New governance and record-keeping requirements mean that employers will also have to create or amend policies and processes on privacy notices, data breach responses and subject access requests.
As the GDPR will come into effect before the UK exits the EU, organisations that are not compliant by May 2018 risk fines of up to €20 million or 4% of annual worldwide turnover, whichever is higher.
2. Gender pay gap reporting begins
Private-sector, voluntary sector and public-sector organisations with 250 employees or more will be required to publish gender pay gap information for the first time.
Employers will be obliged to release information relating to employee pay and bonus pay, as well as information on the number of men and women in each quartile of the organisation’s pay distribution.
Gender pay gap regulations for private and voluntary sector employers are still in draft form but the deadline for the first report is expected to be 4 April 2018, based on pay and bonus data from 2016/17.
Reporting requirements for public-sector employers are expected to mirror private-sector timelines and requirements.
3. Apprenticeship levy on large employers introduced
Employers with an annual payroll of more than £3 million will be required to pay a 0.5% levy on their total pay bill starting on 6 April 2017.
Large employers will be able to access levied amounts, plus a government top-up of 10%, to fund apprenticeships from accredited training providers.
Smaller organisations that are not required to pay the levy will also be able to receive funding for accredited apprenticeships by contributing 10% towards the cost of an apprenticeship, with the Government paying the remaining cost.
4. Salary-sacrifice schemes significantly restricted
Employers may need to reconsider their benefit offerings as tax savings through many salary-sacrifice schemes will be abolished from 6 April 2017.
Schemes related to pension savings (including pensions advice), childcare, cycle-to-work and ultra-low emission cars will not be affected.
Schemes in place prior to April 2017 will be protected until April 2018, while arrangements related to cars, accommodation and school fees will be protected until April 2021.
5. Changes to rules for employing foreign workers
Employers sponsoring foreign workers with a tier 2 visa will be required to pay an immigration skills charge of £1,000 per worker (£364 for small employers and charities) beginning in April 2017. The immigration skills charge will be in addition to current fees for visa applications.
In April 2017, the minimum salary threshold for “experienced workers” applying for a tier 2 visa will also increase to £30,000. New entrants to the job market, and some health and education staff will be exempted from the salary threshold until 2019.
6. Restraints on public-sector exit payments still expected
Restrictions on public-sector exit payments, which had been expected to come into force in 2016, are still anticipated, although their implementation dates have not yet been confirmed.
Exit payments will be capped at £95,000 when public-sector employees leave their roles, including as a result of redundancy or voluntary exit.
Employees earning over £80,000 will also be required to repay exit payments if they return to any public-sector role within 12 months.
7. National minimum wage changes aligned
Cycles for national minimum wage increases – including the national living wage – will be aligned, with the next round of changes taking effect on 1 April 2017.
The next increase will see the national living wage for staff aged 25 or over rising to £7.50.
8. Trade union balloting changes to be implemented
Employers await the implementation date for new balloting requirements under the Trade Union Act 2016.
Under the rules, a successful vote for strike action will require a 50% minimum turnout and a majority vote in favour of industrial action.
Industrial action in important public services will require a strike vote of 40% of all eligible voters.
By Qian Mou on 7 Dec 2016 in personneltoday.com
PAYE and NIC responsibility for personal service companies will shift to employers from April
There are estimated to be more than 250,000 personal service companies (PSCs) in Britain. They are often, but not always, ‘one man band’ operations that provide the personal services of their owners to clients and customers. This type of company is common in, for example, the IT contracting space, and healthcare and energy sectors.
From a tax perspective, providing services through a limited company can mitigate or defer income tax and national insurance contributions (NICs) for their owners. The government has long disliked these arrangements, and the IR35 rules were introduced in April 2000 to try to counter this perceived avoidance. HMRC estimated that the cost of non-compliance will be £440m in 2016-17.
IR35 is designed to require PSCs to subject payments received to PAYE and NICs, which they would otherwise not be. The problem with the existing rules is that they are rarely applied by taxpayers, and HMRC simply does not have the resources to chase payment from all of the PSCs in the UK, meaning that very little tax is actually collected by IR35 in its current form.
However, in less than three months’ time that story is going to change. In April 2017 IR35 will be flipped on its head – at least for the public sector and those contractors working through PSCs providing services to it.
The ‘public sector’ in this context broadly means any government body such as a local council, the NHS, Ministry of Defence, the BBC, Channel 4 and certain other organisations. The requirement for effectively applying PAYE and NICs will pass from the PSC to the public sector engager or agency through which contractors source their work. A public body will have to decide if it is engaging someone who is legitimately self-employed or if the PSC is simply a means for the contractor concerned to receive payments without the deduction of PAYE or NICs. If the public body decides the latter case applies, it – or the agency through which the contractor PSC is supplied – will need to withhold PAYE and NICs. In addition, the body withholding PAYE will need to pay employers’ NICs on the payment.
Public bodies will be provided with an online tool by HMRC (which is not currently available) to decide whether someone is legitimately self-employed or should be subject to PAYE and NICs like any other employee. The legislation bringing in these new changes is still in draft and appears to require a number of changes to make it workable. This is unfortunate for businesses and public bodies, which will be faced with dealing with this from April.
Implications of the new rules
Regardless of the current state of legal drafting, the consequences of these new rules will be wide-ranging and significant.
The promised online tool will no doubt mean a lot of contractors will be brought within PAYE and NICs. In fact, HMRC is probably unlikely to give much leeway for deciding that contractors are anything but employees by another name. This is, of course, because the new measures have the potential to raise significant additional tax revenues.
There is likely to be an increased cost for public bodies, such as NHS trusts, because of the employers’ NICs they may need to account for. While this is going from one government ‘pocket’ to the other (in the case of the NHS, for example) there will be a net cost to individual public body budgets and consequently pressure on the prices that contractors currently charge.
Agencies supplying these types of PSC workers will have to be careful not to fall foul of the new rules. Contracts with clients and PSCs will need to be reviewed and updated. Price pressure could depress margins, or even send these entities out of business if they get a huge bill for PAYE and NICs that they should have withheld because they have misunderstood or misapplied the new rules.
Affected contractors will face larger tax bills and will need to revisit their tax status and business structures.
Initially, the rules will only apply to the public sector, but PSCs are prevalent in the private sector as well. If the new rules raise significant additional revenues, how long will it be until they are expanded?
Mark Fielden is a tax partner at Kingston Smith. Original article on http://www2.cipd.co.uk/
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