Confused about what you need to do? READ MOREJust want to get on with it?GET STARTED
We do seem to have become the ‘go to’ company for companies that have missed their staging date, so I thought it would be useful to run through a recent case study, just I case you’ve missed yours…
A client, let’s call him Tom, called us a couple of weeks ago and confessed that his staging date was 1st August 2016, and he’d done nothing so far. He’d contacted a couple of other workplace pension companies but they weren’t interested in helping him because he’d missed his staging date, so he was quite relieved when we said of course we can help.
The first thing we advised Tom to do was call The Pensions Regulator to explain that he had missed his staging date but he was working with us to get his scheme set up in the next few days and put things right. Doing this will actually reduce the chance of a fine.
Secondly, we needed to obtain payroll reports from Tom showing his employees’ gross earnings since 1st August last year. His payroll lady emailed the reports over to us the next day and we calculated the backdated employer and employee contributions from last August until the most recent payroll run. We confirmed to Tom that he would be liable to pay all of these backdated contributions, rather than asking employees to pay theirs, but as he only had a couple employees the backdated contributions came to about £150.
We advised Tom about tax relief, postponement and the most cost effective pensionable salary and contribution combination for his business and we set up his scheme with NEST within 3 days of his initial contact with us. We also spoke to his payroll lady and gave her everything she needed to set the scheme up correctly on her payroll software, and we checked the first set of contributions calculated, just to make sure.
Tom needed to be responsible for uploading weekly pension contributions onto the NEST portal because his payroll lady wouldn’t do this for him, so we did the first contribution upload for him to save time, and then we provided him with training so that he could do this himself going forwards. We gave Tom guidance on completing his Declaration of Compliance and made sure he did this as soon as his scheme was in place.
So within a matter of days, and very little drama, Tom was compliant and up and running with his pension arrangements.
So if you need help with setting up your workplace pension please get in touch. If you’ve found this article useful please like our Fb page @autoenrolmentbureau and follow us on twitter @aebureau.
Setting up your own business is a hugely exciting prospect. It gives you the opportunity to do something that you really love, you can share your knowledge and experience with others, and of course you can be your own boss!
Having a business plan is important, and part of this plan might be that you’ll be taking on employees, either immediately or at some point in the future. So in terms of payroll and pensions, what do you need to think about when you take on your first employee?
First of all, you’ll need to set up a PAYE scheme with HMRC so that you can calculate and pay your employee’s wages and report the pay, tax and national insurance due for each employee to HMRC. You can set up your PAYE scheme online on the .GOV.UK website.
Then you’ll need to appoint a payroll administrator, or you’ll need to buy some payroll software and learn how to use it – get up to speed with the law around minimum pay requirements, tax calculations and statutory pay. To keep your costs down I would recommend that you run monthly payrolls rather than weekly.
There’s an additional cost to the employer over and above the employee’s salary which you might not be aware of, and that’s the employer’s national insurance (NI) contributions, which are 13.8% of an employee’s pay over and above the current NI threshold of just over £8,000.
You’ll need to tell HMRC about the tax and national insurance due to HMRC each pay period by sending a Full Payment Submission on or before pay day, and then paying the amount due to HMRC by the 19th of the following month.
Turning to your pension responsibilities, if you’re paying your employee more than auto-enrolment trigger of £10,000 a year, then you’ll need to set up a workplace pension for them. If you started paying your staff between 1st October 2016 and 30th June 2017 then your deadline for setting up a pension scheme will be 1st January 2018, or if you starting paying staff between 1st July and 30th September 2018 then your staging date will be 1st February 2018. It’s important to note that after 30th September 2017, the ‘phasing in’ of staging dates has finished, and if you start paying staff from September 2017 onwards, then you’ll need to set up a scheme straight away, within 6 weeks of paying your first employee, which is an extremely tight deadline.
It’s a good idea to get advice when you’re setting up your business so that you know exactly what you need to do by law. We can set up your PAYE scheme for you and run your payroll, and if you need a pension scheme then we can also help you with this when the time comes. So do get in touch if you need help – call Sarah or Adele on 0800 160 1233, or fill in your details on our Get Started page and we’ll get back to you.
Workplace pensions – there’s no need to miss your staging date…!
Recent research by Aviva has shown that one in seven companies who set up pensions with Aviva in the last quarter of 2016 actually missed their deadline, or Staging Date, for setting up a workplace pension. By my calculations, that means on average around 15% of businesses aren’t complying with their legal duties on time and are very likely to receive a fine from The Pensions Regulator. This is just money down the drain for a small business, and so easy to avoid if confronted early on.
The Pensions Regulator is sensibly recommending that companies set up their schemes around 6 months in advance of their deadline, which is good advice, because 2017 is by far the busiest year for pension providers, with 750,000 companies being allocated a staging date. Some providers may have a long waiting list this year, and any delays in setting up your scheme may lead to a failure in meeting your deadline and a subsequent fine – no excuses.
I suspect that companies are leaving their workplace pensions on the ‘to-do’ pile until the last minute, and then they find that choosing and setting up their scheme, if done properly with thought and consideration for a good employee outcome, takes a lot longer than they thought.
But this doesn’t surprise me – I’m a small business owner myself – and I can certainly sympathise. Small businesses are often stretched to capacity, and it’s likely that the responsibility for workplace pensions will fall on the director or business owner, who tends to be the busiest of the bunch! This is where professional advisers come into their own, because they’ve done all of the research beforehand, and if they specialise in workplace pensions then their knowledge and experience will be a great timesaver.
So what if you do miss your staging date? Well, it’s a legal deadline, there’s no getting around it, so there are repercussions for your business. If you’re within 6 weeks of your staging date then you should issue statutory postponement letters straight away, set up your scheme and enrol your employees within 3 months of staging.
If your staging date was more than 6 weeks ago then you can’t apply postponement and things get a bit more complicated. You’ll need to set up your scheme straight away and work out the contributions that should have been paid into the scheme since your staging date, and it’s likely that the company will also have to pay the backdated employee contributions too.
Towards the end of last year The Pensions Regulator confirmed that there had been a staggering rise in penalties for small businesses for non compliance, with more that 20 times more businesses getting an escalating penalty notice than in earlier quarters. An escalating penalty notice imposes a daily fine of between £500 and £10,000 a day, so best to be avoided!
If you’re getting close to your staging date and haven’t had time to sort out your workplace pension, we can turn things round quickly and easily, taking the pressure off you. We’re here to make sure that you choose a quality scheme and we’ll help you to design your scheme to keep costs and administration to a minimum.
If you need help, please call Sarah or Adele on 0800 160 1233 or fill in the Get Started page on our website and we’ll get back to you straight away.
CONNECT WITH US
Find out more ...
What do our customers think..?
"We wanted to embrace Auto-Enrolment to get good pensions in place for our team early. We interviewed a couple of companies to assist us, and Sarah gave a very good case for her company. We are confident that we made the right decision! From selecting the right provider, through to setting up the systems and even presenting to our staff, Sarah and her team were excellent. I don't hesitate recommending the Auto-Enrolment Bureau to anyone looking to enrol their company. My only words of advice are, do it early!"
Richard Hardstaff, Director, Polydron (UK) Ltd