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The new tax year is coming up very soon, so today I wanted to highlight the changes that employers need to know about which will apply from 6th April 2017.
We’ll start with an easy one: the Personal Tax Allowance is increasing from £11,000 to £11,500 a year, so if you’re a director paying yourself just under the tax threshold then you can increase your pay to £958 a month from April. If you pay yourself just under the National Insurance threshold then your pay can increase up to £680 per month.
The Apprenticeship Levy starts this year. This levy is being introduced to help young people get into apprenticeship schemes. The new levy will only apply to companies that have a wage bill of over £3 million per annum, and the levy will be based upon 0.5% of your wage bill, although there will be an allowance of £15,000 for all employers, which means the levy will actually be 0.5% of your wage bill less £15,000.
New gender pay gap regulations are coming into force, and companies employing more than 250 people must publish the details of their gender pay gap by April 2018 using data from the 2016/17 tax year. The report will need to include median and mean information relating to employee pay and bonus pay, together with details of the number of men and women in each quartile of the organisation’s pay distribution. I’m sure the results will make interesting reading!
Benefits in Kind can now be payrolled, including company cars, so instead of completing individual P11Ds for each benefit in kind, they can be put through the payroll instead and taxed accordingly each month. A P11d(b) form must still be submitted to HMRC though – this will report the total Class 1A NI contributions due on benefits in kind. If you want to start payrolling your benefits in kind then you must declare this online to HMRC before 6th April and provide the relevant information to your payroll administrator, otherwise you’ll need to wait until next year.
From April 2018 it will be compulsory to put Benefits in Kind through the payroll, and you must apply to HMRC to do this before 6th April 2018, so it’s probably worth starting a year early and getting used to the process before next year.
The National Living Wage for those aged 25 and over is increasing to £7.50 per hour, and the National Minimum Wage will increase from April 2017 as follows:
£6.95 to £7.05 per hour for those aged 21-24
£5.55 to £5.60 per hour for those aged 18-20
£4.00 to £4.05 per hour for those aged 16-17
£3.40 to £3.50 per hour for apprentices aged under 19, or over 19 but in their first year of apprenticeship. Apprentices in their 2nd or 3rd year must be paid at the rate applicable for their age.
If any of your employees are on, or close to, the current minimum wage, you’ll need to increase their hourly rate from 1 April 2017. If April’s payroll run includes hours worked in both March and April then you’ll need to record hours worked at each rate.
Statutory payments are also increasing this year. Statutory Sick Pay is increasing to £89.35 per week and Statutory Maternity Pay is going up to £140.98 per week.
If we’re already running your payroll then we will already have been in touch with you about these changes because we’re proactive in ensuring that our clients pay the right wages to their staff, so you don’t have to worry. If you would like to outsource your payroll to our proactive team of payroll professionals, please get in touch on 0800 160 1233!
We had a fantastic start to June! I’m very proud to say that the Auto-Enrolment Bureau won ‘Business of the Year’ at the 2017 Gloucestershire Women of the Year Awards. We were up against some amazing local companies, so it was a genuine surprise and a real honour to win this award. Many congratulations to all of the award winners and finalists – all women with amazing businesses.
My journey from the company’s inception in 2013 up to now has been hugely enjoyable and I’ve loved every minute. Setting up your own business equates to throwing yourself in at the commercial deep end - the challenges and demands of your business will take you well and truly out of your comfort zone but, ultimately, this gives you a huge amount of confidence in all aspects of life that perhaps you didn’t have before.
Having worked for a local actuarial and pension consultancy for nearly 20 years, I was more than ready for a change. The more I learned about workplace pensions, the more I realised that small businesses would struggle to become the pension experts that the Government expected them to be, and they might appreciate a little help.
So the Auto-Enrolment Bureau was created, and our first job was to service a handful of payrolls from a local accountancy practice. The payroll bureau has since become the backbone of the business, and we have some wonderfully appreciative and loyal clients who have been with us from the start. We employed our first payroll manager very early on so that I could focus on developing the pension side of the business, and then later on we needed further support on the pension side. Employing the right staff has been key to the success of the business.
I found that I loved networking, and this was a great way to spread the word about workplace pensions. The referral network we’ve created across Gloucestershire and the UK provides us with the vast majority of our clients today – there’s nothing like a positive introduction from someone who knows both parties.
Since 2013 we’ve helped hundreds of businesses across Gloucestershire and the UK to choose and set up their workplace pensions. For some of our clients, the ongoing pensions administration through payroll was too much for them, and so they’ve passed their payroll work to us too. Pensions and payroll now go hand in hand, so our knowledge of both has been of huge benefit on the payroll side.
Looking forwards, the workplace pension ‘capacity crunch’ will slow down later this year, although new businesses will still need help and advice, and in readiness for this we’re focusing a little more on our payroll and ongoing pension support services. We’re very proud of our payroll track record and our aim is to be the most proactive and tech smart payroll bureau in Gloucestershire!
Not necessarily. Workplace pensions have a limit on how much they can charge employees (the ‘Annual Management Charge’) of 0.75%, and many old policies charge more than this, which means they can’t be used for workplace pensions. And the provider may not allow the policy to be used as a workplace pension. If it doesn’t meet the workplace pensions ‘qualifying criteria’ then the old scheme, however generous, must be closed down and a new compliant workplace pension scheme must be set up before your deadline. ‘I’ve checked, and none of my staff are interested in joining a workplace pension, so I’m not setting one up...’
This could get you into big trouble with The Pensions Regulator! If you have eligible employees aged between 22 and state pension age who earn over £10,000 a year, then you must enrol them into a workplace pension, whether they like it or not. And staff who fall outside of these age and earnings criteria have a right to opt into a pension scheme if they want to, unless their earnings are very low. Once enrolled, employees need to read the pension provider’s welcome pack and it’s only then that an employee can make an informed decision as to whether to opt out of the scheme. ‘I don’t need to do anything about this until 3 months after my deadline, or Staging Date, because I can postpone enrolment for 3 months, so I’ll worry about it then.’
We’ve helped many employers who have fallen foul of this one. If you’re planning to implement postponement for 3 months from your Staging Date it’s a legal requirement that you notify your staff of this by way of a written postponement notice, within 6 weeks of your Staging Date. If you haven’t issued this legal notice to your staff then you can’t postpone, and contributions are due from your Staging Date onwards. The sting in the tail is that employer will have to pay not only their own backdated employer contributions but also the employee’s backdated contributions. ‘I have less than 5 staff, so I’m not affected…’
This myth comes from the old Stakeholder pension legislation, which hasn’t applied since 2012. Workplace pensions are the law for businesses with one eligible employee or more.‘I’m not complying, and nobody will ever know…!’
Unfortunately, The Pensions Regulator has a direct line to HMRC and they receive regular updates about the employees you pay and how much they earn. Alarm bells won’t ring at the Regulator’s office until 5 months after your staging date, when they expect to have received your declaration to confirm you’ve set up your scheme. If a declaration is not sent to the Regulator, this will trigger an investigation.So what are the repercussions of non-compliance? A straightforward breach, such as forgetting to complete your declaration of compliance in time, can result in a fine of £400, but if you’ve blatantly ignored the law then the fines are eye-watering, at £500-£1,000 a day for a small business, rising to £10,000 a day for larger businesses. Swindon Town FC was in the headlines in 2016, having been fined over £20,000 for failing to meet their duties. There are quite a few online do-it-yourself pension solutions out there, many of which don’t offer you a choice of pension scheme or publicise their fees and charges until you sign up. Some pension schemes will charge a set-up fee, others an ongoing fee. Some schemes are cheap for the employer to set up but have high charges for employees going forwards. It’s a bit of a minefield. Business owners must be able to justify their choice of scheme to their employees if challenged, but unless they fully understand what they’re signing up to, then how can they?Our Bespoke, FastTrack and Simply Conform solutions are tailored to suit any size of business and are aimed at business owners who would rather not do it themselves. We’re independent of any one pension provider so we can help you to choose the right scheme for your staff and your budget. And we do it all for you to save you time, ensure compliance, and get the right messages out to your employees. We can also help out on the payroll side as we run a busy payroll bureau – our pensions knowledge certainly comes in handy here!If you would like to talk through your circumstances with an auto-enrolment expert, please give us a call on 0800 160 1233 or email email@example.com . We’ve got lots of useful information and guidance on our website if you need it: http://www.aefasttrack.com/
If you’re currently running your payroll in-house but have decided to outsource, or you’re thinking of changing your payroll administrator, how can you identify a good payroll provider? Payroll is too important to chop and change too often, and of course you want to move to something better than you’ve already got!
There are some key areas you can consider before making your move, over and above just the cost. Receiving a good service is top of most people’s wish list, but how do you define a good service, or even a great service?
A good payroll bureau will have experienced staff, who you can speak to at any time of the day with your queries. They should have sufficient knowledge to be able to answer your questions about statutory pay issues, notice and holiday pay, tax and national insurance issues. A great payroll bureau will be proactive in keeping you informed about important changes, such as how to payroll benefits in kind and reminding you about national living wage changes if you pay staff minimum wages, and they will have extensive knowledge about workplace pensions.
A good payroll bureau will input the wage information you give them correctly, but a great payroll bureau will look at what’s in front of them and question it if looks odd or unexpected, because you don’t always get things right. A great payroll bureau will turn your payroll around the same day if they can.
A good payroll bureau will provide you with their standard suite of payroll reports and they will offer you e-Payslips, which are payslips that your staff can access online. A great payroll bureau will be able to produce bespoke reports in whatever format you want them in, including reports to your company year end for your accountant.
Technology comes into its own if you have a larger or more complicated payroll. A good payroll bureau will ask you to send in a wage collection spreadsheet each month and will input the figures manually. A great payroll bureau will vet the complex data each month and when they’re happy with it they’ll covert it into an import file that can be directly uploaded onto their software, reducing the risk of manual input.
All payroll bureaux should be aware of Data Protection issues and must ensure that payroll reports sent to you are securely password protected.
I’m proud to say that the Auto-Enrolment Bureau is a great payroll provider, and our aim in life is to make payroll easy for you, so please do get in touch if you’d like to make a change for the better!
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.
We’ve spoken to a number of employers who are keen to get their employees into a workplace pension scheme straight away, rather than waiting for their deadline, or staging date, which is set by The Pensions Regulator.
Why on earth would anyone want to do this any earlier than they have to?! Actually, we’ve come across quite a few reasons why…
One of our smaller clients, a car sales company with 11 employees, could ill-afford pay increases, so they decided to introduce their workplace pension scheme early instead of giving pay rises this year. To do so is more tax efficient for the business. The employees still receive a positive benefit rather than a nil pay increase, and the employer can offset the cost of their contribution against profits, reducing its corporation tax bill.
Pension schemes are a very attractive employee benefit these days, which is why so many businesses have them up and running already. Candidates are becoming increasingly aware of the perks of each job they apply for. You wouldn’t want to miss out on the best employees because your benefits were less attractive than those of a competitor….
Some businesses have more than one PAYE scheme under the company ‘umbrella’. Businesses in this position tend to align later staging dates with their earliest staging date to save time and costs. It’s more practical to deal with all of your businesses in one go and, importantly, it’s helps staff morale if they are all treated equally regardless of the PAYE scheme they belong to (especially if staff share office premises).
A larger client of ours wanted to introduce their workplace pension at the beginning of their company year because that’s when they award pay increases. Aligning your staging date with the start of your financial year can be a cleaner approach from an accounting perspective in terms of setting budgets and calculating pay increases.
If you want to bring your staging date forward, The Pensions Regulator’s website holds a list of possible brought forward dates you can choose from. Visit www.thepensionsregulator.gov.uk for more information.
You’ll need to bear in mind that if you bring your staging date forward, you can’t change it back again – the new date will apply and fines can be imposed if you miss your new deadline.
As always, getting the right advice at the outset is really important. If you would like to talk through your circumstances with an auto-enrolment expert, please give us a call on 0800 160 1233. We’ve got lots of useful information and guidance on our website if you need it: http://www.aefasttrack.com/
I met a lovely chap this week, he was a doctor and I had met with him to talk about a workplace pension for his team of medical secretaries.
Whilst we were chatting, he mentioned that he, like many other GPs and consultants, employed his wife as an administrator. His accountant had advised him that this would be beneficial for tax purposes. What he hadn’t realised, was that because he paid his wife more than £10,000 a year, he would also need to set up a workplace pension for her.
As this arrangement had been in place for sometime (before April 2012), his Staging Date, the date by which he has to set up a pension scheme, could be anywhere between 1 June last year and 1 April 2017, depending on his PAYE reference.
This doctor has the same duties to his wife as a traditional business, such as coffee shop or estate agent, with employees. He must set up a workplace pension scheme enrol his wife, deduct pension contributions from her pay and pay employer contributions on top of her salary.
If he fails in this duty, then The Pensions Regulator has the power to levy some pretty hefty fines.
Hopefully, I made him aware in time, and his staging date hasn’t yet passed, but I’m still waiting to hear.
Even if his wife earned less than £10,000 a year, he would still need to take some action. See my earlier blog “I don’t think any of my staff are eligible for Auto-Enrolment, do I need to do anything?”
If you think you might need to set up a scheme, or would like to talk through your circumstances, please give us a call on 0800 160 1233. We’ve got lots of useful information and guidance on our website if you need it:http://www.aefasttrack.com/
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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