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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!
The UK’s Statutory Maternity Pay policy has been under fire from the TUC recently, saying the UK underpays maternity leavers in terms of weekly pay, but if you look at the SMP package as a whole, the UK offers much more than most other countries in Europe, and far in excess of the EU directive.
So what do we offer in terms of SMP?
In terms of leave entitlement, eligible employees can take up to 52 weeks’ maternity leave. The first 26 weeks of this leave is known as ‘Ordinary Maternity Leave’, the last 26 weeks as ‘Additional Maternity Leave’. The earliest that leave can be taken is 11 weeks before the expected week of childbirth, unless the baby is born early, and employees must take at least 2 weeks after the birth (or 4 weeks if they’re a factory worker).
Then in terms of pay, SMP for eligible employees can be paid for up to 39 weeks. For the first 6 weeks pay is based upon 90% of their average weekly earnings (AWE) before tax, and the remaining 33 weeks is paid at £140.98 per week, or 90% of their AWE (whichever is lower). To calculate AWE, you need to take an average of the employee’s gross earnings over a period of eight weeks up to and including the last payday before the end of the employee’s qualifying week. The qualifying week is the 15th week before the week the baby is due.
Tax and National Insurance need to be deducted from their pay as usual. As a small employer, you can claim back 103% of the maternity pay, or as a large employer who pays more than £45,000 a year in Class 1 NI, you can claim back 92% of the SMP paid.
Not everyone is eligible for SMP – there are some qualifying criteria. Your employee must have been on the payroll in the 15th week before the expected week of childbirth, they must have given you the correct notice and have worked for you continuously for at least 26 weeks up to the first day in the qualifying 15th week. Finally, they must earn at least £113 a week in the 8 week period over which AWE are calculated.
In terms of notice, an employee must tell their employer that they are expecting a baby at least 15 weeks before the baby is due. The employee should also confirm what date they want their maternity leave to start – this can be moved but the employee should give 28 days notice before leave starts. The employer should then confirm their Statutory Maternity Leave start and end dates and the SMP due, in writing, within 28 days of notice being given. Employees can change their return to work date if they give 8 weeks’ notice.
If the employee isn’t eligible for SMP, then you must give them a Form SMP1 and explain why they are not eligible.
SMP and pension contributions can be a tricky one because your payroll software might not work out the correct employer pension contributions, so you might need to over-ride the software! Under employment law, an employer should continue to pay the same employer contributions that they were paying prior to employee going on maternity leave, so contributions must continue at their current level, even though the employee’s income has dropped, but the employee will pay contributions based upon the SMP she’s actually receiving, so her actual income.
However, once SMP stops after 39 weeks and the employee is not receiving any pay at all, both employee and employer contributions can stop (although they don’t have to). The employee will remain an active member of the pension scheme, however, because contributions are just suspended. Once the employee returns to work and pay recommences, pension contributions will start once again.
If you currently run your own payroll in house, or if you’re an accountant or book-keeper who would like to outsource your payrolls to a professional payroll and pensions bureau so that you can focus on your core business, then we would love to help – please do get in touch on 0800 160 1233 or email firstname.lastname@example.org.
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!
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.
When approaching your staging date, you need to think about payroll administration and auto-enrolment together, because the two are intrinsically linked when it comes to your workplace pension.
Setting up your workplace pension is only half the story, because it's your payroll software that will need to assess and categorise your staff every time you pay them, it should calculate and deduct the correct level of pension contributions and it will help you to correctly enrol your eligible employees. Your payroll administrator will need to upload a pension file to your chosen provider each month to confirm the contributions to be allocated to each employee.
Your payroll software should generate statutory letters for you because you’ll need to write to employees to tell them how they will be affected by auto-enrolment – are they to be auto-enrolled or can they opt in? How much will it cost? Who is your chosen provider? What must they do if they want to opt out or opt in? These letters are a legal requirement and must contain specific information set out by law.
Don’t assume your payroll software is ready to go. If you run your payroll in-house, chances are you’ll need to upgrade your software to include an ‘auto-enrolment module’ to deal with this administration (often at a cost), and you’ll have to learn a bit about pensions before you can use it – follow the software provider’s instructions to the letter! If you choose the wrong tax relief basis or pensionable salary, for example, it’s a real headache to unpick errors once the contributions have been deducted from pay and paid to the pension provider. And beware: the HMRCs free PAYE tool doesn’t do auto-enrolment at all.
If you’ve outsourced your payroll to a good bureau or your accountant, then should have upgraded their software and done their training, but we’re still coming across the odd payroll administrator who doesn’t offer full admin support and expects you to carry out assessments, statutory communications and data uploads to the provider. If you don’t want to do this yourself, then now’s the time to move your payroll. There are plenty of payroll administrators who will happily do this for you, including the Auto-Enrolment Bureau.
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/
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"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