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The AE Fast-Track Blog


Our latest Blogs about Auto-Enrolment

Statutory Maternity Leave – who is entitled and how does this affect payroll and pensions?

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


Key changes for the new 2017/18 Tax Year

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!        

Missed Your Staging Date for Workplace Pensions? A Case Study

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.      

Will you get a visit from The Pensions Regulator?

6 top tips on how to ensure you have complied with workplace pensions, when the pension regulator contacts you. 

As part of their ongoing enforcement activity, The Pensions Regulator announced yesterday that spot checks will be carried out on employers across the UK to make sure they’re complying with their workplace pensions duties.  The Regulator plans to visit businesses from a range of industry sectors, including those who they’ve identified as being more at risk of failing to meet their duties, such as the hospitality and retail sectors.  If you’re selected for a visit, you’ll be given a short period of notice before the inspection. 


During the spot checks the Regulator will investigate any non-compliance, help employers get back on track or take enforcement action where necessary.  The Regulator has made it clear that deliberate non compliance won’t be tolerated.


So if the Regulator comes calling, what can you do to ensure you’ve complied?  Here are a few quick pointers:-

  1. Firstly, make sure you choose a qualifying pension scheme that meets all of the legal requirements of a workplace pension.
  2. Set up your workplace pension before your staging date, even if you’re planning to use postponement.
  3. Make sure you send the correct statutory postponement letters, enrolment letters and non-qualifying letters to your staff within the legal timescales. 
  4. Check pension contributions really carefully the first time they’re calculated by your payroll software – check that the tax relief basis, the pensionable salary basis and the contribution rates are in line with what you’ve agreed with your pension provider, and pay these pension contributions to your pension provider on time, before the 19th of the following month.
  5. Not many people are aware of Scheme Certification, which is a requirement if you’ve chosen a pensionable salary definition of Basic Salary, Total Earnings or a Basic Salary with an underpin.  You’ll need to set up your Certificate at staging and re-certify every 12 to 18 months.
  6. Finally, keep records about your staff’s assessments, contributions and eligibility each pay period, for at least 6 years, and keep information about your pension provider and scheme design.



If you’re worried about compliance and want to get it right, please get in touch, and if you’ve found this video useful please like our Facebook page and follow us on Twitter.

Start-up businesses – what about payroll and pensions?

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 – should you do-it-yourself?

Workplace Pensions – should you do-it-yourself?



If your company’s staging date is approaching, you may be thinking to yourself ‘What’s going to be the most effective way to approach this in order to achieve the best outcome for your business and your employees?’.  This is a very good question!






You actually have a couple of options – either do some fairly extensive research yourself and set up your own scheme with an online DIY solution - you’ll need to choose your scheme very carefully - or you can ask a specialist like us to do the job for you.   If you don’t know anything about pensions it’s really difficult to know which route to go down, so I thought I’d just outline very briefly what you’d need to do if you do decide to DIY.



First of all you need to choose your scheme – there are well over 100 pension providers to choose from.  Make sure you choose a scheme that’s approved by The Pensions Regulator or the FCA, and if you’re choosing a master trust then make sure it meets the Master Trust Assurance Framework set out by the Regulator, otherwise it could encounter serious problems when the Pensions Bill comes into force this year. 



Compare scheme costs – employee charges, employer charges, contribution charges and administration charges.  These can be quite hard to pin down as providers don’t always make them obvious on their website, but there will definitely be costs involved.  Make sure you’re clear on what the costs are to you and your employees before you choose your scheme.



Look at investment performance and compare performance of each scheme over the last 3 years – has investment growth been slow and steady, or more risky and erratic?



You’ll need to design your scheme in terms of tax relief basis for employee contributions, postponement policy, salary and contribution combinations (which directly affect the contribution rates you’ll need to pay) and auto-enrolment pay reference periods.  You’ll also need to make sure that your pension scheme integrates smoothly with your payroll software.  Designing your scheme properly at the outset will save your business an awful lot of money in the long run.



It’s a good idea to provide your employees with clear and comprehensive communications about the benefits of your chosen pension provider so that they understand the value of the pension scheme you’re providing, and you’ll need to update your employment contracts and, if you have them, your staff handbooks.    



It’s really important that you understand the processes behind auto-enrolment so that you know exactly who is responsible for each process.  For example, who will be carrying out employee assessments each pay period, who calculates employer and employee contributions, who is responsible for producing and issuing statutory employee letters, who will be uploading a contribution file to your pension provider each week or month and who is going to deal with opt-ins, opt-outs and contribution refunds.  You payroll administrator may offer to carry out these tasks on your behalf, but they may only choose to do some of this administration, in which case you need to pick up the rest.   



One of the most critical things to get right is to provide your payroll administrator with clear instructions about how to administer your scheme through their payroll software.  They will need to know how you’ve designed your scheme and who you’ve chosen.   



If you don’t have the time to do all of this yourself, we can do it for you!  We’re qualified workplace pension specialists and we’ll make sure you get it right first time.  We charge a one-off fixed fee which is dependent upon the size of your business, and we’re happy to continue answering any questions you may have for the foreseeable future too, at no extra cost.



If you’d like to take the pressure off yourself and appoint a trusted, specialist company to help you instead, please give me or Adele Webb a call on 0800 160 1233, or fill in your details on our Get Started page and we’ll get back to you.   

staging date for workplace pensions

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.

Workplace pension schemes... how to choose

It’s fair to say that the most important decision you’ll make around auto-enrolment is the choice of pension scheme for your employees.  Selecting the right provider at the outset can potentially save you and your employees many thousands of pounds over the lifetime of the scheme.  So how do you go about choosing the right scheme for your business?   


The government imposed a cap on charges for workplace pension schemes of 0.75% to make sure they offered good value for money - this is called the Annual Management Charge (AMC) and it’s a charge against your employees’ funds each year.  Many providers have set their AMC at the top of the cap, but if you shop around you’ll find quite a few ranging from 0.5% up to the cap.


It can be quite tricky for a normal person (i.e. a non-pensions geek) to find out what a pension scheme’s charges are, because they’re not always clearly evident on the provider’s website.  And the AMC isn’t the only charge to think about.  Some schemes charge a monthly fee to the employer to use their scheme, which can be as much as £100 a month; others charge the employer a set-up fee, which is payable over and above any advice you may receive from your advisor.  It’s well worth doing the research to find out what’s best for your business, or appointing an experienced advisor who can find out for you.


But it’s not all about charges – you need to know that the provider is well-established and their business is well governed.  You want to make sure your employees’ pensions are in safe hands.  You should expect a broad investment selection and good, steady history of performance.  Customer service and payroll integration are also important factors in saving time and costs going forwards.


Understand what you’re signing up to – is it a master trust or a commercial provider?  Many master trusts are not-for-profit organisations and all are set up as occupational pension schemes, governed by Trustees who must act in the best interests of their members.  Commercial providers are for-profit and are set up as personal pension schemes.  Your advisor will be able to explain the pros and cons of each, but it’s important that you understand what type of scheme you’re signing up to.


So the message is clear: don’t just go for an easy ‘default’ option - it’s really worthwhile spending a  bit of time at the outset to choose your scheme carefully.  If you think you might need to set up a scheme, or would like to talk through your circumstances, please give our friendly and experienced team a call on 0800 160 1233.  We’ve got lots of useful information and guidance on our website if you need it:

Workplace Pensions – a big responsibility for small businesses

When a business owner or director gets around to dealing with their workplace pension, it can be difficult to know where to start and who to turn to for help.  Many people I’ve spoken to have been putting things off, and then panic ensues and it’s a rush job….  


If this touches a nerve with you as an owner or director of a small business, my advice is ‘don’t leave it until the last minute!’ because choosing, designing and setting up your pension scheme is something that shouldn’t be rushed – give yourself 6 months to put your scheme in place.  The choices that you make about your workplace pension scheme should be informed, researched and understood – it’s your business, and it’s your responsibility to do the right thing for your company and for your employees.  If you choose your scheme wisely you can avoid ongoing employer charges, and your employees will enjoy lower annual management charges which could make a difference of several thousand pounds to each employee’s pension fund when they come to retire. There’s also the very real risk of a smaller pension provider going belly-up.  The decisions you make now will directly influence the quality of life your staff can enjoy in their later years – that’s a big responsibility to take on yourself, so getting good advice and the right support can provide the reassurance you need that you’ve done the best you can.


Our typical client wants to get compliant quickly and cost-effectively, through a well-established, safe and secure scheme which performs well.  And help with HR is also useful – you’ll need to update your employment contracts, provide a pension policy for new employees and let your existing employees know what’s going on.  If you run an in-house payroll, then you’ll most definitely need guidance around payroll administration too. 


Our AE FastTrack service covers all of these important issues for you.  Because we’re pensions people, we understand better than most the importance of scheme choice and design.  Most people we meet want to do the right thing for their employees and they understand that there’s a bit more to it than simply filling in an application form.


We’ve set up workplace pension schemes for hundreds of businesses to date, and our aim is to make life easier for those facing the challenges of auto-enrolment.  If you would like to talk through your circumstances, please give our friendly and experienced team a call on 0800 160 1233.  We’ve got lots of useful information and guidance on our website if you need it:



Who is on the naughty list this Christmas?

The Pensions Regulator recently issued updated statistics on the number of time it had "used its powers" over the last quarter. The number of Compliance Notices issued, where an employer has failed to meet their auto-enrolment duties, has quadrupled compared to the previous quarter with 469 compared to 119.


There has been a 70% increase in the number of notices issued, where employers have either paid contributions late, or not at all, and a 50% increase in the number of fines issued.


Some of the excuses are along the "my dog ate my homework" line, with one employer disputing a notice on the grounds he never received it, even though The Pensions Regulator has a telephone recording of him acknowledging receipt!


The majority of non-compliance has been unintentional on the employer’s part, with business owners perhaps putting off the job of sorting their workplace pension until the last minute. This is the theme of The Pensions Regulator’s latest awareness campaign, with Workie, the big fluffy workplace pension, who most definitely shouldn’t be ignored.


Since the introduction of auto-enrolment in 2012, more than 60,000 employers have been affected by the new workplace pensions legislation. Most employers so far have completed their duties on time but with 500,000 businesses due to reach their staging date over the next 12 months, the number of compliance notices and fines is expected to rise.


There is some good news in The Pensions Regulator’s latest bulletin though. 9 out of 10 employers staging over the next few months had begun to prepare already. Levels of awareness and understanding of the issues around workplace pensions within small businesses has also significantly improved.



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:

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