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Payroll World Blog

Low Pay Commission consults

By Ian Holloway, head of legislation and compliance at Cintra HR & Payroll Services

We have only just implemented the accepted results of the Low Pay Commission’s (LPC) autumn 2016 report from April 2017. This saw the following changes to the National Minimum Wage and National Living rates:

• Adults (25+) aka the National Living Wage: £7.50

• Adult (21-24): £7.05

• Youth Development (18-20): £5.60

• 16- to 17-year-old (under 18 but over school leaving age: £4.05

• Apprentice £3.50

  • For apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to rate applicable for their age.

On 21 April 2017, the LPC launched its 2017 consultation in preparation for its report ahead of Autumn Budget 2017. Around this time, the chancellor of the exchequer will announce the rates that will apply for the first full pay reference period starting on or after 1 April 2018.

The consultation will be if interest to any organisation that pays workers at the National Minimum and National Living Wage (or bases pay increases on the value of these rates). Therefore, interested employers and employer representatives are encouraged to respond by
7 July 2017.

Posted on 27th April 2017 by Jerome Smail • Read comments Permalink


Here we go again!

By Ian Holloway, head of legislation and compliance at Cintra HR & Payroll Services

I can’t think of a year recently in which we have not had some sort of election. Then, on 18 April 2017, to everyone’s surprise, prime minister Theresa May announced a ‘snap’ election on 8 June 2017, ratified by the majority of members of parliament the following day.

Yet, we were only two years into what was supposed to be a fixed parliamentary term brought to us courtesy of the Fixed-term Parliaments Act 2011. This act was introduced in the early days of the Conservative-led coalition government from 2010 to 2015 and was seen as the Liberal Democrats’ way of securing that they would remain in the power-sharing arrangement for a fixed length of time. The act seemed to spell the end of the uncertainly of a general election every four or, maybe, five years (or any time in between). Fixed-term parliaments did bring stability for civil servants but also long and drawn out campaigns.

Forget the Fixed-term Parliaments Act, however, and look to the two situations where it does not apply:

1. Where a ‘no confidence in HM Government’ motion is passed, or
2. Where a motion is passed saying “there shall be an early parliamentary election” supported by two-thirds of MPs

Perhaps we should be referring to the above act as the (Not necessarily so) Fixed Term Parliaments Act!

Joking aside, there are serious implications about Mrs May’s snap decision. There are, currently, ten parliamentary bills in ‘ping-pong’ between the two houses in Westminster:

1. The Bus Services Bill
2. The Children and Social Work Bill
3. The Digital Economy Bill
4. The Health Services Supplies Bill
5. The Higher Education and Research Bill
6. The Intellectual Property (unjustified threats) Bill
7. The National Citizen Service Bill
8. The Neighbourhood Planning Bill
9. The Pension Schemes Bill and
10. The Technical and Further Education Bill

Possibly, what will happen is that any parts of the bill that are preventing agreement in the houses will be dropped to allow swift passage before the houses rise upon the dissolution of parliament on 3 May.

The same could be said about the Finance Bill 2017 that will bring us things like Optional Remuneration Arrangement and off-payroll working, both retrospectively effective 6 April 2017. Also, the first Making Tax Digital proposals are contained for action at a later date. Possibly, a hasty Westminster ‘wash-up’ will see the watering down of some of these proposals in order to get this important legislation through. That is absolutely the last thing that the payroll profession needs at a time when guidance is at its barest minimum anyway.

And the reason for the snap election at the end of the day is Brexit!

Posted on 23rd April 2017 by Jerome Smail • Read comments Permalink


HMRC using RTI data to amend tax codes – at last

By Ian Holloway, head of legislation and compliance at Cintra HR & Payroll Services

If you were vigilant, hidden away at the back of Agent Update 56 (page 16) is a new HMRC initiative called PAYE Refresh, going live from tax year 2017-18. This is all part of HMRC’s Making Tax Digital programme and was outlined in their 2016 consultation document Better use of Information (2.10 to 2.20), i.e. making better use of information regardless of who holds the data.

The consultation document said that it is estimated over six million taxpayers do not pay the correct tax through the PAYE system. In recognition, and as a first step, HMRC intended to make “better use” of the taxable pay income it already holds to update tax codes more frequently – e.g. the information that has already been flowing to HMRC about different types of taxable income via RTI for years! A responses document at the end of January 2017 confirms that April 2017 will see the start of HMRC using the data that they have had for years to adjust tax codes. A Policy Paper on 10 April 2017 confirms these changes to the PAYE system.

The good news

This is good news for the estimated six million taxpayers who have under or overpayments. Tax codes will be adjusted up or down to ensure that the right amount of tax is collected in more real time via PAYE Refresh.

Refresh is a totally new concept for the PAYE system which, up until now, has only ever been a way of estimating an individual’s tax liability over the course of the tax year.

The bad news

Adjusting tax codes will mean more notifications to the individual (via the P2 or their Personal Tax Account). At the same time, similar notifications will have to come to the employer via the P6. More tax codes means more frequent tax code changes and more data entry for employers. Although, quite correctly, HMRC recognises that many P6s “flow automatically into their computer systems”, although there are many employers who do not have these automatic flows.

However, HMRC have reassured employers that tax codes via the P6 will not be issued in batches more frequent than they are used to at the moment. In discussions, HMRC have said they will not change an employee’s tax code more than once a month.

I think it is important to look at HMRC’s comment about automatic flows of tax codes into the payroll system. By this statement, they have confirmed they understand that many, many employers are unable to intercept tax codes before they reach the payroll system because of their better use of technology. So, when HMRC turn around and say we should be looking at individual tax codes (and Student Loan notices), it will be easy to point to their January 2017 document and say this is not possible because of automation.

The query

Both the consultation and responses documents talk about PAYE Refresh being a mechanism to ensure the individual pays “the right amount of tax and National Insurance contributions for the tax year”. I am not quite sure how more frequent changes to a tax code will help the individual pay the correct National Insurance.

Maybe I am missing something obvious here.

The future

From April 2018, HMRC also plans to use bank and building society interest (BBSI), specifically capturing for tax purposes the 5% of individuals with savings whose interest exceeds the Personal Savings Allowance.

HMRC has large data-powering powers courtesy of Schedule 23 in Finance Act 2011. You may want to take a look at this Schedule to see that, essentially, anyone that holds data that may be taxable could be required to provide this data to HMRC in the future.

Posted on 19th April 2017 by Jerome Smail • Read comments Permalink


CWG2 Employer further guide to PAYE and NICs

By Ian Holloway, head of legislation and compliance at Cintra HR & Payroll Services

The CWG2 further guide is essential reading for the UK payroll professional. In previous years, this has always been provided in pdf format, however, the 2017-18 version published on 22 February 2017 was only text with no clear index of sections at the front.

After questioning this with, apparently, the right people, I am pleased to say that a revised version has been uploaded to Gov.uk that contains an index.

While this is extremely useful and makes the document useable again, the index is contained at the back rather than at the front. Although, to be fair, the document does start off with a link to the index at the back!

Not perfect but much better.

Posted on 19th April 2017 by Jerome Smail • Read comments Permalink


All the guidance you could ever need

By Ian Holloway, head of legislation and compliance at Cintra HR & Payroll Services

Whether you are finishing 2016-17 (with the pending declaration of benefits in kind) or starting 2017-18 (getting used to new tables and guidance), this post attempts to put all the current guidance into one document:

Benefits and expenses (tax year 2016-17)

Guidance

Expenses and Benefits A-Z
P11D Guide (a brief guide to P11D completion)
Booklet 480
Booklet 490
CWG5 (Class 1A National Insurance on benefits)

Forms

Expenses and benefits 2016-17 (online P11D and P11D)
P11D (pdf)
P11Db online form
Working sheet 1 (accommodation)
Working sheet 2 (cars and car fuel)
Working sheet 3 (vans)
Working sheet 4 (loans)
Working sheet 5 (relocation expenses)
Working sheet 6 (mileage)

Payroll (tax year 2017-18)

Tax

Taxable Pay Tables (Manual Method)
Tables A (Pay Adjustment Tables)

The Calculator Method tables are discontinued from 2017-18 onwards.

National Insurance

CA38 (Table Letters A, H, J, M and Z
CA40 (Employee-only Contributions)
CA41 (Table Letters B and C)
CA42 (Foreign-going mariners and deep-sea fisherman)
CWG2 (Further guide to PAYE and NICs)

Statutory Payments

Guidance

SSP (Employer guide to pay)
SMP and Leave (Employer guide)
SAP and Leave (Employer guide)
SPP and Leave (Employer guide)
ShPP and Leave (Employer guide)

Tables

SSP (linking tables)
SMP (table of dates for employee entitlement)
SAP (table of dates for employee entitlement)
SPP (birth – table of dates for employee entitlement)
SPP (adoption – table of dates for employee entitlement)

Student Loans

SL3 (Student Loan Deduction Tables)
Guidance for employers

Posted on 11th April 2017 by Jerome Smail • Read comments Permalink


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