Official publication of The Chartered Institute of Payroll Professionals
in Payroll, Pensions & Reward
Issue 37 February 2018
Automation, AI and robotics
AI and the future of work Embracing
Law of unexpected consequences Wrestling with
Enforcing GPG reporting Getting a grip
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With artificial intelligence we are summoning the demon. Elon Musk (1971–)
Editor’s comment
In this issue you’ll find several articles and a roundtable report on the feature topic of automation, artificial intelligence and robotics (pages 35–42). Though the articles’ authors present different views, some expressing concerns, their message is of
obviously had similar impact. However, I do not envisage similar radical effects occurring from application of AI as in my opinion scope for fundamental automation is now rather more limited. My research suggests to me that AI lacks intelligence, common- sense and experience. Enabling a machine to learn and think – and to react to available information (data) – is an ongoing challenge. It is also evident that a ‘gold rush’ is well-underway with some software and hardware suppliers (understandably) offering ‘AI’ functionality to assist sales. Will this gold rush pan out?
profound change ahead. Researching for my article Man and machine (page 36) confirmed that the pace of technological change is rapidly increasing. This is the world in which we live and work. It was the late ‘60s and early ‘70s when British Rail (which I was employee of until 1978) rolled out its computerised National Payroll System decimating those engaged in manually processing payroll. Computerisation of payroll across public and private sectors has
Mike Nicholas MCIPP AMBCS Editor
I hope 2018 has started off well for all our membership. Our three new board members elected by you at our December annual general meeting are starting to get to grips with their new roles and I’m sure Chair’s message
with our learning, whether that be with formal training courses or qualifications, or through our own personal learning. Perhaps you’ve already engaged with the CIPP for an event, or are even thinking of a qualification that will progress you towards the unique Individual Chartered Status. Will you be one of those experienced and qualified professionals who apply for your own personal Charter in 2018? I look forward to seeing many of you at CIPP events during 2018, my last year of office as chair; perhaps at a National Forum, National Payroll Week activities, Scottish National Conference, or the Annual Conference and Exhibition. Whatever the event, I hope you continue to learn, and develop yourself to provide the exceptional service that payroll and pensions professionals do.
will settle in really well. I can’t believe that we’ll soon be asking for nominations for the 2018 election – and so I ask that those of you who considered standing for election in 2017, but either didn’t apply for whatever reason or were unsuccessful, please consider it again. We need our membership to keep getting involved and it was a delight to see an increased number of votes in our AGM, although it is still a very small percentage of our overall membership who are eligible to vote. Let’s see if we can not only get a good number of applications for the membership to choose from again this year, but that we increase the number of votes and show that our membership is engaged fully with the CIPP. When we’re so early in the year, it is always interesting to see how many people are keeping to any resolutions they have made. One of the great resolutions we can make is to plan to continue
Eira Hammond FCIPPdip Chair, CIPP
Another year gone and here we are a month into the new year already. Normally at this time of the year we’re in the grips of winter though at the time of writing this, in December, thick snow, freezing temperatures CEO’s message
Remember to make the CIPP your first point of call as we continue to support all members through our calendar of training, events, consultancy, membership benefits (such as the Advisory Service and special interest groups) and an entire range of qualifications – all of which you can view in our online prospectus at http://bit.ly/2CLGa3I – to make sure you’re adequately skilled to proudly represent our industry. I extend a warm welcome to our three new board directors: Suzanne Gallagher, Stuart Hall and Lizabeth Lay. Their profiles and how they will represent you as members is on display at http://bit. ly/2CNdjw7. Thanks to our outgoing directors, Ian Walters and Paul Rains for their sterling service. I wish you all a successful and prosperous 2018.
and black ice have made an early start. Have you made new year resolutions? Are they broken or still in place? Well, the CIPP resolves to continue to be at the forefront of continually promoting payroll and pensions education, training, events and membership. I was looking at the challenges we faced as professionals in 2017, including the apprenticeship levy, Brexit, salary sacrifice changes, gender pay gap reporting, Scottish income tax rates and IR35 reform legislation. For me, it feels like ‘same again’ for 2018 as well as the introduction on 25 May 2018 of the General Data Protection Regulation. And as usual, as professionals, be it payroll or pensions, we will, throughout organisations in the UK and globally, have a key part to play.
Ken Pullar FCIPP Chief executive officer, CIPP
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| Professional in Payroll, Pensions and Reward |
Issue 37 | February 2018
in Payroll, Pensions & Reward PROFESSI NAL
Also available online at payrollpensionsandreward.org.uk
Contents
February 2018
35
The good the bad the ugly
Lisa Gillespie asks can AI be trusted
Features
19
16
11
Enforcing GPG reporting Diana Bruce urges action
It’s all about learning Sue Smith describes benefits
So much to look forward to Neil Tonks previews changes
22
26
20
Illegality, trust, substitution Nicola Mullineux reviews decisions in three cases
Law of unexpected consequences Helen Hargreaves alerts new legislation
The year ahead Jill Smith reveals what’s coming
| Professional in Payroll, Pensions and Reward | February 2018 | Issue 37 2
LGPS and AVCs via salary sacrifice Amanda Venables explores salary sacrifice arrangement 30
Tackling workplace sexual harassment Danny Done outlines what employers should do 28 Pensions dashboard – opportunity or threat? Henry Tapper discusses 31
Chief executive officer Ken Pullar FCIPP CIPP board of directors Gordon Cresswell FCIPP Jason Davenport ACIPP Suzanne Gallagher MCIPP Stuart Hall MCIPPdip Eira Hammond FCIPPdip Ros Hendren MSc FCIPP, Mgr, FCMIdip, FHEA Lizabeth Lay MSc FCIPP Karen Thomson MSc FCIPP, FHEA Cliff Vidgeon FCIPP Ian Whyteside MCIPP, FMAAT, ATT Editor Mike Nicholas 01273 412 836 | editor@cipp.org.uk Advertising Jill Bonehill 0121 712 1033 | advertising@cipp.org.uk Design James Bartlett and Nicole Gumery design@cipp.org.uk Printing Warwick Printing Company Ltd
32
What now for the pensions dashboard? Shaun Gomm mindful of consumers’ needs
36
42
Man and machine Mike Nicholas traces AI’s origins/progress
AI and the future of work Iain Moffat explains what it means
Useful contacts Membership membership@cipp.org.uk 0121 712 1073 Education education@cipp.org.uk 0121 712 1023 Training admin@cipp.org.uk 0121 712 1063 Events events@cipp.org.uk 0121 712 1013 Marketing and sales marketing@cipp.org.uk 0121 712 1033 General enquiries
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42 6
How RPA will affect payroll Nick Day alerts the profession
The wave of Industry 4.0 Bob de Wit argues for future-proofing
Regulars
01 Editor’s comment, and Chair’s and CEO’s message 04 Membership insight 13 CIPP update 14 Events Horizon 15 Professional development
23 Industry news 26 Reward insight 30 Pensions insight 33 Pension news 47 Technology insight 54 Confessions of a payroll manager Additional online content 36 Man and machine (complete article) 47 Improving data security 48 Making a cracking start to 2018
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Articles Please support this magazine so that it can continue to be a part of your membership package. Trademarks The CIPP logo, the initials ‘CIPP’ and the words ‘Professional in Payroll, Pensions and Reward’ and ‘CIPP Consult’ are trademarks of the Chartered Institute of Payroll Professionals. Copyright: The Chartered Institute of Payroll Professionals 2018. The Chartered Institute of Payroll Professionals, CIPP, Goldfinger House, 245 Cranmore Boulevard, Shirley, Solihull, West Midlands, B90 4ZL. Switchboard 0121 712 1000 Fax 0121 712 1001 Copyright This magazine is published by The Chartered Institute of Payroll Professionals in whom the copyright is vested. All rights reserved. No part of this publication may be reproduced, stored in a retreival system, or transmitted in any form or any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. The views expressed in this publication are not necessarily those of the CIPP or the editor. The information and comment contained in this publication are given in good faith, their accuracy or completeness cannot be guaranteed.
18 Payroll news 19 Payroll insight
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| Professional in Payroll, Pensions and Reward |
Issue 37 | February 2018
MEMBERSHIP INSIGHT
On your behalf
Policy team update The CIPP policy team provide an outline of recent activity
Agent Strategy Group In November, Jill Smith, CIPP policy manager, attended the Agent Strategy Group meeting which included discussion about making tax digital for business (MTDfB). This highlighted the important role agents play encouraging and supporting their clients to keep digital records; especially new clients as, moving forward, it will make the transition process easier if/when it becomes mandatory for everyone to be digital. In response to many agent queries, HM Revenue & Customs (HMRC) has now given a limited number of agents, beta access to a new digital agent service account. This new online service is not a replacement function; it is basically the front-door to all MTDfB. Making tax digital for individuals was also covered. A key aim is for agents to have as many tools as possible to be able to complete their clients’ tax accounts. Simple assessment has already begun as we know, which allows HMRC to make a calculation of income tax liability without the need for an individual to complete a self-assessment tax return. The long-term strategy for agents was also discussed and HMRC is investing in process design and work for agents focusing on three strategic pillars: digital services for agents; raising professional standards; and working in partnership. HMRC’s aim is that the ‘standards pillar’ will bring about working towards a single HMRC agent standard so that all agents are a member of one professional body. Watch our news pages for further updates on the improvements to come for the agent community.
Statutory Payments Consultation Group
of continuous service will be entitled to statutory parental bereavement pay, as long their normal weekly earnings for the period of eight weeks ending with the relevant week are not less than the current lower earnings limit for class 1 National Insurance contributions. All employees, regardless of length of service, will be entitled to two weeks of statutory parental bereavement leave. There were also updates at the meeting about the green paper proposal to introduce a flexible statutory sick pay system; this is still at the discussion stage so no real news to report on this just yet. With regard to the extension of shared parental leave and pay to grandparents (of which there was no mention in the 2017 Autumn Budget), it has not been ruled out but the government is exploring/considering options for the public for supporting working families. Government Gateway validation codes A two-step verification process protects government credentials from hijack or malware by asking the customer to enter a six-digit code, sent to a mobile phone or landline, each time they log into their digital services. This is an issue that has prompted discussions through various channels, including CIPP’s LinkedIn group. There are reports of issues where, in particular, an office has only one landline, no work mobile phones and several pay as you earn (PAYE) references to deal with. Many people understandably want to avoid having to use their personal mobile phone for work purposes. One solution that has
Jill also attended the Statutory Payments Consultation Group meeting at the end of November. One of the first items on the agenda was the Parental Bereavement (Leave and Pay) Bill which is currently making its way through parliamentary scrutiny. Although this is a private bill it has the backing of the Conservative party and the Opposition. There were several questions raised at the meeting such as: when would payments be made, will there be public consultation on the detail, will there be at least an eighteen-month lead time for software developers? We will have to wait for information on the finer details. ...wait for information on the finer details When the Bill receives Royal Assent and becomes an Act, it will amend the Employment Rights Act 1996 (ERA) to entitle parents who lose a child (under eighteen years) to two weeks of statutory parental bereavement leave. Currently, the ERA gives a ‘day one’ right for an employee to have ‘reasonable’ time off work to deal with an emergency, such as a bereavement involving a dependant. ‘Reasonable’ is not defined and will depend on the situation. An employer does not have to pay an employee for this time away from work, but many employers offer paid special or compassionate leave. Only employees with at least 26 weeks
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Policy hub
been set up for one company is an inbox that emails the access code received by SMS to a selected group of team members who can then use the code to access the account. We asked HMRC if they were looking at the possibility of sending codes via email or if there was an alternative solution in the pipeline? Their response was: “Previously, we have looked at email as an option for extra security. For a number of reasons, we have found that it is not secure enough for us to use as a form of 2-factor authentication. However, we do constantly re-evaluate all possible extra security methods based on the changing online security landscape and email is always part of that exercise. “HMRC Extra Security Process has been created to ensure one account is not shared between multiple users. When setting up extra security, you will be able to create admin and delegate accounts so every user will have an account which they can then protect with extra security. “To provide different options for users, we offer mobile SMS, landline, or the option of an authenticator application. The HMRC app (which we recommend) is available on the Windows, Apple and Google stores for free or you can use one of the many free authenticator applications available for Windows, Android and ISO (such as Google Authenticator).” Draft legislation At the end of November 2017, we also responded to the technical consultation on draft PAYE regulations in respect of car data reporting requirements and reporting taxable amounts due under optional remuneration arrangements (http://bit. ly/2mpyW1v). There was only a two-week consultation period, so we did not produce a survey to gather member opinion. We did, however, put a call out through our email news distribution asking that individuals wishing to provide feedback do so either directly or to us. The policy team reviewed the draft legislation and had no real concerns about the legislation itself; however, we were concerned that the guidance and examples provided to employers and their agents may be misleading in some respects. ● Cars and tax-exempt benefits – It was confirmed that the ‘amount foregone’ for a taxable car is only the part of the salary
sacrificed amount that relates specifically to the taxable car. It does not include the amount sacrificed for ‘payments and benefits associated with taxable cars’. Employers should therefore apportion the full amount of the salary sacrifice (or, indeed, a cash allowance) between to the taxable car and to the tax-exempt benefits (according to the provisions of the supply contract). ...guidance and examples provided to employers and their agents may be misleading... There is an example of apportioning the total bundle in this way in HMRC’s Employment income manual at EIM44020 (example 1) (http://bit.ly/2zbyTeg), but other examples on this page that relate to taxable cars do not yet identify the issue of apportionment. We suggested in our response either to adapting one of those examples to show the split, or to provide an additional example and it would certainly be helpful to cover this in a future issue of HMRC’s Employer Bulletin. ● Meaning of OpRA – The explanatory note and the preamble on the draft legislation’s webpage use the following text several times: ‘Optional remuneration arrangements also known as salary sacrifice’ (or similar). Unfortunately, this is misleading because the terms are not synonymous: salary sacrifice arrangements are type A so the current text ignores type B. We suggested addressing this by changing ‘also known as salary sacrifice’ to ‘including salary sacrifice arrangements’ (or similar). We also received one response directly from a member (thanks Vince Ashall) who highlighted something we have been reiterating to members relating to the provision of car details when payrolling company car benefits. The explanatory note that accompanied the draft regulations implies that the information must be supplied from April 2018 even in cases where the car benefit is not payrolled. However, the correct situation is that the car details only need to be provided in the full payment submission where the car benefit is payrolled. n
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Issue 37 | February 2018
| Professional in Payroll, Pensions and Reward |
*correct at time of publication
MEMBERSHIP INSIGHT
employer NICs have been paid at any part of the tax year then class 1A will be due, possibly on a pro rata basis. Q: An employee has been on long- term sick leave. She is going on maternity leave shortly but unfortunately is not entitled to statutory maternity pay (SMP). She has now reached the point where it is four weeks before her expected due date. A: If the employee is not off sick with a pregnancy-related illness then statutory sick pay (SSP) can continue up to the day before her maternity leave date which she has requested. If this employee has been off sick with a pregnancy-related illness and this continues into the four weeks before the due date, then SML and SMP would automatically commence at this point. As she is not entitled to SMP in this scenario she could potentially be entitled to maternity allowance which she could claim from the Jobcentreplus. Please see paragraph 4.8 on the following link for further guidance https://goo.gl/hp6YAH. Q: I have a dilemma over an employee who on their second day of employment was in a car accident which has resulted in them not being able to attend work for the last two weeks. They have provided a doctor’s note for the two weeks they have been absent but have not been paid yet and earned over the £113 a week threshold. Are we able to process SSP for them? A: The guidelines for SSP eligibility are that your employee must have completed some work for you; therefore, in the scenario outlined, it appears they could possibly be eligible for SSP depending on the earnings. You would have to base the earnings test on what they would have earned if they had been at work for the payment period not for the hours they worked. If they pass the earnings test the employee would then be eligible for SSP. Q: We have a new employee who joined our company on 16 November and is also going on maternity leave on 13 December. Unfortunately, she has not been employed by us long enough to be entitled to SMP, and so I have issued When will she have to start her statutory maternity leave (SML)?
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Q: Is there a limit on the number of earlier year update (EYU) returns that can be submitted to HM Revenue & Customs (HMRC)? A: I can confirm that HMRC do not limit the number of EYU submissions which can be submitted by employers. It may be that your provider has agreed limits within their terms of engagements, so you would need to go back to these terms to check what is included. Insurance contributions (NICs) via the post office and whether this would also affect pay as you earn (PAYE) income tax and class 1 NICs? A: The last day an employer can pay class 1A NICs, PAYE income tax or class 1 NICs to HMRC via the post office was 14 December 2017. From 15 December 2017, you need to have an alternative method in place. Employers can choose to pay HMRC by one of the four methods: online, telephone banking, CHAPS and BACS. Credit cards can be used but will incur a fee, and from 13 January you will not be able to use a personal credit card. Confirmation of these changes can be found at the following link https://goo. gl/541XH7. Q: An employee has now reached state pension age (SPA) and so we have changed the table letter for NICs to category C. Will this employee still have to pay their student loan? Q: Will HMRC no longer accept payments of class 1A National
A: It is correct that if the employee has reached SPA then you should amend their NICs category accordingly, but this will have no reflection on the student loan deduction. This should still be taken providing they have hit the correct earnings levels associated with student loan deductions. This link to GOV.UK website provides information: https://goo.gl/J6BwWs. Q: We have several seconded employees from Germany who have current A1 documents and are exempt from employer and employee NICs. My question is whether their benefits in kind (BiK) that are being reported in P11D returns would also be exempt from class 1A NICs? A: As there are current A1 documents in place for these employees, there are no employee or employer NICs due. Following this, I can confirm that there will also be no class 1A NICs due on the BiKs reportable in the P11D for these employees. Please see the following links: https://goo.gl/E1Vuyc, https://goo.gl/ xYH8M3. HMRC’s guidance states that there will be no class 1A NIC liabilities on BiK if all of the following apply: ● the benefit must be chargeable to income tax on an amount of general earnings as defined at section 7(3) of the Income Tax (Earnings and Pensions) Act 2003 (even though tax may not actually be paid) ● there must be liability for employer class 1 NICs for any part of the tax year in which the benefit was provided, so if
| Professional in Payroll, Pensions and Reward | February 2018 | Issue 37 6
Policy hub
Q: In the company there is an employee who is currently on SML. She has already taken twelve weeks of SML, and has received company maternity pay at full-pay alongside SMP. She has now requested to take three weeks’ annual leave and also remain on SML and still be paid SMP. I would like to ask whether it is okay to replace the SMP with holiday pay for the annual leave and for her to continue to be on SML? A: If the employee has returned to work then yes she can take and be paid for the annual leave that has been accrued. The employee cannot take annual leave whilst still on SML. She should have taken annual leave either before going on SML or at the end of SML, but not whilst still on SML. You can find confirmation of this on both GOV. UK and ACAS websites via the following links: http://bit.ly/2dmcUG2, and http:// bit.ly/2uHGLmx. Q: An employee will be going on maternity leave and I would like to know if we are permitted to deduct the employee’s pension contributions from the SMP she going to receive from us? A: If the employee’s pension deduction comes from her net pay then yes pension contributions can be taken from the SMP. However, if the pension is a salary sacrifice arrangement then you cannot take the pension salary sacrifice from the employee’s SMP as the employee is sacrificing salary for a higher employer pension contribution. Therefore, the employer must still pay these higher contributions based on the employee working and earning normally even though no deduction for the sacrifice can be taken from the employee. n
form SMP1 to her. However, our human resources (HR) manager has insisted that we should pay her SMP for the first two weeks of her maternity leave that she takes once her baby is born. Is this correct? A: Unfortunately, your HR manager is incorrect. If the employee is excluded from SMP because of the earnings test or the service test, then she will not be entitled to be paid any SMP for the two weeks, even though she must take at least the compulsory two weeks of maternity leave. You should issue form SMP1. The employee may be able to claim maternity allowance from Jobcentreplus, and she may also be entitled to company maternity pay. Q: I am currently looking at whether we need to report under the gender pay gap regulations for one of our companies. I understand that the snapshot date is 6 April, and so as this company at 31 March had less than 250 employees it would have been out of scope for reporting their figures. However, as of 1 April they acquired more employees which has now taken them over the 250-employee mark. As real time information returns would not have reported this until later in the month we have not received a request from HMRC to publish the gender pay gap figures for this company. Even though we have not received the formal request to publish, do we still need to report our gender pay gap figures? A: The recent guidance does refer to the number of employees as at the snapshot date; however, it also says that where the headcount drops slightly below the 250 threshold the employer should continue to report voluntarily. The guidance says that “If an employer has fewer than 250 employees on the snapshot date, they are not required to comply with the regulations but should give serious consideration to the business benefits of doing so”. So, as you have pointed out that on this date your head count was over 250 employees, even though you have not been formally requested to publish, to avoid any fines and to comply with the snapshot employee figure, it would be in your interests to publish your gender pay gap figures.
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Issue 37 | February 2018
| Professional in Payroll, Pensions and Reward |
*correct at time of publication
MEMBERSHIP INSIGHT
Autumn Budget 2017
CIPP’s policy team outline the key announcements
A rmed with the prime minister’s cough sweets, the chancellor of the exchequer, Phillip Hammond (see image), delivered the 2017 Autumn Budget on 22 November, taking just over an hour to do so. A ‘balanced approach’ Budget was assured with some fiscal loosening that aimed to get Britain “firing on all cylinders” and “fit for the future”. We were also promised a future full of change (the payroll profession is certainly used to that), new challenges and, above all, new opportunities. There weren’t really any surprises for payroll, save perhaps for the absence of any reforms to pensions tax relief. There are certainly going to be several consultations in 2018 which the policy team will review, report on, and survey members and the wider profession accordingly. Thank you in advance for your input. It is your views, your comments and your experience that give our consultation responses the valuable detail required to help influence policy. Read on for a summary of announcements. Further detail on the Autumn Budget 2017 announcements, the ‘red book’ and all associated documents are available on GOV.UK (goo.gl/z2TZGR). Tax rates and thresholds The tax-free personal allowance will increase in April 2018 to £11,850 and the higher rate threshold will increase to £46,350. Both figures are increasing in line with inflation and continue their progression towards the government’s targets for April 2020 of
● Fuel duty – This will be frozen for an eighth year in 2018–19. The government will review whether the existing fuel duty rates for alternatives to petrol and diesel are appropriate, ahead of decisions at Budget 2018. In the meantime, the government will end the fuel duty escalator for liquefied petroleum gas (LPG). The LPG rate will be frozen in 2018–19, alongside the main rate of fuel duty. ● Vehicle excise duty (VED) – From 1 April 2018, VED (car tax) rates for cars, vans and motorcycles registered before April 2017, and the first-year rates for cars registered after April 2017, will increase in line with the retail price index. However, the heavy goods vehicle VED and road user levy rates will be frozen from 1 April 2018. Expenses and benefits in kind ● Electric vehicles – Electricity provided by employers to charge employees’ electric vehicles will not be treated as a benefit in kind from April 2018. ● Taxation of employee business expenses – Following the call for evidence published in March 2017, the government will make several changes to the taxation of employee expenses: m there will be consultation in 2018 on extending the scope of tax relief currently available to employees and the self- employed for work-related training costs m from April 2019, employers will no longer be required to check receipts when reimbursing employees for subsistence when using benchmark scale rates. The
£12,500 and £50,000, respectively. Rules for the marriage allowance (also known as the transferrable tax allowance) will be revised to allow claims to be made following the death of a partner, backdated by up to four years.
...promised a future full of change...
Transport tax ● Company cars, vans and fuel – The cash equivalent where a van is made available to an employee for private use will increase to £3,350 for 2018–19. The value of the multiplier for calculating the cash equivalent of the fuel benefit for a car will increase to £23,400 for 2018–19. The flat rate charge for the van fuel benefit will increase to £633 for 2018–19. As previously announced, the van benefit charge for zero-emission goods vehicles will increase from 20% to 40% of the standard charge from April 2018. The company car tax diesel supplement will increase from 3% to 4% from April 2018. The supplement is used when calculating the taxable benefit of a diesel car that is available for private use and will apply to diesel cars registered on or after 1 January 1998 that are not certified to the real driving emissions 2 standard. The supplement will not apply to diesel hybrids or to vehicles other than cars.
| Professional in Payroll, Pensions and Reward | February 2018 | Issue 37 8
Policy hub
Intermediaries legislation The government reformed the off-payroll working rules (known as ‘IR35’) for engagements in the public sector in April 2017. Within the Budget document it states that early indications show that public sector compliance is increasing as a result, and therefore a possible next step would be to extend the reforms to the private sector, to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company. The government will be consulting on how to tackle non-compliance in the private sector, drawing on the experience of the public-sector reforms, including through external research already commissioned by the government and due to be published in 2018. ...a reform of the current system for charging penalties and interest... Pensions ● Lifetime allowance – The lifetime allowance for pension savings will increase in line with consumer price indexation, rising to £1,030,000 for 2018–19. ● Life assurance and overseas pension schemes – From April 2019, tax relief for employer premiums paid into life assurance products or certain overseas pension schemes will be modernised to cover policies when an employee nominates an individual or registered charity to be their beneficiary. Tax administration ● Late submission penalties and late payment interest – There will be a reform of the current system for charging penalties and interest on late submissions and payments. The new system will be on a points-based approach. Also under consideration is the simplification and harmonisation of the current penalty and interest schemes. Final decisions on both schemes will follow consultation. It is not yet clear whether this affects all tax regimes. ● Making tax digital – As previously announced and legislated for in the Finance (No 2) Act 2017, making tax digital will not
existing concessionary accommodation and subsistence overseas scale rates will be placed on a statutory basis m HM Revenue & Customs (HMRC) will work with external stakeholders to improve the guidance on employee expenses, particularly on travel and subsistence and the process for claiming tax relief on non- reimbursed employment expenses. National Insurance contributions (NICs) ● Reforms – As previously announced, to ensure that there is enough time to work with parliament and stakeholders on the detail of reforms that will simplify the NICs system, the government has announced that it will delay implementing a series of NICs policies by one year. These are the abolition of class 2 NICs, reforms to the NICs treatment of termination payments, and changes to the NICs treatment of sporting testimonials, which will all now take effect from 6 April 2019. ● Class 4 – As announced earlier this year, the government will no longer proceed with an increase to the main rate of class 4 NICs from 9% to 10% in April 2018, and to 11% in April 2019. ● Employment allowance – The government has found evidence of some employers abusing the employment allowance to avoid paying the correct amount of NICs, often by using offshore arrangements. To crack down on this, from April 2018, HMRC will require upfront security from employers with a history of avoiding paying NICs in this way. NMW/NLW Alongside the Budget the government’s response to the Low Pay Commission’s autumn 2017 report was published, accepting the following recommendations for hourly rate increases to the national minimum/living wage (NMW/NLW) from 1 April 2018: ● from £7.50 to £7.83, for workers aged 25 and over (the NLW) ● from £7.05 to £7.38, for 21–24-year olds ● from £5.60 to £5.90, for 18–20-year olds ● from £4.05 to £4.20, for 16–17-year olds ● from £3.50 to £3.70, for apprentices aged under-19 or in the first year of their apprenticeship. The daily accommodation offset rate will increase from £6.40 to £7.00 (weekly £49.00).
become mandatory until April 2019, and then only for businesses with a turnover at or above the VAT (value added tax) threshold. The government is committed to ensuring that the system is robust before rolling it out further; the earliest date for any further rollout is April 2020. ● Faster recovery of self-assessment debt – HMRC will use new technology to recover additional self-assessment debts closer to real-time by adjusting the tax codes of individuals with pay as you earn income. These changes will take effect from 6 April 2019. ● Security deposit legislation – To ensure the collection of debt in cases of insolvency, the government is expanding the security deposit legislation to cover construction industry scheme deductions. The change, which will take effect from 6 April 2019, will be included in Finance Bill 2018–19 and there will be a consultation on its implementation. Tax avoidance and evasion ● Further measures – The government has introduced over 100 measures to tackle tax avoidance, evasion, non- compliance and aggressive tax planning between 2010 and 2017. A policy paper was published alongside the Budget which includes the work that has already taken place and which details eighteen further measures, including extending HMRC’s powers to hold online marketplaces jointly and severally liable for the unpaid VAT of all traders on their platforms. ● Disguised remuneration – The government will also tackle disguised remuneration avoidance schemes used by close companies (companies with five or fewer participators) by introducing the close companies’ gateway, and measures to ensure liabilities from the new loan charge are collected from the appropriate person. Modern working practices The government is to publish a discussion paper as part of the response to Matthew Taylor’s review of employment practices in the modern economy, exploring the case and options for longer-term reform to make clearer the employment status tests for both employment rights and tax. The government recognises that this is an important and complex issue, and so will work with stakeholders to ensure that any potential changes are considered carefully through consultation. n
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Issue 37 | February 2018
| Professional in Payroll, Pensions and Reward |
MEMBERSHIP INSIGHT
5 minutes with…
I think that the experiences I have had in marketing and business operations allow me to contribute ideas, participate in project teams and generally contribute to the success of the CIPP. By meeting the members and finding out what their issues are, reading legislation updates and attending industry events, I am confident that I can bring a positive contribution to the CIPP’s strategy. What does the future hold for the future of payroll, pensions and reward? There have been many challenges in the last few years for payroll, pensions and reward professionals and I foresee more changes ahead. If you look how far the industry has come since I received my first brown envelope, prepared by another member of staff with no training or real knowledge, there is no doubt in my mind that, with the advances of technology, a Chartered body to represent you and an ever-changing and challenging workforce, there will be exciting times ahead. What do you do in your available time to unwind? When I am away from the office I am a keen watcher and reader of fantasy and science fiction. I enjoy technology and am probably known as a bit of a geek when it comes to a certain brand of phones, tablets and laptops, as I have the whole range. Family is hugely important to me and as a proud (but very young, of course) grandma of four under-five-year- olds, I love spending time with them and it gives me a renewed outlook on life. n
Dawn Baxter Business operations team leader, CIPP
Tell us about your career and background I have had a varied background along with a career break to have a family, but my experience is predominately in retail management. I started, in the distant past of 1980, on a youth trainee scheme at a local chemist, where I got paid £23 a week in cash, with a handwritten payslip. I soon progressed to cashier and window-dresser at Etams in Birmingham. Along the way, I have been a store manager for some big names – including River Island and Laura Ashley – and achieved my career goal in 1998 of becoming store manager in the largest Mexx outside London where I managed forty staff, three clothing departments and a huge stockroom. When did you first become involved with the CIPP? In 2005, I decided the long hours of retail were not for me so chose to retrain and undertook the Pitman’s Microsoft Office Specialist qualification. After successfully passing this I walked into the IPPM’s (a CIPP forerunner) office in Hockley Heath on 14 August 2006 as a very nervous marketing temp. It was a very busy time as within six weeks the Institute
became simply ‘IPP’. I became a permanent member of the team in March 2008 and both the Institute and I haven’t looked back since. I took on my current role in December 2016. What does the role mean to you? I am passionate about the Institute and its members. The values the company hold are important to me and I enjoy passing these on to new members of the team. I love going out and attending events; in particular: the Annual Conference and Excellence Awards and the Graduation Ceremony, as these show how professional the industry and its members are. Though I did not go to college after leaving school, I am a huge advocate of learning whatever your age. CIPP has supported me to achieve a level 3 certificate in marketing and I am awaiting, with crossed fingers, my results for the level 4 CIPP Professional Development Award in Team Management. What do you think you can bring to the future strategy of the CIPP? There have been lots of changes to the Institute during my time here.
| Professional in Payroll, Pensions and Reward | February 2018 | Issue 37 10
Policy hub
Get off to a great start
Enforcing GPG reporting
Payroll Technician Certificate
Diana Bruce MCIPPdip, CIPP senior policy liaison officer, urges action as deadlines imminent
The Payroll Technician Certificate will equip you with the skills necessary for the timely and compliant administration of payroll in your organisation; and provide a grounding in areas such as statutory payments, court orders and student loans.
T he date is fast approaching by when thousands of employers must report and publish their gender pay gap (GPG) figures: no later than 30 March 2018 for public sector employers and 4 April 2018 for private sector employers. We urge all employers who think they come under the GPG legislation to comply by the deadline date. The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 and the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 (‘the Regulations’) require employers to analyse data and publish reports. Employers need to publish six calculations showing: ● mean bonus GPG ● median bonus GPG ● proportion of males and females receiving a bonus payment ● proportion of males and females in each pay quartile. ‘Mean’ is the average hourly rate of pay, calculated by adding the hourly pay rate for employees then dividing by the number of employees. ‘Median’ is the middle hourly pay rate, after arranging pay rates in order from lowest to highest. Employers must both publish their GPG data with a written statement on their public-facing website and report their data to government online, using the GPG reporting service, also a public-facing website. In the main the duty to collect and report GPG information applies to employers in Great Britain with 250 or more relevant powers under the Equality Act 2010 ● mean GPG in hourly pay ● median GPG in hourly pay ...various enforcement
employees on the relevant or ‘snapshot’ date, which is 31 March for public sector organisations and 5 April for those in the private and voluntary sector. Organisations with fewer than 250 employees can publish and report voluntarily but are not obliged to do so. Employers with employees in Northern Ireland – or anywhere that isn’t part of Great Britain – must exclude workers based outwith Great Britain before performing GPG calculations. Despite reports that the Regulations ‘show no teeth’ for failure to report, the Equality and Human Rights Commission (EHRC) has various enforcement powers under the Equality Act 2010. On 17 December 2017, the EHRC published a consultation – Closing the gap: enforcing the gender pay gap regulations (http://bit.ly/2lWFzVU) – which details its planned approach. The consultation details the timescales within which the EHRC will aim to take certain steps once enforcement action has commenced. Initially, the aim is to resolve non-compliance through informal resolution, but if formal action is required EHRC will use the most appropriate available. In 2018–19, the intention is to focus enforcement work on employers that do not publish the information required by the Regulations but EHRC may also act against those publishing inaccurate data. n Further information ● ACAS and the Government Equalities Office practical guidance on managing gender pay reporting (http://bit. ly/2aDNnEZ) ● EHRC advice and guidance on GPG reporting requirements (http://bit. ly/2E7SN9M) ● CIPP webcast (http://bit.ly/2rsky7u) ● CIPP training course (http://bit. ly/2AqdpaI)
Available online and face to face.
For more information or to book: Visit: cipp.org.uk Email education@cipp.org.uk
Call: 0121 712 1023 Live chat with us
cipp.org.uk @CIPP_UK
11
Issue 37 | February 2018
| Professional in Payroll, Pensions and Reward |
*correct at time of publication
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cipp.org.uk @CIPP_UK
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CIPP AGM and accounts
T HE CIPP’S 2017 annual general meeting (AGM) took place at the CIPP offices in Arne Street, London, on 5 December 2017 to consider and, if thought fit, to pass the following resolutions: ● Approval of minutes from AGM 2016 ● To elect directors to the board ● Approval of accounts for the year ended 30 June 2017 ● Election of auditors ● Any other business. Lizabeth Lay MSc FCIPP, Stuart Hall MCIPPdip and Suzanne Gallagher MCIPP were elected as the new board members, with Cliff Vidgeon elected as pensions representative. Full profiles of the CIPP board are available on cipp.org.uk . The other resolutions were voted as follows: ● Approval of accounts – for: 238 votes, against: 3 votes
● Election of auditors – for: 240 votes, against: 7 votes. The Institute’s Directors’ report and financial statements for the twelve months to 30 June 2017 were released mid- November. Members can find the thirty- page document by visiting cipp.org.uk , clicking on ‘My CIPP’. The report reveals a change in fortune for the Institute which posted an operating profit of £138,863 for the twelve months (compared to an operating loss of £118,193 for the eighteen months to 30 June 2016). The administrative expenses for the 2016–17 year were £3,758,923 (£5,184,758 for 2015–16). The consolidated balance sheet states that for 2016–17: ● total assets less current liabilities are £719,659 (£468,493 for 2015–16) ● capital and reserves are £71,738 (minus £27,013 for 2015–16). The notes to the financial statements
show that in respect of: ● Creditors – total of amounts falling due after more than one year is £647,921 (£495,506 for 2015–16), of which £155,394 is identified as ‘Other loans’ secured against certain assets owned by the company ● Directors’ remuneration – £154, 643 is for emoluments (£36,889 in 2015–16), and £19,717 is for company contributions to defined contribution pension schemes (£7,205 in 2016–16) ● Operating profit/loss – the amount for 2016–17 is after charging £171,308 (£239,295 for 2015–16) for defined contribution pension costs ● Auditor’s remuneration – there is no fee stated as payable to the Group’s auditor ● Employees – the average monthly number of employees including directors during the year was 133 of which 70 are tutors (152 and 75, respectively, for 2015–16). ❏
| Professional in Payroll, Pensions and Reward | February 2018 | Issue 37 12
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