Payroll news
Public sector exit payment terms THE GOVERNMENT announced at the 2015 Spending Review and Autumn Statement that it intended to consult on cross-public sector action on exit payment terms to reduce the costs of redundancy payments and ensure greater consistency between workforces. In September 2016, The Treasury published its response to the earlier Reforms to public sector exit payments consultation (http://bit.ly/2cB3fZb). Although the government does not believe that there is a case at present for a fundamental reform of the way in which public sector exit terms are determined and delivered, it considers that a common framework of upper limits to the main elements of compensation provision across the main public sector schemes should be set. This framework sets: ● a maximum tariff of three weeks’ pay per year of service for calculating exit payments ● a ceiling of fifteen months on the maximum number of months’ salary that can be paid as a redundancy payment ● a maximum salary on which an exit payment can be based – as a starting point the government will expect this to align with the existing National Health Service scheme salary limit of £80,000 ● a taper on the amount of lump sum compensation an individual is entitled to receive as they get closer to their normal pension retirement age, and ● action to limit or end employer-funded early access to pension as an exit term. The government expects agreement to be reached and the necessary changes made to compensation schemes and other arrangements within nine months of publication of the response document. Should it not be possible to achieve meaningful reform for one or more public sector workforces, the government will consider options for primary legislation to take forward reform. RTI – micro-employers and agents A STUDY – Managing pay as you earn in real time: challenges faced by micro-employers (http://bit.ly/2dsMo06) – reveals micro employers are finding real time information (RTI) reporting challenging. The recent research involved only those known to have either received a penalty from HM Revenue & Customs (HMRC) for submitting a full payment submission (FPS) late or with missing/incorrect information, or had made use of an earlier year update (EYU). The report identifies that there is a lack of understanding of how pay as you earn (PAYE) should be managed – particularly what should be done and by when – which creates errors in RTI reporting, resulting in receiving penalties for late or missing FPS returns or the need to provide an EYU to correct earlier submissions. Technical understanding of PAYE is limited to basic ‘need to know’ information. (This applies mostly to micro-employers rather than to agents.) Few make use of HMRC’s education or support materials which are felt to be difficult to navigate and understand. Instead, an approach of learning ‘on the job’ is adopted, relying on experience through trial and error. Very few micro-employers engage with their agents to understand and retain information about their obligations. Where payroll is outsourced, understanding of requirements is dependent on the competency and capabilities of the agent used. HMRC’s technical terminology (particularly abbreviations) is rarely used and/or understood by micro-employers. Although those outsourcing are particularly at odds with HMRC’s terminology, agents are more likely to use the ‘right’ language although even here there is low usage of EYU. Dates and deadlines – what employers need to do and when – are the main cause of error and present the main challenges. Often unable to differentiate between the dates, micro-employers tend to default to their own priorities: 1. paying employees, 2. paying HMRC, 3. submitting FPS returns. Where they outsource their payroll, clients do not understand the importance of getting the right information to their agent at the right time. For many micro-employers, there is a disconnect between their behaviour and the outcomes of that behaviour. The challenges they face mean they do not always understand what would constitute ‘bad-practice’ or an ‘error’, from HMRC’s perspective. There are three categories of bad practice that contribute to errors: insufficient checking; prioritising other tasks; being too small to be seamless (such as no-one else in the business to submit FPS returns on time).
Diary dates Automatic enrolment staging date for employers with fewer than thirty employees with the last two characters in their PAYE reference number: 47–57, 8A–8Z, Q1–Q9, R1–R9, S1–S9, T1–T9, QA–QZ, RA–RZ, SA–SZ or TA–TZ
1 November
2 November 5 November
Due date for returns P46(Car) for quarter to 5 October 2016
Last day of tax month 7
6 November
First day of tax month 8
Last day for submitting a real time information employer payment summary to apply to tax month 7 Deadline for payment of PAYE and NICs etc to HMRC’s Accounts Office by non-electronic method
19 November
22 November
Deadline for payment of PAYE and NICs etc to HMRC’s Accounts Office by electronic method
| Professional in Payroll, Pensions and Reward | November 2016 | Issue 25 14
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