COMPLIANCE
What was discussed at the CIPP technical panel? The last panel was held on 28 November 2023 and the panel discussed an array of topical payroll items. Autumn statement outcomes The key announcements made in the autumn statement impacting the payroll, pensions and reward industries were: l the 2-percentage point decrease to the main rate of class 1 National Insurance contributions (NICs) from 6 January 2024 l national minimum wage (NMW) and national living wage (NLW) rates for use from pay reference periods beginning on or after 1 April 2024 l the call for evidence on small pension pots. The panel discussed the above at length, particularly the mid-tax year change to the class 1 NICs, which should come as no surprise. The software developers on the panel explained that although this change may not be technically challenging, typically a rates change would come with an 18-month notice period, to allow developers to build, implement, test and roll out these changes. As industry experts, we know this isn’t as simple as changing a percentage within the background of the software – if only it was! We’ve proven we can cope with and adhere to mid-tax year changes to NICs before, but to implement a change as big as this over the festive period (when processing periods are already cut short due to bank holidays and office shutdowns) is terribly timed. Many may be led to think this announcement was made for a good news story ahead of an imminent election. Many sectors like hospitality and retail will put a pause on software release updates throughout the festive period, due to the large volumes of onboarding new starters. When this is the case, it reduces the time employers have to do their own internal testing ahead of their January payday. A further complication brought about by this change is for the calculation of director NICs: l a blended rate of NICs will be used for company directors l a recalculation will be required for directors who’ve left throughout the 2023/24 tax year to consider the new blended rates of NICs l please see our News Online article which shows the directors blended rates: https:// ow.ly/oLf850QhOvi. The panel aired concerns regarding the
interaction with those on universal credit, and the impact to the ‘savings’ made via salary sacrifice schemes. "Our 2023 Payslip Statistics Survey Report shows that from the employers who used the payslip messaging for the implementation of the health and social care levy in 2022, 77% confirmed they didn’t receive any further queries around the changes to National Our 2023 Payslip Statistics Survey Report shows that from the employers who used the payslip messaging for the implementation of the health and social care levy in 2022, 77% confirmed they didn’t receive any further queries around the changes to NI into the payroll department. The results show this method of communication works wonders in informing employees of changes, alongside reducing the number of queries received by the payroll department / service provider. You can see the report here: https://ow.ly/ gEvj50QhQ2J. The panel was pleased that the government has reached the target of increasing the NLW to reach two-thirds of median earnings, and that this will apply to workers aged 21 and over by 2024. This announcement came with the abolition of the 21-22-year-old banding, meaning sectors who primarily employ a younger workforce will be most impacted. All panellists agreed that increases to the NMW and NLW can only be a good thing for workers, meaning they’re receiving an hourly rate of pay that’s relative to the cost of spending on everyday items. However, this second good news story from the autumn statement brings added burden to Insurance into the payroll department"
employers, who are also feeling the pinch of the economic climate. We know employers are obliged by law to pay this rate of pay to their workers, with no ongoing support from government. The announcement that the government has now published a call for evidence on the ‘small pot’ pensions and lifetime provider model was welcomed by the panel. Ensuring no additional administrative burden is put onto payroll professionals was the common theme of the conversation. The policy team will be responding to the call for evidence, and we’ll be reaching out to members, ensuring we’re representing your views on the proposals. The Department for Business and Trade's (DBT's) responses to consultations on holiday pay and entitlement The policy team eagerly awaited the consultation response from DBT, which was published on 8 November 2023. The team was delighted to see that many of the suggestions the CIPP made have been taken on board by the government. Sam asked whether the ‘applicable to holiday years beginning on or after 1 April 2024’ will cause a headache when accommodating the amended regulations into software. The software developers aren’t overly concerned, as allowing the annual leave to accrue in a ‘pot’ is easily calculated, as is creating a pay element to pay rolled-up holiday pay at the end of each pay period. It will be down to employers to ensure the correct holiday scheme / method is applied to the correct employees. The panel discussed the changes to the way holiday pay will be calculated moving forward, predominantly: l rolled-up holiday pay will pay the same rate of pay for the total 5.6 weeks of annual leave entitlement l when calculating average pay for workers accruing a bank of entitlement, we will now be including weeks where no hours were worked. n How can members get involved in the technical panel? The CIPP is keen to hear questions and topics that members would like to see debated and discussed with the technical panel. If you have anything you’d like to ask, please email the policy team, at policy@cipp.org.uk to get your issues on the agenda.
19
| Professional in Payroll, Pensions and Reward |
Issue 97 | February 2024
Made with FlippingBook - Online magazine maker