COMPLIANCE
Payroll: from other perspectives Julie Weighill, tax manager, BDO, has been liaising with colleagues from a range of departments regarding their experiences of working with the payroll function to give an insight into the relationships formed
Karen Foster - employment taxes
Q: Have recent changes in legislation or shifts in employee expectations triggered any issues? Recent years have seen more attention being given to National Insurance contributions (NICs), including several changes to the rates and thresholds during the tax year. One impact of this was the creation of a blended rate of NICs for directors who, unlike regular employees, are charged NICs on an annual earnings basis. As many employers now opt to apply the alternative method of calculation, rather than the strict annual earnings basis, it’s important not to overlook the need to carry out an annual reconciliation to ensure the correct amount of NI is being paid on annual earnings prior to processing the final payment for month 12. Care will also be needed when making any post year end adjustments to
ensure the correct threshold and rate of NIC is applied relevant to the pay period.
team to assist with the categorisation of different pay elements as terminology used in payroll can be confusing. With mandatory payrolling of BiKs rapidly approaching, it’s important stakeholders take the time now to review their processes. They must identify the responsibilities and actions required to ensure accurate data is collated on a timely basis to support the reporting of BiKs in real time. There’s a risk employers will underestimate the administrative burden this will bring, but calculating the BiK at the end of the tax year is often difficult enough, without bringing forward the BiK calculation to the start of the tax year. The process also needs to be adequate to ensure the BiK value is updated throughout the year for joiners and leavers, as well as when there are changes due to policy renewal and company car movements.
“We often need to interact with the payroll team to assist with the categorisation of different pay elements as terminology used in payroll can be confusing”
Q: Do common themes arise where you interact with payroll teams more? We often need to interact with the payroll
| Professional in Payroll, Pensions and Reward | February 2025 | Issue 107 22
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