Official publication of The Chartered Institute of Payroll Professionals
in Payroll, Pensions & Reward
Issue 53 September 2019
Keeping the UK Paid
The devil in the details Frequency concerns
No one puts payroll in the corner Centre of attention
It pays to be accurate Insights and focus
CIPP update | Policy hub | Career development
TRUST Frontier Software with your payroll
processing Accurate, secure and reliable
0845 370 3210 sales@frontiersoftware.com www.frontiersoftware.com
OFFICES IN AUSTRALIA, INDIA, MALAYSIA, NEW ZEALAND, PHILIPPINES, SINGAPORE AND UNITED KINGDOM
“Uncertainty of any sort results in volatility, and Brexit will be no exception.” Raghuram Rajan (1963–) (http://bit.ly/2ZjzGOg)
An abundance of high-quality, informative articles in this issue means being selective about those I mention. I hope Anju Puri’s article (page 13) enchants and enthrals you as much as it does me. Reading that she would be stopped by
I also hope you enjoy Henry Tapper’s article (page 34). Though I have a personal view about ‘Brexit’, I’ve deliberately avoided including opinions recognising that it is a highly emotive and divisive issue. (Brexit joins religion, politics and royalty as taboo topics.) So, I’m happy and relieved that Henry’s article provides a balanced view – well, in my opinion. Throughout this issue you’ll find several articles relatable to the wide-ranging feature topic of ‘Keeping the UK paid’. I recommend Ian Whyteside’s thought-provoking article (page 15).
employees saying they had worked overtime or been on holiday reminded me of my own happy payroll management experiences. Does this resonate with you, too? The article surely confirms that ‘payroll’ engages skilled individuals, offering a challenging career with essential continual learning and development. Furthermore, it also confirms that payroll is now a key function in accountancy practices, providing a primary route to obtaining clients and other work.
Mike Nicholas MCIPP AMBCS (editor@cipp.org.uk) Editor
From my very first steps in payroll, I learnt how emotive and important it is to every Chair’s message individual to have their pay calculated correctly. In the construction industry, the teams working in tough conditions on site knew the bonus they had earned to the penny and
them to become members of the CIPP to ensure the knowledge they hold is present. With financial concerns being one of the biggest factors to influence health and wellbeing, the so-called hygiene factor of being paid correctly is critical. Everything that an individual does financially has a bearing on their pay. It is the common denominator that gives leverage for so many other choices that they will make in life. So, when decisions are made about the gross salary someone receives, the deductions taken from it must be correct to allow all those other ‘purchases’ to happen. Often, helping an individual employee whose subject matter expertise is not payroll to truly understand how statutory deductions operate, can be so rewarding. Thank you all for keeping the UK paid. You are all heroes!
there would be hell to pay if there was an error in the calculations. Today’s environment is just the same. We hear how for many households an unexpected bill for a sum as much as £500 would be enough to seriously impact finances. With many of the UK population working from month to month, the role and dedication of their payroll, pensions and reward professionals is paramount to ensure they are paid accurately and on time. On behalf of all the employees you serve, I thank all of you who show the dedication to deliver to these standards every single pay period. It is possible that you may know of individuals who deliver payroll ‘at the side of their desk’ or as part of a broader remit of responsibilities. This group predominantly work in small-to medium- size enterprises/businesses and I would urge all of you to challenge
Jason Davenport MCIPP MIoD (jason.davenport3@cipp.org.uk) Chair, CIPP
I hope you all managed to take time out for a break. Summer may now be a distant memory as we enter autumn, but this is a crucial time for the CIPP and members in terms of education, training and key events. In our fast-paced world, the CIPP continues to CEO’s message
it is fit for purpose by leading industry experts. It is encouraging that as each year passes that employers are actively ensuring their payroll and pensions staff are suitably educated; the CIPP are pleased to play a leading part in this. This career roadmap continues as it’s also the time of the year for enrolment into our Foundation Degree (with either a payroll or pensions offering). Make sure you enrol as the benefits to both your career and your employer will be considerable. Hopefully you’re all prepared for National Payroll Week in September as the key importance of your role within your business is emphasised. Closely following this is our Scottish National Conference in September and our Annual Conference and Exhibition in October. I hope to see you at one of these events.
ensure our content and material is accurate, timely and up to date. Over the last few months we have invested substantially in two of our key educational offerings: the Payroll Technician Certificate and the Certificate in Pensions Administration. The Payroll Technician Certificate continues to grow year on year and is evidentially crucial for those entering the profession, needing a refresher or returning into the payroll industry. With the option of online and/or face-to-face delivery it addresses the needs of when and how this educational training can be fitted into our busy schedules. An increased take up of our online Certificate in Pensions Administration shows how more payroll professionals play a key part in the administrative area of pensions. For the benefit of our members, we have recently had this material refreshed and ensured
Ken Pullar FCIPP (ken.pullar@cipp.org.uk) Chief executive officer, CIPP
1
| Professional in Payroll, Pensions and Reward |
Issue 53 | September 2019
in Payroll, Pensions & Reward PROFESSI NAL
Also available online at payrollpensionsandreward.org.uk
Contents
September 2019
45
The evolving role of payroll
Glyn King discusses
Features
12
19
15
No one puts payroll in the corner Anju Puri reveals
Apprenticeship levy – use it or lose it Jill Smith explains
The devil in the details IanWhyteside discusses
22
23
24
Is outsourcing your payroll department the right action? Jason Davenport examines
Off-payroll working responsibility Susan Ball and Lee Knight discuss
Off-payroll working rules Samantha Mann outlines
| Professional in Payroll, Pensions and Reward | September 2019 | Issue 53 2
31
26
Chief executive officer Ken Pullar FCIPP CIPP board of directors Jason Davenport MCIPP MIoD Stuart Hall MCIPPdip Ros Hendren MSc FCIPPdip, CMgr FCMIdip FHEA Dianne Hoodless MSc ChFCIPP FHEA Liz Lay MSc FCIPPdip Karen Thomson MSc ChFCIPP FHEA Cliff Vidgeon BA (Hons) CMA ACIS FCIPP Ian Whyteside MCIPP FMAAT ATT Editor Mike Nicholas 0121 712 1000 | editor@cipp.org.uk Advertising Jill Bonehill 0121 712 1033 | advertising@cipp.org.uk Design James Bartlett and Nicole Davis design@cipp.org.uk Printing Warwick Printing Company Ltd
Timelines and guidelines Liz lay summarises
The future is green RobinWoodhouse discusses
38
32
What circumstances affect SMP entitlement? Danny Done advises
Disability, privacy, discrimination Nicola Mullineux outlines
37
38
Fixing pension overpayments Gareth Stears explains
Pensions and Brexit Henry Tapper presents
Useful contacts
40
42
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 info@cipp.org.uk 0121 712 1000
It pays to be accurate Catherine de Salvo delves
Keeping the UK paid Jerome Smail confirms
Regulars
01 Editor’s comment, Chair’s andCEO’s messag e
31 Reward insight 36 Events horizon 37 Pensions insight 40 Feature articles Keeping the UK paid 48 Aweek in the life of Jeanette Hibbert 54 Confessions of a payroll manager Additional online content 10 CIPP national forum report 11 CIPP Public sector SIG report 16 Tutor training event 17 CPD 46 Payroll – complexion, complication
Events, news and developments
05 CIPP update 06 Membership insight On your behalf, Advisory 12 Career development insight Diary of a student
cipp.org.uk @CIPP_UK
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 2019. 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 28 Industry news
3
| Professional in Payroll, Pensions and Reward |
Issue 53 | September 2019
Making payroll & HR easy with easy-to-use software.
With flexible packages to suit all kinds of businesses and payrolls, UK support from CIPP qualified experts , and a simple switch guarantee . If Moorepay isn’t on your shortlist for a new payroll provider, why not? See what you’re missing at www. moorepay.co.uk
Reward insight
CIPP update
Julie Northover ChFCIPPdip awarded Chartered membership
Payroll Assurance
Scheme THE INSTITUTE is pleased to announce that
FOLLOWING THE Chartered member assessment panel in July 2019, we are delighted to announce that Julie has been awarded Chartered membership. Julie is a CIPP trainer, Payroll Assurance Scheme assessor and consultant widely respected within the industry and we are delighted that she has achieved Chartered membership with the Institute. A full list of Chartered members can be found on the CIPP website – http://bit. ly/2GQejTe. Chartered membership demonstrates the highest level of professional membership in the industry and recognises those individuals who have worked hard to raise the profile of payroll and their professional standing through education and continuing professional development. It demonstrates to employers that you are committed to keeping up to date and raising the standards of best practice within the industry. To become a Chartered member, or find out more, visit cipp.org.uk/chartered or email membership@cipp.org.uk .
several organisations have successfully achieved the prestigious Payroll Assurance Scheme (PAS) accreditation. They are: ● Armstrong Watson ● Domestic and General ● Eque2 Limited ● Hays Specialist Recruitment Ltd ● Moore Stephens East Midlands ● Sunrise Senior Living Ken Pullar, CIPP chief executive officer, said: “We are thrilled that so many organisations have embarked on the journey to achieve this respected accreditation. It is imperative that organisations comply with government legislation and the Payroll Assurance Scheme is designed to help companies do just that.” Visit cipp.org.uk/PAS or email info@ cipp.org.uk to find out more about the Payroll Assurance Scheme. CIPP shortlisted as best overall UK association for the third time THE CIPP has been announced in the shortlist for the Association Excellence Awards Overall Best UK Association for the third time. Founded in 2014, these awards have gone from strength to strength and are the acknowledged accolade to recognise and reward the hard-won achievements of trade bodies, professional membership organisations and associations. Bringing together an outstanding panel of judges, representing associations from every sector, these awards recognise individuals, teams and initiatives and highlight excellence in how trade bodies operate and serve their members and clients. The CIPP first achieved this award in 2016, were recognised in 2018 with a bronze trophy and is now listed within the shortlist for 2019. The lunch time awards take place on Friday 11 October.
Annual Excellence Awards shortlist announced
AFTER RECEIVING a record number of award nominations for the CIPP’s Annual Excellence Awards, the shortlist will be announced during National Payroll Week 2019. Visit cipp.org.uk for details of the shortlist which will also be announced through News Online and social media. The 2019 Annual Excellence Awards is the CIPP’s 16th awards ceremony and will
be hosted by Hugh Dennis. Hugh is a comedian, writer, actor, impressionist and voice-over artist, best known for his work with comedy partner Steve Punt and for the comedy series Outnumbered and Mock the Week . He is also a talented and captivating after-dinner speaker and awards host. A skilled impressionist, Hugh did voices for Spitting Image and appeared with Punt as resident support comics on two TV series hosted on the BBC by Jasper Carrott. He has performed on various TV and radio shows, including The Imaginatively Titled Punt and Dennis Show and sitcom Me, You and Him . He has guest hosted Have I Got News For You and played obnoxious GP Piers Crispin in BBC sitcom My Hero . He is friends with Chris Morris and has had cameos on Brass Eye . He is in huge demand as a voiceover artist and he currently appears on the panel game Mock the Week , in which he frequently refers to Showaddywaddy and car insurance. Since August 2007, Hugh has starred in the hit BBC comedy Outnumbered , a semi-improvised sitcom based around family life which has won numerous awards.
5
| Professional in Payroll, Pensions and Reward |
Issue 53 | September 2019
MEMBERSHIP INSIGHT
On your behalf
Policy team update
Diana BruceMCIPPdip, CIPP senior policy liaison officer, provides details about recent and ongoing consultations
A plethora of consultation documents have been published in recent months, so the CIPP policy team have been busy gaining members’ views on the proposals and changes to processes that are in the pipeline (some of which are summarised below). Please look for ways of getting involved through News Online , email and social media. It may be through a survey or a think tank or directly – whatever the method, if you have experiences to share or views on the subject, please do get involved – we need your expert knowledge to help influence policy. The Employment Allowance (Excluded Persons) Regulations 2019 Draft regulations were published for technical consultation in July 2019 which, if enacted, will mean the employment allowance (EA) is to be restricted to those with a secondary (i.e. employer only) class 1 National Insurance contributions (NICs) liability of less than £100,000 in the previous tax year. The draft regulations reclassify the EA as state aid. Employers will need to ensure that any EA claimed does not take them over the state aid limit for the sector in which they operate. The state aid sectors are: agriculture, fisheries and aquaculture, road haulage, and ‘other’ (industry). It is unlikely that the payroll function will currently be involved to any extent (if at all) but we recommend that you talk to colleagues within your organisation who are responsible for accounting for government funding that constitutes de minimis state aid. An employer could become ineligible where it is in receipt of ‘de minimis state aid’, and claiming the £3,000 EA will breach the ceiling of 200,000 Euros. The draft regulations as written, will
bring about significant reporting and administrative challenges to payroll processes for reporting via real time information (RTI) by employers that
contracts entered into or payments made on or after 6 April 2020. The draft legislation: ● defines when non-public sector organisations, including unincorporated organisations, will be considered to be ‘small’ and therefore not within the scope of the reform, and ● includes provisions to ensure that all parties in the labour supply chain are aware of the organisation’s decision and the reasons for that decision, and will introduce a statutory, client-led status disagreement process to allow individuals and fee- payers to challenge the organisation’s determinations. HMRC consulted on the detail of the reforms earlier this year and in April 2019 published guidance (http://bit.ly/2ZRih6X) on the action engagers can take to prepare for the reforms. (See pages 20–21 for details.) The consultation closed on 5 September 2019. Goodwork plan: establishing a new single enforcement body for employment rights As part of the ‘Good Work Plan’, in July 2019 the government published a consultation (http://bit.ly/2yLipby) which seeks views on whether establishing a new single enforcement body for employment rights could improve enforcement for vulnerable workers and create a level playing field for the majority of businesses Pensions (DWP), which is responsible for policy on statutory sick pay (SSP), is considering reforms (see ‘Health is everyone’s business’ below), including options to strengthen enforcement. One of the questions posed in the consultation is whether a new single enforcement that are complying with the law. The Department for Work and
continue to claim the EA from April 2020. The following details are to be reported in the employer payment summary (EPS): ● EA indicator (already present in the EPS) ● the state aid sector in which they operate ● the amount of state aid allocated in the current tax year, plus the amount of state aid claimed in the previous two tax years. The value is to be expressed in Euros, using an exchange rate published by HM Revenue & Customs (HMRC) on 1 April. The EA eligibility declaration will cease to be carried over – by virtue of the £100,000 secondary NICs exclusion level – so must be considered and declared annually. This consultation closed on 20 August 2019. ...EA eligibility declaration will cease to be carried over... Off-payroll working in the private sector HMRC has published a consultation on the draft legislation and measures being included in the 2019–20 Finance Bill (http://bit.ly/2TamS14) which confirm that reforms to off-payroll working in the private sector for medium and large businesses will come into effect from April 2020. The reforms will make organisations responsible for determining whether the existing rules apply to the contractors they hire and ensuring the necessary employment taxes are paid. This measure will have effect for
6
| Professional in Payroll, Pensions and Reward | September 2019 | Issue 53
ENROLMENTS NOWOPEN
Policy hub
Certificate inPensions Administration
body would be better placed to take on enforcement of SSP if its process is strengthened. The consultation also asks whether this new body should have a role in relation to discrimination and harassment in the workplace and also what role should it play in enforcement of employment tribunal awards. ...considers how a rebate of Through this consultation, government want to consider the case for a new single labour market enforcement body and whether it could deliver: ● extended state enforcement – delivering the commitments to enforce holiday pay for vulnerable workers and regulate umbrella companies operating in the agency worker market ● a strong, recognisable single brand – so individuals know where to go for help. In a single organisation the user journey could be improved, making it easier for individuals to raise a complaint and to tackle cases that might currently be coordinated guidance and communications campaigns, and a more easily navigable and proportionate approach to enforcement ● coordinated enforcement action – with new powers and sanctions to tackle the spectrum of non-compliance, from minor breaches to forced labour and increased focus on high harm cases to disrupt serious, repeated offending ● pooled intelligence and more flexible resourcing – enabling greater sharing of intelligence and national tasking and coordination of operational activity targeted at tackling serious breaches ● closer working with other enforcement partners – including immigration enforcement, benefit fraud, health and safety, The Pensions Regulator and wider local authority enforcement. The consultation states that this would not be an exercise to reduce costs; resource for enforcement SSP for small- to medium-size enterprises... handled by different organisations ● better support for businesses – to comply with the rules, including
would be maintained but used more effectively. Funding for new areas, such as enforcement of holiday pay for vulnerable workers will be considered through the spending review. The consultation closes on 6 October 2019. consultation Health is everyone’s business (http://bit.ly/2TaY5tP) published in July 2019. It includes proposals to amend the rules of SSP to allow for phased returns to work following sickness absence and to widen eligibility for SSP to extend protection to those on the lowest incomes. The government proposes to reform SSP so that it is available to all employees who need it, is more flexible in supporting employees and is underpinned by a suitable enforcement framework. Proposed changes include: ● amending the rules of SSP to allow for phased returns to work following sickness absence ● widening eligibility for SSP to extend protection to those on the lowest incomes, and ● strengthening compliance and enforcement of SSP to ensure employees are paid what they are due. Alongside these specific reforms, the consultation also considers how a rebate of SSP for small- to medium- size enterprises that demonstrate best practice in supporting employees on sickness absence, might be designed. The government is also interested in exploring ways to record SSP payments and use this information to provide helpful prompts and advice to employers. The government is not proposing to make any further changes to the structure of SSP beyond the reforms outlined above; however, it has considered the extent to which the rate and length of SSP drives employer behaviour and is interested in views on this. The consultation further proposes improving access to occupational health services with additional support for small employers including a potential subsidy and for government to provide best practice advice and support for employers on managing health and disability in the workplace. This consultation closes on 7 October 2019. n Health is everyone’s business Reforming SSP forms part of the
Overview of UK pension schemes
Providing pension scheme information
Creating and maintaining pension scheme member records
Transferring into and out of pension schemes
Amend pension records to reflect a member’s change of circumstances
For more information or to enrol: Visit: cipp.org.uk/study Email education@cipp.org.uk
Call: 0121 712 1023 Live chat with us
cipp.org.uk @CIPP_UK
7
| Professional in Payroll, Pensions and Reward |
Issue 53 | September 2019
MEMBERSHIP INSIGHT
missed the payroll deadline for May’s payment. They are due back-pay for the period 23–31 May which will be included in their June payment. What is the rule for the tax and NICs due on their May payment? A: The tax calculation is normal: a single tax allowance for June is due, but this is dependent on whether the employee provided a form P45 or signed a new starter declaration. The NICs in this scenario should always be calculated over two months; for example: calculate the NICs that should have been paid for the May and June earnings separately. This may mean you have to do a manual override if your system cannot do this for you. Guidance can be found in the CWG2 guidance: see 3.1.5 Working out National Insurance contributions when you first pay an employee, at the following link: http://bit. ly/2GrBbcq. Q: As a company, we offer our employees personal loans, with repayments for the loan occurring via payroll deduction each month. Could you please advise if we would report the loan as a BiK via a P11D return? A: Whether the loan is a reportable BiK or not would depend on the value of the loan that is given to the employee by the employer. The threshold for small beneficial loans is now £10,000 and providing that the loan is no higher and the repayments are made via a net deduction, there would be nothing to report in a P11D return. Keep in mind that if an employee has more than one loan these would need to be aggregated to determine whether the total exceeds the £10,000 limit. This link is to a working sheet that can assist you in finding the value that would need to be reported if the above applies: http://bit.ly/2Y1Pdw1. Q: We currently have an employee who unfortunately didn’t qualify for statutory maternity pay (SMP) and is therefore in receipt of maternity allowance (MA) whilst she takes her statutory maternity leave (SML). I have been asked if the normal rules around keeping-in-touch (KIT) days would still apply. Are you able to offer any guidance? A: Whilst an employee is in receipt of MA (as she does not qualify for SMP) she is entitled to work up to ten KIT days without
Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m. to 4.30p.m. on Fridays * . Call 0121 712 1099 , email advisory.service@cipp.org.uk or visit cipp.org.uk to live chat.
Advisory
*please see summary at cippmembership.org.uk for details.
Q: We have an employee who has been in receipt of a fuel benefit paid by the employer. I would normally expect to report this in the P11D return, but the employee’s earnings for tax year 2018–19 were under £8,500. My understanding is that there is no requirement to submit a P11D to HM Revenue & Customs (HMRC) for all expenses and benefits that are paid to UK-based directors or employees earning under £8,500.00 per year. Is this correct? A: The £8,500 threshold was abolished along with the P9D return a few years ago and now all employees who receive a benefit in kind from their employer must have it reported via a P11D return, regardless of the amount of their earnings. HMRC will assess everything and will determine if tax is or is not due on the benefits reported. Guidance can be found at the following link: http://bit.ly/32OZz12. Q: Can you please clarify if the 50% regulatory limit for tax applies to all taxable earnings, including benefits in kind (BiKs), or should it only be applied to the employee’s taxable salary excluding payrolled BiKs? A: I can confirm that HMRC guidance states that the 50% regulatory limit does not include taxable BiKs and it is only the other elements of taxable pay that count towards this check. Q: Please can you advise if employer’s National Insurance contributions (NICs) are due on termination payments above £30,000? I can recall that there
was something mentioned in the HMRC guidelines that this had changed but I am not sure if this has been implemented or deferred. A: The new NICs rules for termination payments above the £30,000 threshold have not yet changed, but they are due to change with effect from 6 April 2020. From this date termination payments above the £30,000 threshold will attract employer’s class 1A NICs only, alongside the normal taxable element for the employee. Q: I currently have an employee on long-term sick, who has exhausted their company sick pay as well as their statutory sick pay (SSP). In-order to help him back to work we have investigated the option of paying for some medical treatment and the cost for this has been quoted as £2,167. I understand that there will be tax implications – a reportable BiK for the employee. Are you aware if this can this be covered under an exemption? A: We can confirm that if your scenario meets HMRC criteria, then the first £500 of this can be paid free of income tax and NICs with the balance reported as a BiK . You must ensure that this meets the criteria set out by HMRC: please use this link http://bit.ly/2LDzsoG. It would also be helpful for you to check the subsequent pages EIM21775, EIM21776 and EIM21777 which should help with your scenario. Q: An employee started with our organisation on 23 May 2019 and will not be paid until June 2019 as they
8
| Professional in Payroll, Pensions and Reward | September 2019 | Issue 53
Policy hub
Gain an in-depth understanding of payroll, and the complex payroll legislation involved, alongside management skills including performance, time, project and operational management Foundation Degree inPayroll Management Join over 15,000 * qualified payroll professionals in the UK
SShPL and SShPP as the plan is to take the leave and pay before the mother leaves? A: If the partner is eligible for SShPL at the time of employment, then potentially s/he is entitled to SShPP if the employee curtails her right to SMP. The mother will still be entitled to SMP after the employment has ended if she does not work for another employer after the baby is born and she has not curtailed her right to SMP. Q: Are fuel cards a taxable benefit that can be administered through payroll? Do all benefits have to go through payroll to be reported in the full payment submission (FPS), and is it compulsory to payroll? A: If an employer wants a benefit to be reported via FPS you would do it through agreement to payroll benefits, but it is not compulsory to payroll benefits at this point. If you want to tax this via the payroll it would be payrolling and the employer must register with HMRC to do this before the start of the tax year. Where you want to payroll a benefit which hasn’t been agreed before the start of the tax year HMRC may give approval to informally payroll benefits, but you will still have to complete a P11D return. This link explains that you may be able to get agreement to informally payroll: http://bit.ly/2GrL6yN. This an extract from the page for clarity: “If you miss the registration deadline, you cannot payroll benefits until the following tax year unless you have a valid reason, when HMRC may agree that you can informally payroll. You must still complete form P11D at the end of the tax year and mark each P11D ‘Payrolled’. This stops HMRC collecting tax that has already been deducted from your employees.” n Correction Please note the following correction to the last question/answer on page 9 of Issue 52. Q: An employee who turns 21 on 15 July will be paid earnings on 26 July. At what point does the class 1 NICs category change? A: The relevant trigger is the employee’s age on payday. In your example, the employee turns 21 before payday, so the NICs category should be changed from M to A and class 1 NICs applied for both the employee and the employer.
any impact on the MA that is received from the Department for Work and Pensions (DWP) / Jobcentre Plus. The employee should inform the DWP/Jobcentre Plus of the dates of the KIT days. Just as with SMP, if the number of KIT days exceeds the maximum ten allowable, the employee will lose some of her MA. The employee and employer should agree what the rate of pay will be for the work done on these KIT days and the employer should pay at least the appropriate national minimum wage or national living wage rate for hours worked during a KIT day. Q: Please can you help with queries for homeworkers who claim expenses, as I have been asked whether the employer must reimburse additional household expenses? A: It is the employer’s decision as to what they pay or reimburse, but there are statutory rules as to what should be subject to tax and NICs. If, for example, broadband is already in place that the employee pays for, it would be counted as a benefit if the employer reimburses part or all of it. If there isn’t any broadband in place and the employee requires this to do their job, then it could be exempt. There is a flat rate that the employer can pay each week or month. This is £4 per week or £18 per month. If this is used the employer doesn’t have to provide evidence to justify the amount paid. Q: One of our employees is currently on adoption leave and also awaiting a further placement confirmation. This means there will be overlapping statutory adoption pay (SAP). Will the employee be entitled to twenty KIT days? A: The employee may be entitled to two lots of SAP, but only if there are different matching certificates. They would end one period of SAL (statutory adoption leave) and start another. Therefore, in each period they could have ten KIT days, but they couldn’t save KIT days from the first period and use them in the second period of SAL. Q: An employee has requested statutory shared parental leave (SShPL) and pay (SShPP), but the mother (not our employee) has a fixed-term contract which will end before her full SML has ended. Will the partner be entitled to
Enrol now for autumn visit cipp.org.uk/FDpayroll for full details
Delivered in conjunction with
For more information or to enrol: Visit: cipp.org.uk/study Email education@cipp.org.uk
Call: 0121 712 1023 Live chat with us
cipp.org.uk @CIPP_UK
9
| Professional in Payroll, Pensions and Reward |
Issue 53 | September 2019
*correct at time of publication
MEMBERSHIP FOCUS
CIPP National Forums 2019
This year’s series of well-attended National Forummeetings featured stimulating and lively discussions across a range of topics
Introduction session Jason Davenport, Stuart Hall, Ros Hendren, Lizabeth Lay, Jill Smith, Karen Thomson, Cliff Vidgeon and Ian Whyteside shared the role of opening and leading the Forum meetings and introducing the speakers and fielding attendees’ questions. The introduction included a CIPP update, covering: ● ● information about the CIPP, including the new edition of the Compact Payroll Reference Book ● ● making the most of your membership ● ● MSc in strategic leadership ● ● #bepayroll ● ● National Payroll Week 2019 – Keeping the UK paid ● ● finding the CIPP. Ros Hendren MSc FCIPPdip CMgr FCMIdip FHEA , non-executive director, CIPP Lizabeth Lay MSc FCIPPdip , non- executive director, CIPP Helen Livesey , senior business director, The speakers Jill Bonehill , account manager, CIPP Diana Bruce MCIPPdip , s enior policy liaison officer, CIPP Benjamin Carter BA (Hons) FCIPPdip, payroll trainer, CIPP Rachel Chalmers , reward manager, Ernst & Young LLP Jason Davenport MCIPP , chair, CIPP Louise Gray ChMCIPP , payroll manager operations and delivery, PwC Stuart Hall MCIPPdip MA PGMdip , non-executive director, CIPP Helen Hargreaves MSc ChFCIPPdip FHEA ACIPD , associate director of policy, CIPP
IR35 / off-payroll working in the private sector These sessions, which were delivered by Paul Tucker, Louise Gray, Rachel Chalmers, Karen Thomson, and representatives from HMRC, covered various aspects of the extension to the private sector from 6 April 2020 of the off-payroll rules currently operating in the public sector. Delegates received advice on how to proceed, and to whom the rules will apply. Cardiff, 22 May Glasgow, 6 June Newcastle, 18 June – sponsor: Cintra HR & Payroll Services London, 12 & 13 June – sponsor: Corvid Paygate London, 10 & 11 July Birmingham, 17 July – sponsor: Hays Webinar, 10 July Locations and sponsors The National Forum meetings were held at venues across the UK from May to July, as follows: Bristol, 2 May – sponsor: XCD Belfast, 9 May Manchester, 16 May Tim Scott and Graeme Walker delivered these sessions, which included a look at payroll in the past and today, and ideas of what payroll will look like on the future. How did we manage without payroll software? These sessions which were delivered by Stuart Hall and Carsten Staehr looked at possibilities in the future, including How did we survive before payroll software?
Legislative update Ben Carter, Helen Hargreaves, Samantha Mann and Jill Smith delivered these sessions, which provided coverage of a wide range of topics and issues, including: Welsh rate of income tax; employment allowance; student loans; payslips; apprenticeships; minimum wage; changes to RTI reporting; workplace pensions; fair and decent work; increasing pay transparency; holiday pay guidance; off- payroll working. The sessions also set out the role and activities of the CIPP policy and research team, which includes running Think Tanks / surveys / forums, responding to consultation documents, and publishing Payroll: need to know, the devolution matrix, and further information and guidance. Carsten Staehr FCIPP, chief executive officer, Cintra HR & Payroll Services Karen Thomson MSc ChFCIPPdip FHEA, non-executive director, CIPP; partner, head of payroll & employee services, ArmstrongWatson Paul Tucker, e mployment tax partner, Smith & Williamson LLP Chris Turnbull, head of product & marketing, Corvid Paygate Cliff Vidgeon FCIPP , non-executive director, CIPP Graeme Walker, XCD Ian Whyteside FMAAT MCIPP ATT , non-executive director, CIPP Hays Payroll Management Samantha Mann MAAT MCIPPdip , senior policy and research officer, CIPP Tim Scott, payroll product manager, XCD Jill Smith MCIPPdip, policy manager, CIPP
| Professional in Payroll, Pensions and Reward | September 2019 | Issue 53 10
Membership focus
Rethink payroll payments Chris Turnbull discussed payroll/payments,
AI, daily payrolls, increased pension information, local taxation/deductions etc.
current ways of working, how software helps, the future of payroll payments and things to consider. Future skills – A shifting landscape Helen Livesey presented this session, drawing on findings from Hays’ payroll report and salary guide for 2019. n Webinar The online national forum was opened by Jill Bonehill, with Sam Mann delivering the legislation update and IR35 sessions, with Tim Scott presenting the part on How did we survive before payroll software?
Thanks to our National Forum sponsors:
Public sector SIG report
T he CIPP’s public sector specialist interest group, which covers local authorities, NHS and education, has held two free-of-charge meetings this year. A further meeting is planned for October and another in February. The CIPP thank PwC, RSM and Ernst & Young for their kind hosting and supporting of the events. The ‘winter’ annual update This event – the sixth annual public sector update for payroll and HR professionals – was held at PwC’s Embankment Place, London offices on 7 February 2019. Shaun Tetley FCIPPdip, chair of the CIPP public sector SIG, and Caroline Rai, PwC, welcomed delegates. A wide range of speakers covered topical public sector content on payroll, pensions and HR. The agenda included: ● ● exciting news on pensions – James Walsh, PLSA ● ● legislation update – Jill Smith, CIPP ● ● update from The Pension Regulator – Neil Esslemont ● ● employment law update – Jade Linton, Thurston’s ● ● IR35 – How’s it all going? – Caroline Rai, PwC ● ● National minimum wage – Gary Saunders, PwC
● ● Local Government Pension Scheme (LGPS) update – Jeff Houston, LGPC ● ● customer engagement; tax compliance – Colin Shingler, HMRC, Mark Carroll, HMRC. The ‘summer’ meeting This meeting was held on 4 June 2019 at the offices of RSM Farringdon, London. Shaun Tetley FCIPPdip, chair of the CIPP public sector SIG, opened the event, welcoming delegates. The agenda comprised: ● ● legislative update – Jill Smith, CIPP ● ● LGPS cost cap and legal update – Gary Delderfield, Eversheds ● ● update from The Pension Regulator – Andy Nicholls, TPR
● ● exercising reasonable care to mitigate employment tax risk – Lee Knight, RSM ● ● real time information and universal credit – Steven Tucker, The Payroll Site. Forthcoming events The following two events will feature the usual mix of excellent speakers covering legislative and other important updates. Further details on content and the agenda to follow in due course. ● ● The ‘autumn’ meeting will be held on 10 October at the Ernst & Young offices, London. ● ● The all-day ‘winter’ meeting is scheduled to be held on 6 February at the PWC offices, Embankment, London. n
2017 AE review - key findings
DM7501989 v1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
11
| Professional in Payroll, Pensions and Reward |
Issue 53 | September 2019
CAREER DEVELOPMENT INSIGHT
Apprenticeship levy – use or lose it
Jill SmithMCIPPdip, CIPP policymanager, explains how the apprenticeship levy and funding operate
F rom about the start of the last unemployment particularly in people leaving school, college and higher education establishments, such as universities. Government has continually been looking at ways to address this issue as this category of the unemployed presents both a social issue and has the potential to impact a whole generation. Prior to April 2015 the apprenticeship programmes were voluntary, and despite the support of government through financial incentives and the subsidies for training and salaries, they have largely collapsed or been exploited. The apprenticeship levy (‘the levy’) was announced by Chancellor of the Exchequer George Osborne in the July 2015 budget. It was subsequently incorporated into law by Part 6 of the Finance Act 2016 and came into effect at the start of the 2017–18 tax year. Skills and training are devolved policy areas and whilst the levy is UK-wide this article focusses on arrangements for England. To be eligible to undertake an apprenticeship in England an employee’s workplace must be in England and they must spend most (50% or more) of their time in England during their apprenticeship. It does not matter if the employee’s place of residence is or is not in England. major recession, which was 2007, there has been an increase in
When you need to pay it The levy is paid through the pay as you earn (PAYE) process in the same way employers pay income tax or National Insurance contributions. The levy is payable by all employers with an annual pay bill in excess of £3,000,000. This includes smaller employers that are connected to other businesses or charities for the employment allowance if in total they have an annual pay bill of more than £3,000,000. ...levy paying employers need to register for an apprenticeship service account... The ‘pay bill’ is defined as earnings such as wages, commissions and bonuses liable to class 1 secondary National Insurance contributions. The levy is payable at 0.5% of the employer’s pay bill. If an employer is not connected to another business or charity they will have a levy allowance of £15,000 each year, which reduces the amount payable by £15,000 across the year. This means that only employers with an annual pay bill of more than £3,000,000 will pay the levy. Associated companies or charities will only
have one £15,000 allowance to share between them.
How to invest the levy All levy paying employers need to register for an apprenticeship service account (‘the account’). Once this has been actioned the money can then be paid across into this account. Funds in this account can only be used for apprenticeship training and assessment. The account is currently only available to employers that pay the levy or to non-levy paying employers in receipt of a transfer of funds from a levy paying employer. The amount in the account is calculated by multiplying the monthly levy paid to HM Revenue & Customs (HMRC) by the proportion of the employer’s pay bill paid to their workforce in England (referred to as the ‘English percentage’), plus a 10% top up on this amount from the government. These funds are then available for spending in England. Often employers are not aware of the full range of occupations and levels covered; however, this link – http://bit. ly/2Z7K8yY – shows what standards are available and also the variety of levels available to benefit employees at different stages in their career. While lower-level 16–18 apprenticeships are important, a large range of higher-level apprenticeships are on offer which are perfect for up-
| Professional in Payroll, Pensions and Reward | September 2019 | Issue 53 12
Career development insight
skilling existing teams. Apprentices can be of any age and do not need to be new starters. Investing in current staff through apprenticeship training can exceedingly enhance employee retention and develop the skill set within your business. For instance, the CIPP offers a three-year MSc level 7 qualification in strategic leadership that provides payroll, human resources and reward managers with the skills and knowledge to shape the future of their organisation, which can be funded through the account. Employers can only use funds in their account to pay for apprenticeship training and assessment for apprentices who work at least 50% of their time in England and only up to the funding band maximum allowed for that apprenticeship. If the costs of the training and assessment go over the funding band maximum, employers will need to pay the difference themselves. Account funds cannot be used to pay for other apprentice costs such as wages, travel and subsidiary expenses, work placement programmes or implementing an apprenticeship programme. The government has introduced ‘co- investment’, which is available for non-levy employers that don’t pay the levy, but co-investment is also available for those that do pay the levy but want to spend more than is available in their levy account in any single month. The purpose of the co-investment is for the employer and government to share the cost of apprenticeship training; the intention being that if an employer makes a cash contribution it will increase their engagement and in time increase apprenticeship training. The co-investment rate has changed for new apprenticeships starting on or after 1 April 2019, meaning that the employer will now pay 5% towards the cost of the apprenticeship training, whilst the government will pay the outstanding sum of 95%. All apprenticeships that commenced before 1 April 2019 will remain at the previous co-investment rate Support with apprenticeship costs
of 10% with the government paying 90%. The employer contribution is paid directly to the training provider. Levy management There are some levy paying employers that are not able to spend all the funds in their account. Conscious of this, the government will now allow employers to transfer up to 25% of the annual value of funds entering the account to other employers. These funds can be transferred to any employer, including smaller employers in their supply chain, and to apprenticeship training agencies (ATAs), to support new opportunities and widen participation in apprenticeships. Employers that have unused funds can find employers that want to receive a transfer in a number of ways: l contact employers in their supply chain l employers that work in their industry l use an apprenticeship training agency l work with regional or local partners. The transfer of funds will be used to pay for the training and assessment cost of the apprenticeships agreed with the receiving employer. Both parties will need to agree the details of the transfer of funds such as how many apprentices, cost and which apprenticeship standard to use. Both will need to agree on a suitable payment plan and the provider must prove that the contributions have been paid as a requirement of the government paying its contributions. When an employer has agreed a transfer to fund an apprenticeship, they are committing to fund the apprenticeship until it ends. They must ensure that they will have enough transfer allowance to cover the costs over the period of the apprenticeship. Once the apprenticeship has been approved on the apprenticeship service, they will not be able to stop the payments. Transfer payments will be deducted from their levy account first before their own apprenticeships. Employers receiving the funds need to be aware and understand the implications that this transfer may have under state aid rules. A percentage of all funds received as a transfer may be considered as state aid and this represents the amount of
co-investment they would have had to pay towards the apprenticeship if they had not received transferred funds. Funds expiring To prevent levy paying employers from accruing large balances in their service accounts, all unused funds from April 2019 onwards will begin to expire 24 months after they appeared in their account. So, where funds appeared in accounts in May 2017 all unused funds will expire in May 2019, and this will continue each month where the oldest unused funds in the account will expire if over 24 months old. Funding bands Employers need to choose the training that they would like their apprentice to receive throughout their apprenticeship. Currently there are two separate types of apprenticeship schemes to choose from and both are funded in the same way: l Apprenticeships standards – each apprenticeship standard covers a specific occupation and sets out the core skills, knowledge and behaviours that an apprentice will need. These apprenticeships are also known as ‘Trailblazers’, developed by employer groups. l Apprenticeships frameworks – a series of work-related vocational and professional qualifications within the workplace which are mainly classroom- based training. At present there are thirty funding bands with the upper limit of these bands ranging from £1,500 to £27,000. Employers are expected to agree a price for their apprentice’s training and assessment knowing that the funding band sets the maximum amount that the government will contribute towards. The upper limit of each of the funding bands is the maximum that an employer that pays the levy can use towards an individual apprenticeship from their account. If they go above this amount the levy paying employer will need to meet the costs themselves. For non-levy paying employers the upper limit band is the maximum amount that government will co-invest towards. See the CIPP’s website for more information on using the apprenticeship levy to fund the MSc in strategic leadership. n
...the oldest unused funds in the account will expire if over 24 months old...
13
| Professional in Payroll, Pensions and Reward |
Issue 53 | September 2019
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58Made with FlippingBook - Online magazine maker