TECHNOLOGY
time focussed as much on this practical consequence of the change as on the social policy implications – the attempt to start equalising the starting point for paying tax and NI, and the increasing divergence between employees’ NICs and benefits earned. The Revenue came under a lot of pressure at the time to avoid any repetition: and I think this helped to drive home the message to government that it relies on payroll software for timely and accurate implementation of changes to rates, allowances and the like. And, that they, therefore, needed to allow the industry a reasonable amount of time to plan, create and introduce them. So, what was so massive and so scary for payroll about this change? It reduced the number of employer contribution bands from four to one, but apart from that, it was simply about adjusting thresholds. I’m no software expert, but I’m pretty sure introducing such changes today would be regarded as pretty small beer. But it was perhaps helpful to the payroll community that, in the aftermath of the 1999 changes, the government was more cautious – less cavalier, you might say – in planning anything of this nature over the “I’d say we can certainly thank the software industry for the skill and imagination applied in bringing us to the efficient payroll routines we benefit from today”
of several frustrations faced by payroll professionals: ● the recent decisions to use PAYE to recover student loans and pay tax credits to employees ● the National Insurance contributions (NICs) restructuring in 1998/99 ● the exponential growth of the Employer Pack (a 250-page collection of assorted paper guidance and instructions landing annually on every employer’s doormat). These were just a few of many issues. It probably wasn’t that widely appreciated at the time that one common issue behind each of these annoyances was the lack of functionality to enable both payroll teams and the Revenue to let the computer take the strain and manage such tasks automatically. This was, of course, especially true of the smallest employers: it may be worth reminding readers that most UK employers have fewer than ten employees. But at that time, many larger employers were also still very much reliant on paper-based routines, and above all, perhaps the manual preparation of individual forms P14. P14s detailed the ingredients of each employee’s tax, National Insurance (NI) and other payroll elements, and had to be submitted to the Revenue within six weeks of the year end. It may come as a particular shock to learn that in 2002, there were still two employers sending in more than 20,000 paper P14s. TWENTY THOUSAND! Restructuring of NICs Looking back at the employer challenges I learnt of in 2000, perhaps the most striking example of the difference between the technological tools available then and those we hardly notice today is seen in the NICs restructuring. This was introduced in the 1998 Budget, to apply from April 1999. It involved a complex rewriting of the P14, and commentators at the
following years. Readers might be amused to learn that it was a full ten years after the NICs restructuring episode that the government contemplated the introduction of the upper accrual point for NI, in fear and trepidation that this very minor change might cause a riot among the payroll industry! Hindsight is, of course, a wonderful benefit, and it remains interesting to look back at the complaints generated by some of these past changes and more recent ones too. There can be few employers today who regret having to receive and file payroll data online and in real time. And yet there can be little doubt that the small incentive payments introduced in 2005 persuaded smaller employers to start filing their end of year returns online much earlier than would otherwise have been the case. Equally, the introduction of real time information to enable the same data to be transmitted every pay day caused grumbles to start with but is now well accepted. And thankfully, the early frustrations of the clumsy introduction of electronic transmission of tax code changes and P11D data are now history, and today’s employees and employers mostly benefit from much speedier updates. A huge thank you to the software industry So, what can we learn from looking back? I’d say we can certainly thank the software industry for the skill and imagination applied in bringing us to the efficient payroll routines we benefit from today. We should also recognise the contribution of payroll, accountancy and other professionals to consultation discussions with government over the years. These discussions have brought us to a much better two-way exchange of views and experiences today. Finally, I’d praise those who’ve approached sometimes scary changes with a forward-looking attitude, and with energy and imagination, rather than fear and resistance. Surely, it’s this sort of positive approach to change which will help the smooth introduction of future projects. When I look back over ten years of assessing for PAS, I see much more openness to change than perhaps there was in the past. Payroll managers I meet are always keen to discuss their plans and dreams for the future with me, and I trust readers will share my view that this is a really healthy development. n
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| Professional in Payroll, Pensions and Reward |
Issue 94 | October 2023
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