Payroll insight
Non-banking days To make a payroll UC-friendly, the regular date must be reported in the FPS each month. However, if that date falls on a non- banking day, you can actually make the payment on a different day. ...design a payroll that avoids all of these problems, by meshing perfectly with universal credit... The HMRC web page ‘CWG2: further guide to PAYE and National Insurance contributions’ (https://bit.ly/2sQ4D7C) explains the options in section 1.8: “When a regular payday falls on a non- banking day (Saturday, Sunday or bank holiday) and because of this payment is made on the: ● last working day before the regular payday ● next working day after the regular payday for PAYE purposes the payment may be treated as having been made on the
can be stressful and distracting in the workplace, and this can lead to reduced productivity or absence from work. The choice of pay date If you make payments weekly, fortnightly or four-weekly, all employees claiming universal credit are likely to see some adverse effects, as detailed in the CPAG report. These effects are not as severe as the worst of the problems experienced with monthly payrolls. If you want to design a payroll that avoids all of these problems, by meshing perfectly with universal credit, then a monthly payroll is the most practical way. The regular pay date should either be the last day of each month or a fixed date from the 1st to the 26th. These pay patterns guarantee one pay date per assessment period for all 31 possible assessment cycles in all twelve months of the year. The reason why the 27th and 28th cause problems is found in regulation 21(2)(b). Once a year, this rule changes the assessment cycles which normally start on the 29th and 30th, so they start on the penultimate day of February. T he Help to Save scheme, which is backed by the UK government, launched in September. The scheme allows certain people on low income, who are entitled to working tax credit (WTC) or receiving universal credit (UC), to receive a bonus of 50p for every £1 they save into their Help to Save account over four years. The maximum that can be saved each calendar month is £50, but it is not necessary to save every month. Savers can withdraw money from their account to their bank account. Bonuses, payable into the person’s bank account at the end of the second and fourth years, are based on the amount saved. Those choosing to close their account during the four-year life of the account lose bonus eligibility. The bonus after two years will be 50% Help to Save
regular payday. This is also the date that should be reported [in] the FPS as the ‘payment date’ even if the actual payment is made slightly earlier or later.” The ability to vary the pay date gives us three UC-friendly options when a regular payday doesn’t fall on a banking day, as follows. ● Pay on the regular date. ● Pay on the working day before the regular payday but report the regular payday in the FPS. ● Pay on the working day after the regular payday but report the regular payday in the FPS and send it on or before the regular payday. Some of the options won’t be possible if you can’t make a payment at the weekend or send the FPS in advance. You may also be constrained if your software can’t make a payment on one date and report a different date in the FPS. n As we have seen, some payrolls avoid the assessment period lottery and work consistently for all claimants. Whether employers choose to implement this workaround, is now up to them.
of the highest balance saved, and the final bonus will be 50% of savings above the highest balance in the first two years. As mentioned above, the maximum a person can pay into their account each calendar month is £50, which equates to £2,400 over four years. Accordingly, the maximum bonus is £1,200. A person can open an account if they are either: ● entitled to WTC and receiving WTC or child tax credit payments, or ● claiming UC and their household income in their last monthly assessment period was £542.88 or more. (Payments from UC do not count as part of household income.) Although generally a person will need to be living in the UK, someone living overseas can apply for an account if they
or their spouse or civil partner are either a Crown servant or a member of the British armed forces. Saving through a Help to Save account could affect a person’s eligibility for certain benefits and how much they will get. If they or their partner have £6,000 or less in personal savings (including any savings in the Help to Save account) this will not affect how much UC or housing benefit they get. Help to Save bonuses will not affect UC or housing benefit payments, and any savings or bonuses through Help to Save will not affect the amount of WTC a person can receive. Applications for Help to Save account are made via the person’s Government Gateway account. For further information visit: https://bit. ly/2Qoaxo3. n
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| Professional in Payroll, Pensions and Reward |
Issue 45 | November 2018
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