Payroll insight
available payday after the deduction stop date shown in the notice. The ‘first available payday’ is the first payday on which it’s practical to apply that notice. Note that an employer must never stop making SLDs if asked to do so by the employee. The employee must contact the SLC if they have a query about deductions being made. ● Leavers – When an employee with a student loan deduction leaves the employment, an indicator ‘Y’ must be recorded in the P45 form in box 5. However, a ‘Y’ is not required if SL2 notice has been received. Care should be taken that even if deductions have not been made from an employee – because, for example, earnings were either consistently below the threshold or because an attachment of earnings order prevented a deduction being made – the indicator ‘Y’ must still be recorded in the form P45. If the SL2 has not been received from HMRC, where NICs are due on a payment after leaving, loan deductions would also apply on those NICable earnings. The employer must also supply
details of employee’s deductions in their payslip and P60 certificate and in the P45 form if an employee leaves the business. ● Death of an employee – If an employee with a student loan dies, deductions are not made from any final payment due. This is because class 1 NICs are not due on any payment made after the death of the employee. ...required to deal with loans from any one of the four nations Pension payrolls Because SLDs are calculated on NICable earnings deductions are not made from occupational pension payments as they are not subject to NICs. Therefore, if a P45 form or starter checklist is received for a person on a pensions payroll indicating that a SLD should be made, it can be ignored. However, if the person is also an employee, deductions should
be calculated on their employment earnings.
Devolution Although devolved policies are increasing the complexity of payroll processes in many areas – with legislation concerning student loans and their repayment issued separately for England and Wales, for Scotland, and Northern Ireland – the fundamental rules governing SLDs through the payroll are aligned so there are no differences in this respect across the UK. However, as individuals with loans from one UK nation may move to another, any employer could be required to deal with loans from any one of the four nations. Only England and Wales have both plan 1 and 2 loans, with Scotland and Northern Ireland having only plan 1 loans. In Scotland, the plan 1 threshold will differ from the rest of the UK from 2021 as it is planned to rise to £25,000. PGLs have been introduced in England and Wales only for postgraduate study so will not apply to individuals with loan in Scotland and Northern Ireland. n
NM/LW compliance and enforcement
I N SEPTEMBER 2018, the Department for Business, Energy & Industrial Strategy (BEIS) published the report NLW and NMW: government evidence on compliance and enforcement 2017/2018 (https://bit.ly/2MWc7dQ), providing an overview of national minimum/living wage (NM/LW) enforcement activity during 2017/18. Evidence presented in the report covers, amongst other things: ● estimated non-compliance with the minimum wage ● statistical estimates of low-paid jobs, and ● enforcement operations and statistics. In 2017/18, HM Revenue & Customs achieved record enforcement results in identifying £15.6 million of minimum wage arrears benefitting over 200,000
workers, demonstrating a high marginal return on the increase in resources. Penalties of £14m were issued to employers in this period. Sectors specifically targeted comprise social care, retail and commercial warehousing, gig economy, employment agencies, apprentices and migrant worker. Targeted enforcement levied penalties of £3.4m on employers, with the strike rate for these cases increasing to 39%. Estimates based on the Annual Survey of Hours and Earnings (ASHE) for 2017 indicates there were around 282,300 jobs paid below the NM/LW. This is equivalent to around 1.2% of all jobs held by employees aged 25 or over, and in line with findings from the previous year (where this was equivalent to around
1.3% of all jobs held by employees aged 25 or over). The ASHE data also suggests that the north east has an estimated 1.6% of all jobs paid below the NM/LW, with the proportion in north west and west midlands regions being 1.4%. Although the south east and London have a comparably high number of jobs paid below the NM/LW (1.0% and 0.9% respectively), this implies that non- compliance is not as prevalent in these areas. The report comments that, on the assumption that employers will become compliant with NM/LW law once they better understand it, the main approach for encouraging compliance is to improve the information available to them. n
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| Professional in Payroll, Pensions and Reward |
Issue 47 | February 2019
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