Official publication of The Chartered Institute of Payroll Professionals
in Payroll, Pensions & Reward
Issue 51 June 2019
A lifetime of learning
Be Payroll Membership focus
Being Chartered A vision for you
Risk management Featuring PAS
CIPP update | Policy hub | Career development
INTEGRATED Human Resources, Payroll and Talent Management You choose your required modules
0845 370 3210 sales@frontiersoftware.com www.frontiersoftware.com
OFFICES IN AUSTRALIA, INDIA, MALAYSIA, NEW ZEALAND, PHILIPPINES, SINGAPORE AND UNITED KINGDOM
“Learning is not attained by chance, it must be sought for with ardour and diligence.” Abigail Adams (1744–1818) (http://bit.ly/2YocTqi)
Editor’s comment
Though commissioning articles months ahead of planned publication, I always enjoy receiving and reading them. Without fail, I learn new things – which (sort of) segues neatly to mentioning this issue’s feature topic of lifelong learning (see page 31).
Another important article explains Be Payroll, the Institute’s recently launched membership campaign (page 4). This issue’s front cover is of Michelle Sutton MCIPPdip. Time to get involved – get your skates on! I also recommend the Being Chartered (page 13) and the Payroll Evolution (page 27) articles.
Jason Davenport, CIPP chair, extols lifelong learning below. I must also mention an article by another Jason which is about risk management and the CIPP’s Payroll Assurance Scheme (see page 10). Amongst other things it features the author’s learning and training in the sport of roller derby!
Mike Nicholas MCIPP AMBCS (editor@cipp.org.uk) Editor
‘Every day is a school day’ is a mantra that many will have heard me quote. I left school at age sixteen like so many of my peers, stepping into employment following my first interview. I quickly learnt that formal qualifications balanced with experience were going to be a part of my future to ensure I could pursue the career I wanted, and so further education Chair’s message
A key question I asked in a recent visit to a school’s career fair was ‘who likes to solve problems?’ An area to explore when recruiting into roles in our industry is an individual’s appetite for problem solving. Knowing how to review software, create reports to provide the data required, and continually troubleshooting throughout a process, has helped me in every aspect of my career. Especially as I have taken on more senior roles, where assimilating data quickly and reviewing information available must happen for effective decision making. Keeping your mind open for new experiences and new understanding helps to keep your mind and your approach fresh and relevant. I am minded of this adage: ‘old man with a young mind is much younger than the young man with an old mind’ – which brings me back to my opening mantra. As ever, feel free to contact me on the email address below.
was embarked upon. In my family I have seen the quality of great schooling and what it does to a child’s mind. My brother is an orthopaedic consultant – and clinical director of Wrightington Hospital. His approach to learning is like that of a hungry man who can never sate his appetite. Though I often reflect that his decisions have life or death consequences, our own in payroll are still incredibly important to the employees and employers we serve. There are legislative changes constantly impacting our work; technological enhancements that must be understood to be taken advantage of; and new ways of working continually challenging best practice to be embraced.
Jason Davenport MCIPP MIoD (jason.davenport3@cipp.org.uk) Chair, CIPP
CEO’s message
The CIPP board recently met with the senior management team to set out its strategic vision for the next three to five years as well as review progress. This is carried out on the basis of how we can continually improve our service offerings to the
advertising, online chat, social media, video, apps and email, particularly pleasing in the digital world we inhabit. This has been reflected in the take up of all of these offerings. Our focus on membership continues to ensure that as a not- for profit membership organisation every penny (and pound) is reinvested in keeping our qualifications and training offerings in excellent shape and in ensuring our membership offering has benefits in enhancing your career. A year ago, we introduced 50% off our payroll and HR update training course for all members – I’m pleased that this has been a resounding success and will continue during the next year. We’re also delighted to launch yet another incredible membership benefit for associate, full, fellow and Chartered Members. The CIPP tax pack has been created to help you make the most of your membership and assist you in your role. We hope that the pack, which comprises: The Compact Payroll Reference Book, the payroll factpen and the CIPP’s wallplanner, is of benefit to you.
membership base and try to ‘predict’ what the world of payroll, pensions and reward will look like going forward – not easy. We perform this annually with some detailed preparation and input from the senior management team. I’m pleased to share some of the successes from the last year as directed by the board and executed by the CIPP senior management team. Key areas of focus were our qualifications portfolio, digital marketing and membership strategy. On the qualifications side we held a number of taskforce meetings relating to our Foundation Degree offerings (both payroll and pensions) and included stakeholders from all the areas with which the CIPP engages. We had tutors, students, industry and education representatives – my personal thanks to all who engaged, contributing to reviewing and ensuring our materials continue to be fit for purpose. On digital marketing, we widened the scope and reach of the digital channels used by the CIPP through the website, online
Ken Pullar FCIPP (ken.pullar@cipp.org.uk) Chief executive officer, CIPP
1
| Professional in Payroll, Pensions and Reward |
Issue 51 | June 2019
in Payroll, Pensions & Reward PROFESSI NAL
Also available online at payrollpensionsandreward.org.uk
Contents
June 2019
34
How green is your pension?
Henry Tapper hopes for fundamental change
Features
4
21
10
Employee expenses Justine Riccomini discusses expenses payments and tax implications
Risk management Jason Clark relates his chosen sport and CIPP’s PAS
Be Payroll Justin Mingaye provides details of the new membership campaign
27
28
31
A guide to P11D (and P11D(b)) returns Jill Smith gives information to help completion and submission
Payroll evolution BrendaMorris considers howpayroll can be the fulcrum for change
A lifetime of learning Jerome Smail conveys views and knowledge of experts
2
| Professional in Payroll, Pensions and Reward | June 2019 | Issue 51
42
35
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 01273 412 836 | 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
TPS – facts, figures and funding Ian Neale discusses impending contribution increases
Beyond the TRs Peter Minchinton provides an update on developments
46
44
Addressing the gender pay gap Danny Done advises
Proof, protection, dismissal NicolaMullineux outlines decisions
Useful contacts
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
Regulars
31 Feature articles Lifelong learning
01 Editor’s comment, Chair’s andCEO’s messag e
34 Pensions insight 39 Reward insight 48 Aweek in the life of 54 Confessions of a payroll manager Additional online content 36 Transforming workplace savings behaviour 38 An update by The Pensions Regulator 39 Multi-generational workers – getting their benefits right 40 Setting up for success 41 Apprenticeships – learning and working time
Events, news and developments
04 Membership insight
On your behalf, Advisory, Five minutes with, Being Chartered
14 Events horizon 15 CIPP update 17 Career development insight Movers and shakers, Diary of a student, PAS case study
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.
20 Payroll news 21 Payroll insight 30 Industry news
3
| Professional in Payroll, Pensions and Reward |
Issue 51 | June 2019
MEMBERSHIP INSIGHT
JustinMingaye BA(Hons) CMgr MCMI, CIPPmembershipmanager, provides behind-the-scenes details of the Institute’s newmembership campaign Be Payroll
T he ‘Be Payroll’ campaign is a welcome addition to the profession’s efforts to improve its image and profile, complementing the already excellent work of National Payroll Week and other similar initiatives. The campaign focuses on payroll as a profession, showcasing real-life CIPP members and the key values and attributes that is in the DNA of their careers. The campaign shows that having an interesting and fulfilling career is not limited to our accounting or human resources (HR) colleagues. We focus on the impact that engaging with the CIPP has, clearly demonstrating that membership can provide all the support any payroll professional will need for a rewarding and successful career. About Be Payroll An early concept from CIPP creative manager James Bartlett late last year coincided well with initial thoughts around the need for a new membership campaign. Our membership communications were due a refresh, and in tapping into the trend within professional bodies and higher education around role modelling, we decided that we could go further and use our own members as ‘brand ambassadors’ for the campaign. Since joining the Institute, I had come across plenty of discourse with members and senior management to appreciate that we were experiencing the same fate as other professional institutes. A clear sense that the profile of the profession wasn’t as high as it could be; that those operating with it could sense a slightly higher standing when comparing themselves
to related professions; and a ‘what-do- I-get-for-my-money’ low value, almost transactional, perception of membership. Experience shows that comments like these can typically swirl around the membership bases of other professional bodies. It is also interesting and pretty typical that this perception is in marked contrast to the high levels of competence evident across the membership bases, and the value that they derive from being part of these active professional communities. It was high time then to feature our members and their stories, front and centre in a refresh of our membership materials. ...the role-models existing members and those new to the profession might need A simple membership communications update wasn’t enough. We needed a campaign. These real and active payroll professionals were just the role-models existing members and those new to the profession might need. And fantastic advocates to help us dispel some of the myths around what it takes to survive and then thrive in payroll. Getting started A suggested list of names of engaged members who might make good advocates for Be Payroll was compiled, and from these names an invite was sent out to join the CIPP team for a day in March at our
London offices. It involved professionally shot photos and video interviews. The day also provided a good chance to get to know each other and cheer when it was time to get in front of the cameras. The stories we have captured have massively helped segment our membership offer under the key pillars of knowledge, development, recognition and support. What is happening? We launched Be Payroll on 2 May 2019 at the Bristol national forum where our members become CIPP role models and feature across a new suite of membership communications and materials. This new campaign features photos and videos of our real-life payroll and pensions members alongside key values and attributes of the profession and CIPP membership. It showcases the high-level of professionalism in payroll and how CIPP membership is the perfect career partner. The social media campaign using the hashtag #BePayroll also started on 2 May. As we progress we are encouraging the entire CIPP network and membership base to engage with the campaign on social media and in their business relationships. We’re extremely pleased that this represents a shift in the discourse around CIPP membership. From a list of benefits and focus on price to the highlighting of the value, skills, knowledge and attributes of the profession and the scale of opportunity of a career in the industry. CIPP membership acts as valuable a career partner through its knowledge, development, recognition, and support. As we continue to improve the experience
4
| Professional in Payroll, Pensions and Reward | June 2019 | Issue 51
Membership insight
for our members, we will do so by adding strength to these underpinning four key pillars. What we hope to achieve Be Payroll is the start of a new membership value proposition around the core underpinning pillars of membership and the intended outcomes of joining and engaging with us. We hope more and more people gain a better understanding of the professionalism within payroll and how the CIPP is designed to help. We hope the campaign will attract potential and current members to join in by viewing, sharing, creating content using #BePayroll, and for those prospective members showing them that membership will help them stand out from the crowd and make the most of their careers – regardless of what stage they are at – it might just be the incentive they need to join us and join in. We want current members to consider
growing with us too, upgrading their membership as they progress their careers and aspiring to become Chartered. For example, many of our associate members who have management experience may be due an upgrade to full membership following our recent update to our criteria. How you can help We want more people to benefit from the opportunities that exist within payroll, as you have throughout your career. But we also want you to shout about your successes, your payroll journey, and the tremendous work you can see being done by your colleagues – using the #BePayroll. Get involved. We want you to share, like, comment and get involved with the campaign. We are on LinkedIn, Twitter, Facebook, and now Instagram. Tell your story, share your videos and use the #BePayroll – inspire other payroll colleagues to join the CIPP and raise their profile, but also their support network. If we, as members, can’t shout about
the value that payroll brings to the world, who else can or will?! n
Check out our new membership pages featuring behind-the-scenes footage, case studies and photos of the campaign volunteers at www.cipp.org.uk/join . With very special thanks to: l Alison Ford MCIPPdip l Ben Hancock MSc FCIPP l Claire Warrington MSc FCIPPdip l Daniel Hancock MSc ChFCIPPdip l David Ellis Rees FCIPP l Deborah Auton ChMCIPPdip l Ellie Reynolds l John Stonestreet ChMCIPPdip l Michelle Sutton MCIPPdip l Olivia Dunham ChFCIPPdip l Sharon Anderson BA (Hons) FCIPPdip l Sunmola Adeyemo MCIPPdip l Tristan Day ACIPP Join in and follow #BePayroll on LinkedIn, Facebook, Twitter and (newly launched) Instagram.
...Tell your story, share your videos and use the #BePayroll...
CIPP board vacancies CIPP board of directors - positions available
There will be two vacancies on the CIPP Board which will arise from January 2020 and all members (i.e. those in the categories of associate, full, fellow and Chartered Member) are eligible to stand for election.
A role description and person specification can be found at cipp.org.uk/AGM
To be able to operate effectively and make good decisions, the Board believes that it is important that the governing body reflects the full breadth of the Institute’s activities and the diversity of its membership. It also needs to ensure that it covers the competencies necessary to govern the Institute effectively. The Board has identified that this year there is a need to strengthen its expertise and skills in the following key areas:
l Experience of financial reporting l Operation of a complex organisation and oversight of business activities
Applications would therefore be particularly welcome from members with the skills and experience to contribute to the Board’s work in these areas.
The nominations and appeals committee will assess all nominations and use its best endeavours to shortlist candidates with such skills and expertise as appropriate. This process has been introduced to ensure that the Board is properly equipped to govern the Institute in the best interests of its members.
Where there are more shortlisted nominations than vacancies, a ‘first past the post’ ballot will be held and the results announced at the Annual General Meeting to be held on 5 December 2019 .
If you are interested in joining the CIPP board, submit your application at cipp.org.uk/AGM by 30 August 2019.
cipp.org.uk @CIPP_UK
5
| Professional in Payroll, Pensions and Reward |
Issue 51 | June 2019
MEMBERSHIP INSIGHT
On your behalf
Policy team update
Diana BruceMCIPPdip, CIPP senior policy liaison officer, sets out details of important consultation on off-payroll working and theminimumwage
Off-payroll working in the private sector The latest development was the
the off-payroll working rules will work from April 2020; and the obligations and responsibilities of all parties involved in the labour supply chain. ● Defining the scope of this reform – Concerns were raised during the previous consultation (http://bit. ly/2GX24We) that extending reforms to the private sector would have a significant impact – which potentially gained nothing from a compliance perspective – on small private sector organisations; and this has been accepted by HMRC. The definition of a ‘small company’ is defined within the Companies Act 2006 (‘the Act’). HMRC has highlighted the qualifying conditions which if met, would exclude a company from these reforms. The qualifying conditions will be met by a company in a year in which it satisfies two or more of the following requirements: ❍ annual turnover – not more than £10.2 million ❍ balance sheet total – not more than £5.1 million ❍ number of employees – not more than fifty. However, in recognition that not all organisations will have incorporated and thus need to comply with the requirements of the Act, these two
options have been presented to be able to identify and exclude unincorporated organisations: ❍ either fifty or more employees or turnover in excess of £10.2 million ❍ both fifty or more employees and turnover in excess of £10.2 million. For both incorporated and unincorporated entities when they become small, or cease to be small, it is proposed that change will apply from the start of the tax year following the end of that accounting period. This is an area which will require clear guidance from HMRC, provided in a timely manner to ensure that organisations will be clear as to whether they are captured by the reforms. Information published at Budget 2018 predicted that 1.5 million businesses will not be impacted by the reforms – but that isn’t to say they won’t need to be aware of them. ● Addressing non-compliance – Off-payroll reform in the public sector requires the engaging client to determine the status of the contract. It also requires the fee-payer to deduct income tax and National Insurance contributions (NICs) as if the contractor were an employee. In simple working relationships the engager and the fee-payer are one and the same. However, more complex supply chains were identified as a cause of concern as they relate to the right to obtain the determinations to each party within the supply chain. HMRC seek to address these problems within the
consultation (http://bit.ly/2VEmDPf) published by HM Revenue & Customs (HMRC) in March 2019 which asked for views on proposals to deliver off-payroll working rules to the private sector from April 2020. The consultation closed on 28 May 2019. The policy team produced a survey to gather views and opinions together with experiences of the earlier reforms. We also held a think tank roundtable last month in Manchester, to which full, fellow and Chartered members were invited to attend. Given that time is strictly limited between now and the implementation date of April 2020, the consultation took the opportunity: ● to clarify HMRC’s response to concerns that have been raised about the check employment status for tax (CEST) service (http://bit.ly/2VF2ZTl) ● to provide details about what education and support HMRC intend to provide to all affected parties, in an attempt to ensure readiness for April 2020. The intention is that the consultation document should give organisations and individuals certainty around both: how
...two options have been presented to be able to identify and exclude unincorporated organisations...
6
| Professional in Payroll, Pensions and Reward | June 2019 | Issue 51
Policy hub
consultation and pose several questions that look to identify the impact change would have and to also identify what a ‘typical’ chain looks like for the majority? The off-payroll reforms have come about due to the belief held by HMRC that ‘wide-spread’ non-compliance exists with intermediaries (‘IR35’), and the increased pay as you earn revenue that was collected following off-payroll reform in the public sector is seen as evidence of success. The vast majority of organisations will comply with the new reforms. However, as with any new reforms HMRC believe there is a risk of non-compliance amongst the minority and plan to extend existing provisions within Part 2 of Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003, to provide for the liability for income tax and NICs to be transferred from one party to another in certain circumstances. ● Status determination – The consultation provided details of the intention to strengthen the existing rules to provide both the fee-payer and the off-payroll worker with reasons for the status determination from the client. It is also proposed that the client may need to put in place a regulatory process that will allow disagreements to be resolved. It is intended that the client will have a certain amount of freedom to tailor the process within their wider business processes, whilst still maintaining consistency with other organisations. ● Pensions – HMRC is considering legislative options that will enable the fee-payer to make pension contributions to the off-payroll worker’s personal pension free of tax and NICs. If utilised this would see a deduction being made to gross pay before calculating NICs. HMRC is keen to know what impact this would have on administrative burdens and also how likely would it be for this option to be offered to the off-payroll worker and if offered would there be a demand for this option? ● Preparing for change – Whilst HMRC continue to affirm that the CEST service was ‘rigorously tested’ before reform was delivered to the public sector, continued criticism of the service has seen HMRC meet with stakeholders to address concerns and where possible enhance the service to support customers in making employment
...lessons may have been learned as HMRC have begun to publish new guidance... status decisions. As part of this work it is intended to improve guidance to ensure that the wide range of users, particularly those working through intermediaries, will be able to understand how and why the determination has been made. Much criticism was levied at HMRC with earlier off-payroll reforms and it would appear lessons may have been learned as HMRC have begun to publish new guidance to prompt preparation (http://bit.ly/2ZRih6X). This brief guidance prompts organisations to work across departments to: ❍ review current engagements, to ensure that any undertaking with intermediaries which may include personal service companies, agencies, or both, are identified ❍ put in place comprehensive processes, which will require multi- departmental involvement and co- operation to ensure consistency with status determination ❍ decide how status determination will be made; the CEST service can be used but so can suitably qualified professional advice ❍ review all onboarding and recruitment policies to ensure that they are robust enough to identify contracts that are captured by these latest reforms, and ❍ communicate with workers who are engaged through intermediaries to ensure they are aware of the change and how it may impact them. The survey responses together with anecdotal evidence provided at the policy think tank roundtable support the CIPP written response to this consultation, which can be accessed through the policy hub on the CIPP website: www.cipp.org.uk/my-cipp/ policy-hub.html . Annual review of the NMW As they celebrate twenty years of the national minimum wage (NMW), the
Low Pay Commission (LPC) conducted its annual review, seeking views from the widest possible range of contributors. To support the CIPP written response to the 2019 consultation, the policy team published a survey to collect views and opinions as to the: ● affordability of the national living wage (NLW) rate and the effects of an increase to the ‘on target’ rate for April 2020 – currently around £8.67 ● evidence of the impact of increases in the NLW since its introduction – including the April 2019 uprating – on workers, employers, the labour market and the economy ● evidence of how employers are seeking to improve productivity ● evidence on how the economic outlook is affected by the process of leaving the European Union. The LPC in consideration of all other rates which impact workers under 25 and apprentices was also seeking evidence to make recommendations on its traditional basis which is helping raise the pay for as many low-paid workers as possible without damaging their employment prospects. In addition to this consultation, the LPC has had its annual programme of visits around the UK which allows the Commissioners to hear directly from workers and businesses as to how their minimum wage recommendations are working ‘on the ground’. The policy team also held a think tank roundtable last month in Leeds to provide Full, Fellow and Chartered members the opportunity to share their views and opinions. n The survey responses together with anecdotal evidence provided at the roundtable support the CIPP written response to this consultation, which can be accessed through the Policy hub on the CIPP website: www.cipp. org.uk/my-cipp/policy-hub.html .
7
| Professional in Payroll, Pensions and Reward |
Issue 51 | June 2019
MEMBERSHIP INSIGHT
Q: Members of staff on business have to buy their lunch. Can this expenditure be reimbursed free of tax and NICs, and do they have to provide receipts? A: Yes, they can be reimbursed free of tax and NICs providing they are genuine business expenses. Receipts for genuine business expenses will no longer be required by HMRC from April 2019 but your company’s individual expenses policy may still require receipts. It was announced at Autumn Statement 2017 that from April 2019, receipts for subsistence reimbursement will no longer need to be checked by employers. Also, the concessionary accommodation and subsistence overseas scale rates will become statutory. Please see http://bit.ly/2UNIX4B. Q: Please can you advise if the apprenticeship levy is based on the gross pay bill or taxable pay bill? A: The apprenticeship levy is calculated on your pay bill which means all payments to employees that are subject to employer class 1 secondary (employer) NICs, such as wages, bonuses and commissions; see http://bit.ly/2ZNMV12. Q: The company I work for are currently offering a ‘loan’ of up to £2,400 which will be repaid over twelve months. Is the repayment of a loan from net pay excluded from the national minimum wage (NMW) regulations? A: A ‘loan’ must fall within the exceptions (see below). If so, they will not reduce the employee’s pay for purpose of determining whether the NMW has been paid. (The ‘NMW’ references are to sections/pages in HMRC's National Minimum Wage Manual – http://bit.ly/2WlxJG8.) ● Contractual deduction relating to misconduct and discipline (NMWM11060). ● Contractual deduction for conduct relating to ‘any other event’ (NMWM11065). ● Deduction to repay a loan or advance of wages (NMWM11150). ● Deduction to recover an overpayment of wages (NMWM11140). ● Deduction to purchase shares, other securities or share options or to purchase any share in a partnership (NMWM11190). ● Deductions made by an employer that is a local housing authority or registered social landlord for the provision of living accommodation and the accommodation offset does not apply (NMWM10180).
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 currently offer our employees the choice of a company car or a car allowance. Most employees are in receipt of a car allowance in lieu of a company car. Can they only claim the advisory fuel rates (AFRs) or would the mileage allowance payments (MAPs) be applicable? If the AFRs apply but they have been paid using MAPs rates, will they then either need to pay it back or will it need to be reported as a taxable benefit in a P11D return? If the AFRs have been applied, would we then owe the employees more money for any miles claimed? A: The AFRs are the maximum payable to those employees who have use of a company car. In the situation of the employee choosing an allowance over the physical car, the employee is then expected to provide their own vehicle which can then be used for business purposes. As the employee will be using their own vehicle for business travel (even though they have been provided with an allowance to supply this), they will then be entitled to claim the maximum as advised in the MAPs. MAPs are the maximum an employee can claim per business mile which will have no benefit attracted. If your mileage reimbursement scheme offers more than the MAPs, the difference between what is paid and what is allowed will attract both tax and National Insurance contributions (NICs). Best practice would be to collect this via pay as you earn (PAYE), collecting both the tax and class 1 NICs. If this is not an option, you will need to add the value to your employees’ NIC-able
pay and report via a P11D return for the collection of the tax due. If you reimburse your employees less than MAPs, your employee can claim tax relief from HMRC directly. Please see this link: http://bit.ly/2GRm6Qy. Q: One of our clients has enquired whether their employee would be able to ‘freelance’ whilst she is receiving statutory maternity pay (SMP) and whether this would affect her rights? The employee has asked if she could undertake freelance work as a ‘sole trader’ for one day a week outside of her contract, during maternity leave. A: Yes an employee can work as self- employed basis without affecting her SMP and maternity rights as per the extract below (see http://bit.ly/2GVOpPa): “3.12 Working in your maternity pay period If you are getting SMP from one employer and, before your baby is born, you do some work for another employer, your SMP is not affected. Your SMP will stop if after the baby is born, but before the end of the maternity pay period, you work for an employer who did not employ you in the qualifying week. It is your responsibility to tell the employer paying you SMP about your new job. You must do this as soon as possible, and make sure you return any SMP payment you get that covers the week you started work and any part of the period after you resumed work. If you do any work in a self-employed capacity during your MPP, then such work will not affect your SMP."
8
| Professional in Payroll, Pensions and Reward | June 2019 | Issue 51
R E V I S E D C O U R S E
Policy hub
LEAD YOUR PROFESSION LEAD YOUR BUSINESS
A: It depends on the circumstances: if the employee still is liable to class 1 NICs on their pay the student loan deduction will still apply. For example, the employee could be temporarily seconded to work abroad and the earnings could be subject to class 1 NICs for first year; or a Form 1 may have been applied so that class 1 primary (employee) NICs will be deducted for at least two years and it would follow that the student loan should be deducted. Even if the student loan does not need to be deducted via the payroll, it may not cease the employee’s liability to pay this. The employee should contact the Student Loan Company to ascertain their liability. Q: We are assessing our employees who receive childcare vouchers. One employee who has been classed as a higher rate tax payer in the past appears to have become a basic rate tax payer. Based on the following information would you agree? Salary 2019/20: £50,972.06 Taxable benefit: £1,327.58 Pension at 7%: £3,568.04 salary sacrifice Tax code: 1250L A: After adding the benefit to the salary and reducing it by the salary sacrifice and personal allowance of £12,500 the taxable pay is assessed as £36,231.60. As the basic rate tax band has increased to a maximum of £37,500.00 this current tax year (2019/20), the employee based on the information provided is now classed as a basic rate tax payer and therefore entitled to have £243.00 worth of childcare vouchers free of tax and NICs liabilities.. Q: I have a challenge where I need to explain what a change in tax basis is to an employee/pensioner. I am trying to keep this to one or two short sentences. Can you suggest how best I can explain this please? A: This link to HMRC's PAYE Manual explains an employee’s tax code: http:// bit.ly/2ITbHYl. I have also included the following extract as although it is longer than a couple of sentences, it is easy to understand. “The week 1 / month 1 basis gives a proportion of any allowances and rates of tax for each pay period. However, it differs from the cumulative basis in that it ignores previous pay and tax. In effect all payments are taxed as though it was week 1 or month 1 of the tax year.” n
● Deductions made by an employer that is a higher or further education institution for the provision of living accommodation and the accommodation offset does not apply (NMWM10190). Q: There are several employees who donate to ‘give as you earn’ and the employer is withholding a percentage for admin fees. Should this be deducted from net pay rather than tax free? A: The process that should happen is the employee could donate, say, £300 for example, and all the money will go to the payroll giving agency. The agency can deduct an admin fee from the donation, but the employer cannot as the employee has not agreed to this. In addition, had the employee agreed to the admin fee it would not be exempt from tax, so would have to be deducted from net pay after PAYE and NICs have been applied. Q: We have an employee who is a doctor working for a National Health Service Trust and moves from one hospital to another for training. As far as we know the employee is not moving to a new house but has been told up to £8,000 in travel costs will be paid for relocation free of tax and NICs. I believe this to be incorrect as the employee has not relocated to a new property. Can you advise please? A: This depends on the employment contract which sounds like a rotational contract. If the employee is not moving their main residence then there would not be an exemption from tax and NICs. Usually each hospital in the rotation is operated by a different Trust and because the doctor will work at only one hospital at a time it would be classed as a permanent workplace so no exemption applies for travel from home to the hospital. A less common situation would be where there is a single contract for a five- year training programme, and in this case the individual hospitals could be seen as temporary workplaces as each duration could be less than twenty-four months. HMRC has provided information specifically on junior doctors on rotational contracts which can be found at http://bit.ly/2Vz2dr9. Q: Please can you confirm whether we should or should not be deducting student loans from employees who are currently working overseas?
The CIPP’s MSc in Strategic Leadership has been revised and updated to provide payroll, HR and reward managers with the skills and knowledge to help shape the future of their organisation at a strategic level.
ENROL TODAY
Delivered in conjunction with
For more information or to enrol: Visit: cippqualifications.org.uk 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 51 | June 2019
CAREER DEVELOPMENT INSIGHT
Risk management
Jason Clark CMgr MCMI AFHEA, CIPP training and quality assessment manager, relates this to his chosen risky sport and to the Institute’s Payroll Assurance Scheme
A couple of years ago, I took up the full-body contact sport of roller derby, which put me well- out of my comfort zone. You can break something – done that three times. You can expect to fall. You can fail to understand the many rules; get penalties, not understand them and get sent to the ‘naughty step’ by the referees. (Fewer of your team members on track provides an advantage to the opposing team.) My team dealt with this by ensuring that I passed the minimum skills – there are 28 of them – before being allowed on track and joining the team in training sessions. After eighteen months of training, I made the ‘A’ team and am now proud to say I’m a Crash Test Brummies’ team member. So, why am I telling you about this? Well, Henry Ford said: “If you always do what you’ve always done, you’ll always get what you’ve always got”. For me, this is the very essence of why we challenge the status quo and introduce new activities
whether at work or in our personal life. Ask yourself, when was the last time you did something entirely new? And how did you go about ensuring you did it right and continue to do so? What you did was risk management. Payroll is a risky business. You must contend with, for example: legislation changes and case law; big ticket policies like anti-money laundering, data protection, and new legislative reporting; keeping the team up to date and motivated; ensuring compliance; paying people correctly and on time; and dealing with customers. How do you take away these risks? It should be simple enough, right? Well, with the roller derby I trained and passed my minimum skills and got up each time I fell. But it’s not as simple as that in business, is it? My dictionary defines ‘risk’ as a situation involving exposure to danger. In the case of roller derby, absolutely as there is nothing more dangerous to me than an
eighteen stone opponent who is trying to pass me at fourteen miles an hour. But in business? Though I’m supposed to use phrases like threat, tolerance, mitigation, assumptions and probability, I would define risk as the opportunity to assess and identify acceptable consequences and changes that may produce a negative (or positive) effect on your business. But how do you put this into context? Let’s say you are about to take on additional responsibilities in your already busy payroll department. There is a huge risk involved, as you are potentially destabilising the department while you are embedding these new responsibilities. You may consider how these would be introduced and what issues may arise. But how do you record the decisions and actions around managing their introduction? This is the heart of risk management. While it may seem onerous it’s time well spent to introduce new steps to the way you make decisions, planning and ensuring risks are worked through to influence the outcome. Although it’s not possible to discuss all
... changes that may produce a negative (or positive) effect on your business
| Professional in Payroll, Pensions and Reward | June 2019 | Issue 51 10
Career development insight
the aspects of risk management, there are key messages. Effective risk management should follow six distinct steps always documented and logged in a risk register, which is an important document.
you can exploit the risk: can you transfer it, accept it and so on. Again, there are some great tools out there that you can use, but I like to use tools like the probability impact grid. This tool helps to set a numeric value to the likelihood of risk and its impacts. It’s how you learn from these that is important so that you can manage the risk effectively ... l Assess and evaluate – This is an in important step in the process because it’s how you identify how sensitive your business is to the risks and what tolerances you can withstand for the risks that are identified and to identify the expected value of them. l Plan – So now that you have identified your risks, it’s time to plan. Have you identified how you are going to respond to them? This is the time to do it. Document how you plan to manage them, give them a specific owner and make them accountable for the actions – remembering you can have a responsible owner and a responsible actioner. This would also be the time to conduct a cost/benefit analysis on each risk to help you identify what is acceptable for each action. l Implement – The next thing you need to do is to update your records and implement your plan. If you don’t have a risk register, you should really investigate implementing one. It documents all the steps and what is likely to happen and what has happened alongside who owns the risk. It should contain the following as a basic entry, but of course this is my view and may not be applicable to your business: l risk ID l category of risk (strategic, operational, financial, etc) l date raised l description in detail l risk status (active, closed, ongoing, etc) l pre- and post-response actions (probability, cost impact, expected risk value, proximity) l risk response actions (detailing the
options to manage the risk and why the favoured one has been chosen) l action status (detailing what the risk owner must do to action the chosen option) l secondary risks (what else could happen as a result of this risk) l risk owner/actioner/closing date. Risk management done well really makes a difference to the way you run your business. If you don’t deal with the threat or risk, it then becomes an issue. Payroll Assurance Scheme Since 2012, the CIPP has offered its own robust payroll accreditation service which many of its customers use as part of their risk and compliance methodology. The Payroll Assurance Scheme (PAS) has grown over the years and now has over 100 supporters, each of whom enjoy a day with one of our assessors biannually to obtain the peace of mind that their payroll processes and people development are truly fit for purpose. The CIPP fully understands the challenges in payroll as an industry, so PAS has continued to evolve and is now divided into employer payroll services and payroll service providers. The new format recognises the different risks on both sides of the processing industry and addresses these distinctly. Equally, PAS offers a fresh view on your current ways of working and often delivers innovative ideas for improvement whilst identifying potential risks as part of the final reports derived from the assessment. It is one way to help define your processes in payroll and seek best practice advice and guidance. PAS supporters also feel that the accreditation ensures they continually refresh their ways of working which identifies the detail to understand where the risks are within the payroll department. The following quote, which is relevant as an approach to risk management, is from Latrice Royale who is a fan favourite on RuPaul’s Drag Race (https:// en.wikipedia.org/wiki/RuPaul%27s_Drag_ Race): “It’s okay to make mistakes. It’s okay to fall down. Get up, look sickening and make them eat it!” If I could change that quote, it would say: “It’s okay to make mistakes. It’s okay to fall down. It’s how you learn from these that is important so that you can manage the risk effectively in the future.” n
Steps to effective risk management
l Identify the context of the risk – This can be done in several ways ranging from using, for example, SWOT (strengths, weaknesses, opportunities, threats) and PESTLE (political, economic, socio-cultural, technological, legal, environmental) analyses of the situation. However, I like to draw up a list of stakeholders and see who and how they could be affected by the new situation. We have all seen low/high matrices and no doubt used them. Though simple they are an effective tool. It is at this point you could also use a RACI (responsible, accountable, consulted, informed) diagram. Again, using this tool, you can then assign actions to the team so that the risk is managed effectively. l Identify the risks – I am a ‘list person’, and this is where I normally go into overdrive. You can do so much here, create checklists, prompts and cause and effect diagrams. Get together a group of people to share ideas about the barriers and risks and identify anything that will constrain the mitigation of the risk. One way to manage the get together, would be to consider the Delphi technique (https://en.wikipedia.org/wiki/Delphi_ method) which was developed by RAND in the 1950s. It enables a group of people to share ideas and estimate the impact, so that you can forecast an outcome more accurately. Of course, there is more to Delphi than that, but it helps to stop decisions by committee. A very useful way of identifying the cause and effect is to use an Ishikawa diagram (https://en.wikipedia.org/wiki/ Ishikawa_diagram) – more commonly known as a fishbone diagram – where you identify the major causes of risk and plot them into a diagram with all the issues that reach that final cause. l Assess and estimate – This is more of a detailed process where probability, impact, proximity and the expected value of the risk are estimated. There are ways that you can lessen the risk by looking at a few variables like how
11
| Professional in Payroll, Pensions and Reward |
Issue 51 | June 2019
MEMBERSHIP INSIGHT
5 minutes with… Lynne Rocks Events team leader, CIPP
emotional day for all our graduates. It’s an absolute honour to be at the side of stage congratulating the students as they walk off and giving out hugs where needed. I hope to catch up with lots of our graduates at the alumni events we are running in London and Birmingham later this year. How the events team supports CIPP members It’s really important for CIPP members to come together to share knowledge, build connections and celebrate the profession. My team provide the platform for that to happen. But every event is a joint effort – we can create spaces, put together speaker programmes and make sure everyone is in the right place at the right time. Without the energy and engagement that our members bring, an event is just a room full of people. I am continually impressed by the passion our members have for their profession and the institute. What I do to unwind I have two little girls who keep me very busy. I spend a lot of time waiting outside swimming class, gymnastics, Brownies etc. My real passion is travelling. My daughters are just getting to the age that we can jump on a plane or train without needing to take everything plus the kitchen sink with us. I love exploring new places with them and helping them to learn about the world. Our next stop is Lisbon this summer. n
Overview of my career, work history and background I’ve had quite a varied career. The bulk of it was with the Foreign and Commonwealth Office as part of the Diplomatic Service where I worked on foreign policy and organised public diplomacy events in London and overseas. I was even lucky enough to work on the London 2012 Olympics. Going back further, I started my career in the hospitality industry and studied a degree in hospitality management. When I became fed up with working every weekend, I joined HM Revenue & Customs (Inland Revenue, as it was then), for a couple of years. Joining the CIPP as events team leader in 2017 has pulled all these strands together. What I have planned for 2019 I have a packed year planned this year. I’m spending a lot of time at the moment on the road at the national forums. I love travelling to different cities and meeting our members. We have had a fantastic time so far in Bristol, Belfast, Manchester
and Cardiff. Next stop is my hometown, Glasgow. I’m delighted that the Annual Conference and Exhibition is returning to the Celtic Manor Resort in Wales. It’s a beautiful venue which, as an event planner, really inspires me. We have lots of ideas to make this year special. I’m really excited about the Scottish National Conference in September in Edinburgh. It’s a packed programme full of sessions on the biggest issues our members face. I’m sure everyone will enjoy celebrating National Payroll Week after their busy day with a drink whilst exploring the Dynamic Earth Galleries. We are launching some new joint events with Association of Taxation Technicians on payroll and employment taxes. I’ll be venturing north to Aberdeen and Inverness for those. We have also had a couple of fantastic hot topic events with the Association of Accounting Technicians already and I’m looking forward to more at the end of the year. Finally, one of my favourite days this year, and every year, is in early November – graduation day. What an exciting and
| Professional in Payroll, Pensions and Reward | June 2019 | Issue 51 12
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