MEMBERSHIP INSIGHT
The impact of devolution on the payroll function
This CIPP Think Tank roundtable, which was kindly hosted by Cintra HR & Payroll Services, discussed the effect of widening devolution
T here are three vital elements to a successful roundtable Think Tank: a generous and considerate host; CIPP members attending with the attitude to share their experiences openly; and a subject that is worthy of our time, delivered with policy experts on hand to provide essential technical detail, along with some of the essential context under which we are meeting to discuss and debate. For this CIPP Think Tank, all these elements were satisfied, with the first well-met by Cintra HR & Payroll Services’ chief executive officer Carsten Staehr and personal assistant Alexandra Watts. This Think Tank roundtable, which was held on 24 February at Newcastle University Business School, comprised: ● Graham Bell, payroll service delivery lead at Balfour Beatty ● Linda Shotton, payroll manager at Homes & Communities Agency ● Julie Maddison, payroll manager ● Ian Holloway, head of legislation and compliance, Cintra ● Kevin McEvoy, head of development, Cintra ● Simon Moulden of HM Revenue & Customs’ (HMRC’s) Scottish Rate of Income Tax Policy ● Alan Clark, Department for Work and Pensions’ (DWP’s) Fraud, Error and Debt Strategy and Policy – in attendance for the discussion on higher rate direct earnings attachments (DEAs) ● Samantha Mann MCIPPdip, CIPP Variations have been observed for many years in the way a small number of policies and functions impact payroll processes between United Kingdom nations. Accordingly, attendees recognised that Scottish devolution, along with greater autonomy for Wales, will add to existing complexity. With income tax, HMRC looks to
work with increasingly divergent policy instructions i.e. for Scotland and the rest of the UK. Though Scotland is maintaining income tax rates for 2016–17, in future Scotland’s Parliament could set whatever rates and thresholds it wishes. However, as so much hangs on the basic rate of income tax, Scotland must designate this rate. Further consultation is expected as there is much detail to absorb along with the impact and wider implications that will occur as a result of any changes. ‘Resigned acceptance’ would be a good way of describing attendees’ mood about how these changes might impact those working in payroll. What was clear though is that for these changes to be delivered successfully we need: ● clear and detailed payroll software specifications delivered in time to allow for development and testing of payroll software ● clear guidance for employers, payroll providers and advisers, and ● clear guidance aimed at employees who could increasingly see a difference in net pay simply by virtue of where they live. Attendees viewed the impact that this will have on employer/employee relations as an area of concern. Looking ahead we know that a referendum will not be needed to implement Welsh rates of income tax. (At the time of writing, the Wales Bill had received its second reading in the House of Commons.) The meeting moved on to discussing higher rate DEAs. As policy and operational scope for these is only Great Britain (GB) attendees wanted to understand why Northern Ireland (NI) is thereby excluded. Though differences in social security between GB and NI have existed for many years, there is largely agreement that NI will have parity with GB albeit there are timing differences when changes are introduced Though, by and large, the introduction
of DEAs for payroll practitioners and employers has been relatively smooth it has not been trouble-free, and members were critical of start notices being lost enroute and stop notices also not arriving in a timely manner. This impacts the work of payroll professionals who will receive an increase in communications and workload as a result. Looking ahead to the roll-out of universal credit, it is predicted that the number of DEAs being issued will reduce as income data flows to the DWP from HMRC in real time. Again, there was a roundtable call for the need for an updated and centralised resource that informs payroll professionals on the complete range of ‘pay attachments’. [The CIPP continues to lobby HM Courts & Tribunals Service for an updated handbook.] Following the Think Tank Cintra’s Ian Holloway summed up the challenge, “The big message that I hope got through to the employers is that there will be no such thing as a United Kingdom in years to come. The UK is becoming increasingly federalised and we have to embrace this. Things are different in Wales compared to England and different again in Scotland and Northern Ireland.” n The subject of devolution and the differences in payroll legislation affecting all four UK nations is included in the programme for the CIPP’s Scottish National Conference and Exhibition 2016 which is being held at the Stirling Highland Hotel on 8 September 2016. The CIPP policy team intend to hold three further Think Tanks on the impact of devolution on payroll, in Scotland, Wales and Northern Ireland – if you would like to attend or would be interested in hosting one of the events please contact Samantha Mann at policy@cipp.org.uk.
| Professional in Payroll, Pensions and Reward | September 2016 | Issue 23 12
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