PROFESSI NAL Official publication of The Chartered Institute of Payroll Professionals in Payroll, Pensions & Reward Issue 70 May 2021 Technology enhances the role of payroll professionals
Visibility and business insight Functional alignment Preventing overpayments Improve awareness What’s past is prologue Looking back
CIPP UPDATE POLICY HUB PERSONAL DEVELOPMENT
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Editor’s comment
This issue has several articles within the feature topic theme ‘technology enhances the role of payroll
of culture” and that “they would attract the ‘wrong sort’ to payroll offices”. Page 5 has a must-read momentous message from HMRC.
professionals’, providing insight to how payroll is developing. Contrast the views expressed in these with the portrayal of LED
Mike Nicholas MCIPP (editor@cipp.org.uk) Editor
calculators in the ‘When we were young’ themed article on pages 14 and 15, as “weeds of progress flowering in the ancient beds
Chair’s message
Continuing with the theme of embracing change, the focus of this issue is on the part that technology plays in a payroll professional’s role.
opportunities technology are creating to examine the changing role of payroll, determine and push forward the part we can play, and continue to raise our profession’s profile. How many of you were planning to go paperless, and can now say that you don’t have any paper in sight? We have to consider concerns about privacy and security, but whether you are an in-house payroll, a payroll bureau, or a hardware provider, changing technology will impact how payroll is processed. By embracing change, as payroll professionals we can contribute positively to organisations both strategically and day to day. There are various articles in this edition that will be thought- provoking or will help increase knowledge around technology to enhance payroll professionals’ role. I hope you find them of interest and of benefit; happy reading.
Many organisations that were considering or planning on changing technology before
the pandemic have pushed this forward at a significant pace. Can you even imagine operating now without using Microsoft Teams or another similar operating tool? Payroll can work from home, demonstrating that continuing to provide the same excellent level of service without being sat in the office means increasing usage and accessibility of different forms of payroll technology. Mobile devices, chatbots, AI, the ‘cloud’, and data analytics are all continuing to evolve at an extraordinary pace, with us weighing the cost savings, flexibility and increased efficiencies that making the changes can bring about. As payroll professionals this enables us to improve performance by thinking of and contributing to the organisation’s strategy. Being pro-active, we can grasp the
Liz Lay MSc FCIPPdip FHEA ACIPD (liz.lay@cipp.org.uk) Chair, CIPP
Although this message reaches you early May, editorial deadlines mean that this message is being written towards the end of March 2021. To put this into context, it was almost exactly the same time last year when I wrote: “I hope all members and CEO’s message
no doubt change, be it a combination of face to face and the ‘new’ way of MS Teams, Zoom and the like as well as a mixed element of working from home and in the office. With our Annual Conference and Exhibition and Awards ceremony scheduled for 6 and 7 October at the Celtic Manor Resort, we’re confident – well, as anyone can be at this time of writing – that this can be a successful ‘in person’ conference after what will have been a break of two years! We will be surveying members in due course and are regularly in contact with the Celtic Manor Resort to ensure we have the measures in place that may, or will, be required to enable a successful conference of seeing our colleagues face to face once again. We will keep you updated and certainly hope to see many of you at this time. I concluded my editorial a year ago, saying: “I hope my next message reflects movement back to normality.” Well, from now I’m hoping it will be true! Continue to keep yourself, families and colleagues safe.
their families are keeping as well as can be, both personally and professionally, and that we do see a way forward when hopefully the work to contain and remove the threat of Covid-19 occurs.” Well, that seems a lifetime ago and here we are, in some shape or form, fourteen months into various kinds of lockdown measures. 21 June appears to be the date many of us (particularly in England) are aiming for and hopefully, with a successful vaccination exercise in play, seeing some of the various lockdown measures have succeeded. It’s certainly been a year in the use of technology. Switching from face to face to online delivery of events to ensure students were taught and professionals received training, is a testament to the resourcefulness and ability of the CIPP team. This has been so well-received, with various sessions, such as our BeKnowledgeable webinars, having over 1,000 delegates in attendance. I’m sure as we inch our way forward, our future working life will
Ken Pullar FCIPP (ken.pullar@cipp.org.uk) Chief executive officer, CIPP
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| Professional in Payroll, Pensions and Reward |
Issue 70 | May 2021
in Payroll, Pensions & Reward PROFESSI NAL
Also available online at professionalmag.co.uk
Contents
May 2021
THIS ISSUE’S FEATURE TOPIC TECHNOLOGY ENHANCES THE ROLE OF PAYROLL PROFESSIONALS
37 Accelerated attitudes towards technology in payroll by Glyn King
Features
18
19
14
The Sector-based Work Academy Programme by the CIPP’s policy and research team
What’s past is prologue by Cliff Vidgeon
Improving mental health by Andrew Drake and Amanda Cran
22
24
26
Preventing overpayments by Lora Murphy
Incorrect tax codes by David Malik-Davies
Flexibility is here to stay by Dawn Brown
| Professional in Payroll, Pensions and Reward | May 2021 | Issue 70 2
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Chief executive officer Ken Pullar FCIPP CIPP board of directors Jason Davenport MCIPP MIoD Louise Gray ChMCIPPdip Stuart Hall MCIPPdip Dianne Hoodless MSc ChFCIPP FHEA Liz Lay MSc FCIPPdip Jeremy Montgomery BA(Hons) FCIPP Editor Mike Nicholas 0121 712 1000 | editor@cipp.org.uk Advertising Vickie Graham 07775 564 352 | advertising@cipp.org.uk Design James Bartlett and Nicole Davis design@cipp.org.uk Printing Warwick Printing Company Ltd
Shared cost AVCs by Amanda Venables
Public interest on hold by Henry Tapper
30
Giving them space to breathe by Gareth Stears 29
Sleep-ins, status, safety by Nicola Mullineux
How payroll can become a powerhouse by Daniela Porr 36 What’s driving the demand for agile payroll? by Abigail Vaughan 41
32
Implications of the roadmap by Danny Done
Carole Pearson MCIPP Katie Sharpe MCIPPdip
Technology enhances the role of payroll professionals by Jerome Smail 38
Cliff Vidgeon BA(Hons) CMA ACG ChFCIPP Clare Warrington MSc FCIPPdip AFHEA
Useful contacts
Education education@cipp.org.uk 0121 712 1023 Events events@cipp.org.uk 0121 712 1013 General enquiries enquiries@cipp.org.uk 0121 712 1000 Marketing and sales marketing@cipp.org.uk 0121 712 1033 Membership membership@cipp.org.uk 0121 712 1073 Training training@cipp.org.uk
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Visibility and business insight by Charles Courquin
Regulars
01 Editor’s comment, and
21 Payroll news 22 Compliance 26 Reward 34 Industry news
Chair’s andCEO’smessage
05 We’ve got mail
Letter fromAngelaMacDonald CBE, HMRC deputy chief executive
0121 712 1063 cipp.org.uk @CIPP_UK
06 CIPPupdate 08 My CIPP
Events, news and developments
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 2021. The Chartered Institute of Payroll Professionals, Goldfinger House, 245 Cranmore Boulevard, Shirley, Solihull, West Midlands, B90 4ZL. Switchboard 0121 712 1000 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 retrieval 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.
36 Technology 43 Wordsearch 48 Confessions of a payroll manager
Policy hub: On your behalf, Advisory; Spotlight on…
13 Movers and shakers 14 Personal development BePayroll, Diary of a student
Full issue including additional online content available at professionalmag.co.uk
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| Professional in Payroll, Pensions and Reward |
Issue 70 | May 2021
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The Chartered Institute is pleased to have received the following letter addressed to the CIPP and its members.
Dear all,
As we near the first anniversary of the launch of the coronavirus job retention scheme (CJRS), I wanted to reflect on some of the successes and challenges of delivering the scheme, as well as pay tribute to both CIPP and you, CIPP’s members, for all your help in designing and delivering what has been an unprecedented level of support across the United Kingdom. CIPP, along with other stakeholders, has been involved with the CJRS from the very start – whether advising us on aspects of scheme deliverability, or helping us to hone and improve our scheme guidance on your behalf. There is no doubt that the Covid-19 pandemic has resulted in HM Revenue & Customs working more closely with our trusted partners and stakeholders and it has allowed us to build on our longstanding relationships, well into the future. I wanted to take the time to write in Professional this month because it’s you, the payroll professionals across the UK, who I want to say an especially big thank you to. I know it’s fallen to many of you to submit the CJRS claims to us, so we can pay out grants to support and protect jobs.
You have made a real difference to employers and employees alike and we are extremely grateful of your support.
As announced in the 2021 Spring Budget, the CJRS has been extended until the end of September 2021.
For periods from 1 May 2021 onwards, employers will be able to claim for eligible employees who were on your PAYE payroll on 2 March 2021. This means they must have made a PAYE real time information (RTI) submission between 20 March 2020 and 2 March 2021, notifying HMRC of earnings for that employee.
Until the end of June 2021, the UK government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month.
For periods in July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875.
The next CJRS deadline is 15 May for employees furloughed in April. Monthly deadlines have been introduced so the government can more regularly and accurately see and react to the impact of coronavirus on businesses and individuals, and the cost of the scheme to taxpayers. I’m proud of the way my colleagues in HMRC have risen to the challenge of delivering the CJRS. CIPP and CIPP’s members should be proud of the contribution you have made too. Going forward, there is much work for us all to do. We value our strong working relationship with CIPP, and we’ll carry on consulting closely with you as we do all we can to deliver support to employers and employees, as well as the self-employed, as set out in the chancellor’s Plan for Jobs.
Angela MacDonald CBE HMRC deputy chief executive and second permanent secretary
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| Professional in Payroll, Pensions and Reward |
Issue 70 | May 2021
CIPP update
BeConnected: National Forums WITHIN DAYS of being announced online, the first BeConnected: National Forum became fully booked. Further dates for CIPP members to attend these online events throughout May are available. Take your pick from the dates currently available in May (see below) and take advantage of a great opportunity to hear the latest updates and recent developments in payroll, pensions and reward legislation. ● 12 May ● 20 May ● 26 May. Designed exclusively for paying CIPP members, these events – delivered by CIPP’s policy and research officers, Gemma Mullis and Lora Murphy – are the perfect opportunity to stay connected with industry colleagues. Visit www.cipp.org.uk/events/events-calendar.htm to book your place. Annual General Meeting THE CHARTERED Institute’s Annual General Meeting (AGM) took place on 31 March. The CIPP extends thanks to those who attended and/or voted. The online AGM was opened and closed by CIPP chair Jason Davenport MCIPP MIod. Jason reviewed the year, thanking CIPP staff and board members for their support during his tenure as chair. The AGM marked the end of Jason’s tenure, and commencement of tenure as chair for Liz Lay MSc FCIPPdip FHEA ACIPD. The AGM agenda included the following: ● To confirm the minutes of the Annual General Meeting held on 5 December 2019. (Passed) ● To confirm the minutes of the Extraordinary General Meeting held on 9 October 2020. (Passed) ● To approve the accounts for year ended 30 June 2020. (Passed) ● To reappoint Haines Watts as auditors. (Passed) ● To elect two members to the CIPP board. The Institute is pleased to announce and welcome to the CIPP board the following new directors who were elected by vote: Louise Gray ChMCIPPdip, and Jeremy Montgomery BA(Hons) FCIPP. You can read more about both Louise and Jeremy on the ‘Meet the team’ page of the CIPP website: www.cipp.org.uk/about-us/cipp-team.html. BeKnowledgeable WITH SPRING seemingly sprung, and winter (mostly) behind us, the CIPP’s recent series of BeKnowledgeable webinars drew to a close. These webinars have been a huge hit with CIPP members, with the last one in the series attracting over 1,000 registrants. The BeKnowledgeable webinars will return in June, hopefully heralding a great summer. The CIPP will be announcing the various subject areas for this series soon.
CIPP surveys ● Payslip survey – The CIPP extends thanks to all those who completed the now closed annual payslip survey. A report is currently being prepared with details being announced in June. ● Benchmarking survey – The CIPP has recently launched this benchmarking survey, which for the first time has been opened to all levels of membership and to the wider payroll profession. The survey runs until 30 June. The CIPP invites you to complete the survey and to ask your payroll colleagues to do the same, in order to help gather as much information as possible. To take part in the survey use the following link: cipp.org.uk/benchmarking.
Congratulations to the newly accredited PAS organisations THE CIPP’s Payroll Assurance Scheme (PAS) is designed to
i
i
test your payroll processes in relation to payroll processing, compliance and the people skills and development opportunities. One of the most important elements is ensuring business continuity plans are in place and effective should they be required. Given events over the last twelve months, congratulations to all organisations that have achieved this accreditation and will have been able to put those plans into action. Special congratulations to our recently accredited organisations: ● RS Components Ltd ● Metapack Limited Ken Pullar, CIPP chief executive officer, said: “Never has it been more important for businesses to have good payroll processes, knowledge and skills that enable them to implement new government legislation and guidance quickly. Congratulations to those organisations that have recently demonstrated just that.” The Payroll Assurance Scheme is still operating, with assessments currently operating virtually. To find out how the Payroll Assurance Scheme can benefit your organisation, email compliance@cipp.org.uk .
| Professional in Payroll, Pensions and Reward | May 2021 | Issue 70 6
CIPP UPDATE
Charteredmembers THE CHARTERED Institute is pleased to announce the following individuals have recently gained Chartered membership status: ● Annette Gibbons ChMCIPPdip , payroll consultant, Think Payroll Ltd ● Catherine Carruthers ChMCIPPdip (pensions), assistant pensions manager, Dundee City Council.
New Chartered membership application process CHARTERED MEMBERSHIP is the highest level of professional membership that the CIPP offers and only awarded to applicants who meet the criteria. To ensure the process is fair, applications are scored by a panel of current Chartered members who check that applicants demonstrate how their experience meets their organisation’s strategic objectives and aligns with the CIPP’s values. Until recently, applications for Chartered membership had been temporarily closed while some exciting changes were made. Now, following a successful pilot of revised process and criteria, the Chartered Institute is pleased to announce that applications for Chartered membership have re-opened and that new criteria for this status apply. Previously only applicants holding a level five qualification in payroll, pensions and reward were eligible to apply for Chartered membership status. Now, applications will also be accepted from professionals who can evidence significant experience within the industry. Applicants will need to prove that they have extensive experience of strategic, project and budget management. Competency frameworks have been created by industry professionals who show clearly what experience is required for Chartered member level. The application form has been streamlined and new guidelines provided for its completion. Now is the time to get recognition for your commitment to the industry. For further details and to apply, please visit the CIPP website: www.cipp.org.uk/grades/chartered-membership.html.
2021 Benchmarking Survey It’s your chance to take part
Want to discover how your organisation compares to others?
Take part in our annual benchmarking survey and help to produce this critical report
Give your payroll team the power to be the best they can be.
Visit cipp.org.uk/benchmarking to complete the survey today.
cipp.org.uk
@CIPP_UK
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| Professional in Payroll, Pensions and Reward |
Issue 70 | May 2021
MY CIPP
On your behalf
Policy team update
The CIPP’s policy and research team provide an update on developments
O ne of the key responsibilities of the CIPP’s policy team is to convey the opinions and thoughts of payroll professionals to various government departments in relation to future policies that will impact the profession. This month has seen a flurry of activity in the consultation space, and there is plenty for CIPP members, and the wider profession, to get involved with. This month’s instalment of ‘On your behalf’ focuses primarily on that area and provides an overview of some of the consultations and calls for evidence that have recently been unveiled. Don’t miss your opportunity to get involved. ‘Tax day’ There was an unusual event this year in that, despite traditionally being released on Budget day, consultations and calls for evidence were actually published at a later date – on ‘tax day’ (http://ow.ly/ Nqe330rCebn). The rationale was to “allow for more transparency and scrutiny”, and to enable tax professionals to dedicate more time and attention to responding to these documents. Tax day was 23 March 2021, and the CIPP’s policy team waited with bated breath to see if anything would be released that would have ramifications for payroll professionals in the near future. As expected, a variety of the publications related to broader areas of tax that those working within payroll departments would not necessarily be familiar with. There were, however, some interesting offerings,
to which the team will be formally responding.
● a consultation: ‘Clamping down on promoters of tax avoidance’ (http://ow.ly/ dofa30rCeoh) ● calls for evidence: ❍ ‘The tax administration framework supporting a 21st century tax system’ (http://ow.ly/N5KN30rCeon), and ❍ ‘Timely payment’ (http://ow.ly/ tVdK30rCep8). We will be posting various surveys and hosting several virtual thinktank roundtable meetings over the coming weeks and months, so it is essential to keep your eyes peeled so that you can get involved, have your say, and potentially shape the future of payroll policy. LPC annual consultation Each year, the Low Pay Commission (LPC), which is an independent body responsible for advising the government in relation to the national living wage (NLW) and national minimum wage (NMW) rates, releases a consultation to inform its recommendations. This year is no different, and the latest consultation has been published (http:// ow.ly/uoM430rCetw). The LPC is requesting views on business conditions and the economic outlook, which is more relevant now than ever due to the ongoing impacts of coronavirus on both businesses and individuals. The consultation seeks feedback relating to the following. ● The affordability and impact of a proposed increase in April 2022 to a NLW rate of £9.42. ● The intention of increasing the NLW rate to £10.33 by 2024, and to widening the scope of the NLW so that it will be applicable to those aged 21 and over by, at the latest, 2024. (The NLW applied to those aged 23 and over from 1 April 2021.) ● The effects of recent increases to the
The CIPP was disappointed to see that there was nothing relating to future plans for pensions tax relief, particularly when the net pay anomaly remains such a prevalent issue. A visit to the consultation page (http://ow.ly/Ow9830rCecR) for the relevant call for evidence (which closed in October 2020), reveals that the feedback submitted to HM Treasury is still, at the time of writing, being analysed. One area in which the CIPP is particularly interested centres on the issue of raising standards in the tax advice market (http://ow.ly/uIGx30rCelG). On first glance, it might appear that this is not particularly relevant to the payroll profession, but on scratching beyond the surface our interest becomes clear. The consultation is divided into two main sections: ● one that looks at whether all tax advisors should hold professional indemnity insurance, and ● another that explores a fixed definition of ‘tax advice’. Within the document examples are provided of professionals who and activities that may be deemed as: ● an employer advising an employee about taxable benefits for the year ● a payroll bureau managing an outsourced company payroll. The outcome of the consultation could have far-reaching implications for CIPP members, and the payroll profession more broadly. Other areas of interest include:
...the consultation could have far- reaching implications for CIPP members, and the payroll profession more broadly...
| Professional in Payroll, Pensions and Reward | May 2021 | Issue 70 8
Policy hub
...a burden for pension schemes to administer smaller pension...
be approximately 27,000,000 deferred pension pots in master trusts alone, and 9,000,000 active pots. The CIPP attends meetings of the SPCG. So, if you have any feedback on the growing problem outlined here, and any suggestions on how best to tackle it, then we in the policy team would be delighted to hear from you. We can be contacted at policy@cipp.org.uk . Thank you in advance for your input. Formation of the SPCG was a recommendation of a report published in December 2020 by the Small Pension Pots Working Group. The SPCG comprises experts from a range of pension providers, industry bodies and stakeholders: Capital Cranfield Trustees Ltd; Pensions and Lifetime Savings Association; Association of British Insurers;
NLW and other NMW rates, and whether they have affected employment and hours, pay and benefits, productivity, prices and profits. The LPC will submit its recommendations relating to rates for operation from April 2022 in autumn 2021. As with other consultations, a survey will be available to complete, and there will be the chance to join a virtual thinktank roundtable meeting, attended by commissioners of the LPC, during which feedback can be given. Small pension pots group On Wednesday 24 March 2021, the first meeting of a new industry working group – the Small Pots Co-ordination Group (SPCG) – was held, to begin devising a plan of action for combatting the ever- increasing numbers of small pension pots. The problem has been growing more rapidly since the introduction of automatic enrolment in 2012.
Small pension pots are problematic not only for those saving for their retirement, but also for schemes. As the balances of these inactive pension pots are relatively small, it is not uncommon for them to be completely swallowed by costs and charges. More individuals appear to have multiple pension pots, which makes it harder for them to keep track of their savings and means that they may not be aware of all the funds that they will have available to them when it comes to the point of retirement. Additionally, it is more of a burden for pension schemes to administer smaller pension pots, as opposed to administering larger pension pots. The scale of the problem has also been made apparent through research. At present, there are over 8,000,000 deferred pension pots, and 8,000,000 active pots in master trust schemes, with many more in other defined contribution schemes. It is anticipated that if no action is taken to target the problem, then there could
Pensions Administration Standards Association; NOW: Pensions; The
People's Pension; National Employment Savings Trust; The Investing and Saving Alliance; Which?; Pensions Policy Institute; Department for Work and Pensions; Chartered Institute for Payroll Professionals; Herbert Smith Freehills; Aviva; Fidelity; Royal London. n
BeConnected: National Forums Delivered by our policy and research officers, Gemma Mullis and Lora Murphy, these BeConnected: National Forums are the perfect way to understand how recent changes will affect your and your team’s day to day roles. We’ll keep you up to date on any changes and updates revealed in the March 2021 budget and also tell you how you’ll need to implement and process these changes.
Now open to all current CIPP members
Additional dates: 6 May, 12 May, 20 May, 26 May.
Visit cipp.org.uk/events/events-calendar , to book your place and find out more.
cipp.org.uk
@CIPP_UK
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| Professional in Payroll, Pensions and Reward |
Issue 70 | May 2021
MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Q: Our employees are required to undergo bag searches after clocking-out at the end of their shifts. On occasion this can cause employees to wait an extra five to ten minutes before they can leave the building. Should a company consider this extra time for payment as it is preventing the employees leaving the site? A: ‘Time worked’ includes time where an employee is at or near a place of work. As the employee is required to be available at the place of work, the time spent waiting to be let out of the building and having their bags checked should be paid. This would be regarded as time worked under the provisions in regulation 32 of the National Minimum Wage Regulations 2015 (https:// bit.ly/3s0HYzH). It would be advisable for the employees to clock-out after they have had their bags searched. Q: As my company is having our new office refurbished, is it possible to register for the construction industry scheme (CIS)? A: As the company using the building is refurbishing it for their own business, it would not register as a contractor for CIS even if it is regarded as a deemed contractor under regulation 22 of the Income Tax (Construction Industry Scheme) Regulations 2005 (https://bit.ly/3viSZOC). The company would therefore not need to apply the CIS to any construction expenditure as it relates to property used for the purposes of the business itself. (See HM Revenue & Customs’ (HMRC’s) Construction Industry Manual , page CISR15000 (https://bit.ly/3whTwke).) Q: Is it correct that employers cannot informally payroll benefits from the 2021/22 tax year? Also, would the
benefit being payrolled have to be reported in the full payment submission (FPS)? A: This is correct. HMRC’s Employer Bulletin (https://bit.ly/3qOifbW) for February 2021 explains that under end of year processing you must register to payroll benefits. The only way to payroll benefits from 2021/22 is to enter a formal arrangement with HMRC. The Bulletin provides a direct link to the guidance on how to do this. Benefits processed through the payroll are included in the FPS and submitted to HMRC via data item 60. The P11D return is no longer required where any benefit is payrolled under a formal arrangement. However, the P11D(b) return is still required to account for any class 1A National Insurance contributions (NICs) due. Q: Would off-payroll working (‘IR35’) apply if an individual is a sole trader supplying services through a chain of intermediaries? A: Hiring organisations are always responsible for deciding the employment status of anyone working for them. The IR35 off-payroll working rules can only apply when an individual supplies their services through an intermediary or if the individual is using a personal service company. Where an individual (a sole trader) is contracted directly and there is no intermediary involved, normal status tests should be explored as any pay as you earn (PAYE) liability falls on the company engaging them. However, the legislation relating to IR35 off-payroll working would not apply.
correct this in the next available payroll, but the employee has student loan deductions which will be taken at a higher rate when we process the back pay. Can we manually adjust this to put the employee in the position they would have been had they not been underpaid? A: Student loan deductions follow the same principles as class 1 NICs, in that they are a non-cumulative deduction. Deductions are made on total amounts, regardless of when they were earned. The deduction, unfortunately, will have to stand. If at the end of the tax year, the employee is under the threshold for student loan deductions to be taken, then they can contact the Student Loans Company for a refund. If in doubt with regards to the employee’s level of earnings, the Student Loan Company will be able to confirm the figures with HMRC and issue a refund if applicable. Q: HMRC have withdrawn paper P60 certificates and our software supplier is no longer selling its paper versions. We will, therefore, be printing our P60 certificates on plain paper this year for employees who require paper copies. Is it acceptable to print them out in black and white rather than colour? A: Yes, providing that all the required information is included on the bespoke P60 a different background colour would be acceptable. Q: I am setting up my own payroll bureau. Do money laundering regulations apply to a payroll business and will I be required to register with HMRC? A: Schedule 1, paragraphs 1(a) and 1(b) of the Payments Services Regulations
Q: We have underpaid an employee for the past three months. We are going to
| Professional in Payroll, Pensions and Reward | May 2021 | Issue 70 10
Policy hub
All new P11D course collection
A: If the pension is a salary sacrifice arrangement then this cannot take the employee below the NMW rate for their age. An employer still has auto-enrolment obligations even if the employee is not eligible to join a salary sacrifice pension scheme due to provisions of the National Minimum Wage Regulations. An employer would need to have an alternative pension scheme available for employees in this position, where the deduction can be taken from net pay rather than as a salary sacrifice arrangement. Q: An employee has been on sick leave for six months. Our occupational sick pay (OSP) scheme is six months’ full pay. If an employee exceeds statutory sick pay (SSP) entitlement, do we have to send a SSP1 form whilst they are still in their full pay period? A: An OSP scheme is a contractual arrangement and totally separate from SSP. Form SSP1 should be sent once the employee has exceeded SSP entitlement of 28 weeks. The employee would then need to contact the Department for Work and Pensions to establish entitlement to employment related benefits. Q: We have an employee who is asking to be moved to National Insurance (NI) letter C as she has paid contributions for over thirty years. We have calculated that she does not reach state pension age until November 2026. Are we allowed to move her to NI letter C prior to this if she has made the maximum contributions? A: Under the employee group for NI category letter C, it specifies that this is to be used for employees over the state pension age. There is no maximum limit to the amount of NICs an employee can pay, but liability to pay primary (employee) NICs ceases on reaching state pension age. Guidance can be found at https://bit. ly/3eFfMyj. Q: Could you advise if a handwritten amendment can be made on a P45 form before it is issued to the employee? A: You should not manually amend a P45, and you cannot issue a replacement P45. The only option available would be to issue the employee with a statement of earnings on company letter-headed paper. n
2017 (https://bit.ly/3rRYoKr) identifies the services that are subject to the Financial Conduct Authority as the transferring of moneys under financial agreements is regarded as a regulated activity. However, payroll is not a regulated service where a bureau is not part of an accountancy practice as payroll does not provide finance or financial advice to parties. If the payroll bureau is part of an accountancy practice, they would need to be registered with a money laundering supervisor. Q: If a contractor is caught by the IR35 off-payroll working rules, would we need to offer the contractors a workplace pension scheme? A: The IR35 legislation is introduced to establish if an individual is employed for PAYE tax and NICs purposes only. Contractors are employed not under a contract of employment but a contract for services, which are two separate and distinguishable agreements. If caught by IR35, a contractor is not regarded as employed or indeed a worker; therefore, employee rights such as pension, holiday pay, and national minimum wage are not due. Q: Should employees who work a month in arrears and are paid March’s hours in April, be paid the new minimum wage (NMW) rates for these hours as they are being paid in the April payroll? A: Regulation 4(2) of the National Minimum Wage Regulations 2015 (https:// bit.ly/30Mu7Rr) states: “The single hourly rate of the national minimum wage at which a worker is entitled to be remunerated as respects work, in a pay reference period, is the rate which applies to the worker on the first day of that period”. In this case, as the rate of pay at 1 March related to the minimum wage rates in force at that time, an employer would not increase the NMW rate in the April payroll for hours worked in March. Q: An employee has joined the pension scheme which is operated via a salary sacrifice arrangement. They earn the NMW, and a reduction takes them below this rate. Should the employee be disallowed from joining the pension scheme?
Our brand new P11Ds, expenses and benefits course collection contains everything you need to know about this annual process. If you’re new to payroll and need to know how to report your employee expenses and benefits, or just need a refresher and want to ensure what you are providing is effective and compliant, then this course collection is for you.
Find out more and choose the P11D courses that are right for you at cipp.org.uk/training
To book your place or find out more: Visit: cipp.org.uk/training Email enquiries@cipp.org.uk Call: 0121 712 1000 Live chat with us
cipp.org.uk @CIPP_UK
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| Professional in Payroll, Pensions and Reward |
Issue 70 | May 2021
MY CIPP
Spotlight on...
issue I applied; and the rest is history. I commenced working for the CIPP on 22 August 2005. Holding the Diploma in Payroll Management is an asset to me, and I am a lifetime learner advocate. Deciding to study the course was the best decision I ever made. How do you feel when you know you have made a positive difference to someone through your advice? When members tell me that my advice has helped them, I feel very thankful. If they have a particularly difficult situation, I feel like I want to go and help them out. A lot of the situations they find themselves in, I have experienced in the past; so, it is easy to identify with their feelings as well as hopefully finding a solution to the problem. Lending a sympathetic ear and being able to help members during the trying times of the pandemic gives a big sense of achievement. I also feel this when explaining to people who ask what the Advisory team does, that we assist members who at the moment are working long hours to ensure they are paid on time. Tell us about a typical week as an Advisory team member? The week starts by signing on to the CIPP’s customer relationship management system and phone systems ready to take calls from members. This is followed by
signing into Microsoft Teams to say hello to the other team members, looking at emails and discussing who is doing what for the week and when we will spend time researching. Every day we provide answers to phone calls and emails. Where we cannot find the answer to a query, we discuss it within the team or put it out to CIPP’s policy team. I log the calls and emails I answer as I go along, providing guidance from HM Revenue & Customs or other government bodies. What skills does an Advisory team member need? The skills you need in Advisory are to be able to listen to what the member is telling you, to understand what they are experiencing, and to empathise with their situation. You also must have the practical knowledge they need or to be able to point them in the right direction to access proof they are doing the correct thing. Oh, and you sometimes need a crystal ball. I keep my knowledge updated by searching the web for information and reading Professional magazine, News Online , and information on GOV.UK, ACAS (Advisory, Conciliation and Arbitration Service), Citizen’s Advice Bureau, and The Pensions Regulator. When providing detailed accurate answers to members an important technique is to translate legislation into ‘payroll speak’ so that they understand the guidance which is available from government bodies. n
Sue Richardson MCIPPdip CIPP’s payroll advisory officer
How did you start your payroll career? Originally, I wanted to be a nurse, but at age seventeen I went to work for an accountancy firm as a temp where I was put to work doing payroll and bookkeeping for the firm’s clients – and found I really loved it. I honestly did not realise what went into paying people before actually taking on the task of calculating gross to net. How did you move into policy and advisory? After completing the Diploma in Payroll Management and working at the sharp end of payroll, I saw an advert for an Advisory service officer in CIPP’s Professional magazine. It looked like a really interesting job role, but I thought I’d missed the deadline, so when I saw the advert repeated in the following month’s
| Professional in Payroll, Pensions and Reward | May 2021 | Issue 70 12
To appear on this page contact editor@cipp.org.uk
NEWTO PAYROLL AND WANT TO STANDOUT FROMTHECROWD? The Payroll Technician Certificate meets the industry’s rapidly evolving requirements for knowledgeable
Hi55 VENTURES APPOINTS EIRAHAMMOND ChFCIPPdip DISRUPTIVE FINTECH start-up, Hi55 Ventures, has appointed Eira Hammond as head of payroll as the company launches its new platform, Hi, which enables employees to access their earnings whenever they want, and helps businesses enhance staff wellbeing. Hi also enables businesses to defer their payroll obligations, unlocking a brand-new source of working capital.
Includes five dynamic units: Calculating National Insurance contributions (NICs) and gross payment apportionments
Eira Hammond comments: “At Hi we’re about to turn everything we have come to know and expect from payroll on its head. Workers have come to expect instant access to just about everything using mobile technology, including their bank, shopping, entertainment and social media, so why not instant access to their pay? Employers will have the ability to offer a completely new employee benefit, enabling them to attract and retain the best talent. “It’s an exciting time to be joining Hi and I’m thrilled to be delivering real-time pay to employees as they earn, rather than them having to wait until pay day.”
Taxable pay and PAYE income tax calculations
Statutory Sick Pay (SSP) calculations and administrations
Child-related statutory payment calculations and administration
PAUL SHELLEY LEADS ACTIVPAYROLL’S DUBLINTEAM
GLOBAL PAYROLL and tax compliance specialist, activpayroll, has appointed Paul Shelley as payroll operations manager – Ireland. Paul has over 24 years’ experience working in the payroll sector and has held multiple leadership roles throughout his career, both in-house and as part of the outsourcing sector. Having worked for small and large global organisations across Ireland, Paul’s experience encompasses payroll operations, implementations, consultancy, and customer relations. Alison Sellar, founder and chief executive officer of activpayroll, said: “we are delighted to have Paul on-board to help us start growing our office in the Irish capital.” Paul added: “I am really pleased to be joining the team and being part of a company that is so highly regarded in the payroll industry.” AND BRIEFLY… ● Laura McCormack has joined Hilton as senior payroll analyst. Laura previously worked for Aldi UK for almost seventeen years as payroll assistant. ● James Charlton ACIPP has been promoted after twelve months at All3Media from senior payroll administrator to assistant payroll manager. ● Dominik Jablonski has been appointed as senior payroll consultant, Global Outsourcing at BDO UK LLP. WOULDYOU LIE TOGETA JOB? A SURVEY of 2,315 individuals across a range of sectors, conducted by SavoyStewart. co.uk, identified the extent to which prospective employees would go to earn themselves a new role. Some 39% of respondents admitted to lying on their CV at some stage in their professional career. Three in four of those who had lied, said they had got the job. Amongst the most common fibs told in a CV, the most lied about by one in three (34%) was candidate’s skills, such as proficiency in office software. Thereafter, the most common lies on a CV include: work experience (31%); personality traits (e.g. organised) (29%); education (21%); languages (12%); and references (9%). When respondents were asked would they lie again to get a job: 58% said they’d be happy to tell a little white lie; 36% would be happy to make up a big lie; and just 6% wouldn’t lie at all.
Administering statutory deductions and additional payroll obligations
Updated from 2021-22 budget £1595.00 +VAT*
Enrol today Visit: cipp.org.uk/study Email enquiries@cipp.org.uk Call: 0121 712 1000 Live chat with us
cipp.org.uk @CIPP_UK
13
| Professional in Payroll, Pensions and Reward |
Issue 70 | May 2021
*correct at time of publication
PERSONAL DEVELOPMENT
What’s past is prologue
Cliff Vidgeon BA(Hons) CMAACGChFCIPP, CIPP director and Institute secretary, recalls the way we were when starting his career
I used to think that when it came to memory the brain acted like a sieve, retaining the larger meaningful chunks, and losing forever the bulk of life experiences. More recently I have refined that thinking due to a few instances where my recollection has been triggered by an array of disparate senses and encounters like the smell of brass polish, a chance meeting and, most recently, having to think about writing an article about my early days at work. Recall is not straightforward and writing this piece has rekindled some random recollections of a period that I might not otherwise have thought about for some time, if at all. First days Having attended ten schools and exiting with hardly a qualification to my name, it would be fair to describe my education as having been a bit chaotic. I hadn’t a
clue what I wanted to do when I left my last school, so I fired off a short letter in the direction of my local Council asking if I could be considered for employment. I was invited to an interview at which I was asked if I had any maths qualifications and, being honest, my response was “no” adding that even basic arithmetic was a bit of a challenge. A few days later, I was offered a role in a payroll office and employed by the Birmingham Education Department. I was particularly attracted to being part of the education service because it occurred to me that the consumer experience gained from my excessive school count might have given me something of an advantage. I was wrong. If I could be transported back to that time, I am sure I would be immediately struck by the overwhelming presence and strong smell of pipe and cigarette smoke
in nearly every office. My first boss, Bill, was an inveterate pipe smoker and he shared a smallish office with a fellow pipe enthusiast and his deputy, a cigarette aficionado. When I entered their office on day one of my work adventure, it was like entering a tenebrous cave encasing multi-layers of murky smog. Bill was great and easy to talk to, but he had been quick to recognise my lack of suitability for payroll work and he told me so. However, he persevered with me, I suspect as something of a challenge. Politics One of my first tasks was distributing incoming post. This involved date stamping it all and sorting into piles ready for delivery to the various teams and offices. I wasn’t at all prepared for office politics and I had to learn fast. On one of my post rounds, whilst delivering to one of the smaller offices, I was asked if I could close a window. It seemed an easy enough task and trying to be helpful I took it on with a cheery smile. As I moved toward the open window, “You can leave
...a tenebrous cave encasing multi- layers of murky smog.
| Professional in Payroll, Pensions and Reward | May 2021 | Issue 70 14
When we were young
that window alone” bellowed out from behind an adjacent desk. Retreat seemed a reasonable tactic and I hopped it as quickly as I could. I was later advised that ‘window wars’ had been raging for some years, the protagonists being a health fanatic and a chain-smoker who shared an office and were locked in perpetual combat. Shortly after I started work the Equal Pay Act 1970 found its way onto the statute book, although it didn’t come into force until December 1975. It is hard to convey the societal attitudes of that period and it was a time of change. I can remember an older colleague telling me that he left his trade union because of its support of equal pay. In explaining this to me he pointed to a large heavy box occupying a space on the floor in front of his desk. It was full of spare continuous computer paper. I was hoping that he wasn’t going to ask me to move it, but instead he asked me to show him ’a woman that can pick up that box?’. I didn’t take the challenge seriously. He apparently vehemently disagreed with equal pay and the box was somehow central to his beliefs. In all the time that I was there the box remained firmly rooted to the same part of the floor. Notably, some months after our conversation, the individual concerned injured his back and, if I had placed less value on my front teeth, I would have asked him if he intended to volunteer for a pay cut now that the box moving was no longer part of his skill set. Work issues The main thrust of our activity involved paying staff employed in schools and it seemed to involve a disproportionate amount of time and resource being devoted to dealing with absences caused by sickness. Schools and colleges in the city were required to submit a paper absence return every week. Every day of absence was manually transcribed on to an absence record and each month we tried to assess the amount of state sickness benefit that each absentee was entitled to receive. (This was prior to the advent of statutory sick pay.) Sickness benefit was claimed by the individual directly from the Department of Health and Social Security (DHSS) and, to prevent staff being better off by going sick (and to save money), the sickness benefit received was deducted from salary. Just
to make the process even more labour intensive, we would write and ask the employee concerned for evidence of the rate of sickness benefit receivable (form BS12 as I recall, issued by the DHSS to each recipient). For each full week of absence an employee was excused a National Insurance contribution and instead entitled to a credit from the DHSS. This too required a payroll adjustment. ...the important role that kindness and consideration can play... Perhaps the most momentous event that had to be dealt with in my early payroll days was the conversion to decimal currency from pounds, shillings and pence or ‘£sd’ (abbreviated from the latin librae, solidi and denarii). It makes me feel quite old to note that this year marks the fiftieth anniversary of the conversion which took place on 15 February 1971. In the lead up to ‘D-day’ we issued payslips in dual currency, with all payments and deductions in £sd and the decimal equivalent in brackets. This was reversed in the months that followed with £sd finding itself relegated to the bracket. In more recent years I thought that a similar process would need to take place if we were to convert to the Euro. Another example of my being genned and ready for something that never happened. The mid 1970s also saw the end of the National Insurance (NI) stamp and fixed rate contributions. Everyone had a NI card and an adhesive stamp was to be applied for each week for which a contribution was paid. As a large employer we were let off messing about with gummy stamps and instead submitted a proportion of mainly blank cards to the DHSS each quarter. (Based on the NI number suffix, ‘A’ suffix cards were returned after March, ‘B’ after June, and so on.) The only information we marked on cards was a ‘C’ for a credit for a full week of sickness absence or start date or date of leaving. The cards were then subjected to quite a rigorous reconciliation process.
included carbon paper (yes, I am pre- photocopier), blotting paper (great for soaking up coffee spillages), a book of tables that helped you divide numbers by twelve (there were also other so called ‘ready-reckoners’) and an eraser. Perhaps the most interesting piece of serious kit that was in common use was the comptometer. It looked a little like a typewriter with numbered keys arranged in rows on a slightly inclined plane. Learning to use these wonderful objects and becoming a comptometer operator took considerable training. They were used for a range of calculations, often the addition of large columns of figures. If a comptometer operator checked and rubber stamped your work, you knew that it was the ultimate seal of approval. The introduction of LED desk calculators led to an interesting debate. There were two schools of thought – those who regarded them as a supplement to efficiency and accuracy and those who thought that they would attract the ‘wrong sort’ to payroll offices (people who couldn’t add up). One of my more literary colleagues described them as “weeds of progress flowering in the ancient beds of culture”. I saw them as vital devices that might help me hold on to my job. People We were quite a mix of characters with a largish contingent who had served in the armed forces during the second world war. They instilled a mixture of quiet discipline and comradeship to the way things were done. It was not until many years later that I came to appreciate and respect the commitment that many of my older colleagues devoted to the development of their younger colleagues. Bill spent much time and effort guiding me toward some meaningful qualifications and gave me the odd push when he thought I needed it. He also took pity on me and, in his kind and diplomatic way, moved me away from payroll (which, in all honesty, I not was not great at) towards an involvement in pensions administration. He was probably one of the most thoughtful people that I have ever worked with and we stayed friends throughout retirement. From him I learned so much about managing people and the important role that kindness and consideration can play in our organisations. n
Equipment Essential equipment in those days
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| Professional in Payroll, Pensions and Reward |
Issue 70 | May 2021
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