Pensions insight
New employers
The Pensions Regulator explains that if you have clients thinking about becoming an employer make sure they’re ready for automatic enrolment
T aking on staff is an essential part of growing a business. If your client is thinking of employing someone for the first time, there are several things to consider; such as: ● deciding how much to pay ● checking if the person has the legal right to work in the UK ● determining whether you need to register as an employer with HM Revenue & Customs (HMRC) ● taking out employer’s liability insurance. Getting ready for automatic enrolment is just one of these steps. It’s important that your clients understand what they’ll need to do and the date that the law will apply to them, so that they don’t risk a fine. The date that their duties start will depend on when they employ their first worker, as this date will determine whether they will have a staging date, or whether their duties will begin immediately their member of staff starts work. The table provides a summary. A more detailed overview of when the duties will apply to new employers can be found at www.tpr.gov.uk/adviser. Automatic enrolment duties apply to all employers. They’ll need to: ● assess their staff and, if any meet the age and earnings criteria, put them into a
pension scheme for automatic enrolment, and pay into it ● write to each member of staff – whether or not they meet the age and earnings criteria to be put into a pension scheme – to tell them how automatic enrolment applies to them. ● tell The Pensions Regulator (TPR) how they’ve met their duties by completing and submitting a declaration of compliance within five months of the date their duties started ● manage their ongoing duties, which include continuing to monitor the age and earnings of existing and new staff on every pay date to see if they need to be put into a pension scheme, and how much needs to be paid in. Every three years, they’ll also need to re-enrol staff opting-out of automatic enrolment, and put them back onto a pension scheme. If you have a client who becomes an employer after 1 April who doesn’t use a pay as you earn (PAYE) scheme to pay their staff, then they will not have a staging date. Note that if their staff earn £113 per week (£490 a month) or below, HMRC may not require them to set up a PAYE scheme. However, your client does still have certain automatic enrolment duties, and must start to complete them as soon as they employ their first member of staff:
● they must write to their staff to tell them how automatic enrolment applies to them ● if their staff then ask in writing to be put into a pension scheme, your client must set this up for them but they do not have to pay into it. When your client starts paying a member of staff more than £113 per week, they must set up a PAYE scheme with HMRC. They must also assess their members of staff to work out if they need to be put into a pension scheme that your client must also pay into. After your client has set up their PAYE scheme, TPR will write to them and ask them to complete a declaration of compliance by a specific date, which is where they tell us how they’ve met their duties. n How do the duties apply to directors? In some cases, directors may be exempt, depending on whether they have an employment contract and who else is working for the organisation. Duties start to apply when a worker who has a contract of employment starts working for the organisation. More information about how automatic enrolment duties apply to director-only businesses is on TPR’s website.
When do duties start?
Useful link
Employers on or before 1 April 2012 Employers on or before 1 April 2017 with no PAYE scheme Employers after 1 April 2012 and up to and including 30 September 2017 with PAYE scheme
Will have a staging date up to 1 April 2017
http://bit.ly/1UH6VqD
1 April 2017
http://bit.ly/21YXSLj
Will have a staging date between 1 May 2017 and 1 February 2018 Will not have a staging date; their duties will start from the day that their first member of staff starts work
Useful links ● For clients – http://bit.ly/21YXSLj ● For business advisers – http://bit. ly/1QCVHo8 ● For director-only businesses – http:// bit.ly/2p4DxCq
http://bit.ly/1UH6VqD
Employers after 1 April 2017 with no PAYE scheme
http://bit.ly/2s6UOAw
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Issue 32 | July/August 2017
| Professional in Payroll, Pensions and Reward |
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