Payroll Update and Sage Payroll Seminar 2016

Payroll Update

2016/17

Eve Iunco – Payroll Services Manager

Matt Harris – Sage Advisor

www.francisclark.co.uk

Payroll Update

• Tax Changes

• Transferrable Personal Allowance

• NIC Changes

• Employment Allowance

• Statutory Payments/Student Loans

• Shared Parental Leave and Pay

• Workplace Pensions Update - AE

• Holiday Pay

• Rolled Up Holiday Pay

• Tax Free Childcare Scheme

• Real Time Information

• Other Items


Tax Changes

• Standard allowance increasing by £400 to £11,000

• Relates to everyone

• Emergency Tax Code 1100L

• Thresholds

• Basic £0 - £32,000 – addition of £215

• Additional £32,001 - £150,000 – reduction in range of £215

• Higher over £150,000 – no change

• No change to tax rates


Tax Changes

• Scottish Rate of Income Tax (SRIT)

• What is a Scottish Taxpayer

• S Prefix

• Watch out for Welsh Rate


Transferrable Personal Allowance

• Effective from April 2015

• Basic Rate tax payer can transfer unused Personal Allowance

• Between married couples and civil partners

• Proportion allowed to transfer is 10% of Personal Allowance

• 2016-17 means £1,100 – tax saving of £220

• 2 new tax suffixes

• N = the transferor, M = the recipient


Transferrable Personal Allowance

• Register Online

• Information required:

• Claimant and partners NI numbers

• Proof of identity

• Remains in place until cancelled

• Person transferring allowance makes claim

• Fully operational from October 2015


NIC Changes

• New thresholds per week

• Lower Earnings Limit (LEL) stays the same at £112

• Primary Threshold (PT) E’ees NIC stays the same at £155

• Secondary Threshold (ST) E’ers NIC stays the same at £156

• Upper Accrual Point (UAP) abolished

• Upper Earnings Limit (UEL) up to £827

• Upper Secondary Threshold (UST) up to £827

• No change to rates


NIC Changes

• Employer National Insurance abolished for under 21 year olds

• Must be earning below the UST (Upper Secondary Threshold)

• Employer National Insurance paid on any amount above UST

• Still a requirement to record levels

• Use Category M

• Employee moves back on to standard letter on first pay day on or

after 21st birthday


Apprentices Under 25

• Employer National Insurance abolished for apprentices under 25

year olds

• Category H introduced for this

• Where employee is under 21 and an apprentice Category H to be

used

• What is an apprentice?

• Apprenticeship Levy from April 2017


Employment Allowance

• From April 2016 no longer available to Director Only payroll

schemes

• Not available to domestic employers (employing nanny, gardener,

chauffeur, au pair) and public authority, NHS services, GP

services, prison services, anything for local authority

• Employer can claim £3,000 against Employers National Insurance

from April 2016

• Can be claimed in lump sum or over year

• Not £3,000 per payroll scheme, it’s per employer


Statutory Payments

• National Minimum Wage

• Above school leaving age but under 18 - £3.87 per hour

• 18 to 20 - £5.30 per hour

• Apprentices - £3.30 per hour

• 21 to 24 - £6.70 per hour

• Presume rates to change in October 2016


Statutory Payments

• National Living Wage

• Introduced from 1 April 2016

• Applies to those 25 and over

• Rate is £7.20 per hour

• Voluntary Living Wage

• London - £9.40

• Rest of UK - £8.25


Statutory Payments

• SSP – no change £88.45 per working week

• Fit For Work Service (FFWS)

• SMP – no change £139.58 per week from 6 April 2015

• SPP/SAP/SPP(A) no change £139.58 per week

• ShPP £139.58 per week

• Small Employers Threshold – no change


Statutory Payments

• Student Loans – Two plans from April 2016

• Plan 1 – Loan taken out before September 2012

• Plan 1 threshold increased to £17,495

• Plan 2 – Loan taken out from September 2012 and home address

in England or Wales

• Plan 2 threshold £21,000


Statutory Payments

• Notifications

• P45 – No change to form so default position is Plan 1

• SL1 – Student Loan notification will state which plan

• New Starter Form – Extra questions relating to Student Loans

required


Statutory Leaves and Payments

• Adoption Leave and Pay

• From April 2015 available for Foster for Adoption (England)

• From April 2015 available for surrogacy arrangements re adoption

once child is adopted

• Leave becomes a day 1 right (just as maternity)

• Pay remains a conditional entitlement

• For placements on or after 5 April 2015


Statutory Leave and Payments

• Statutory Paternity Leave and Pay

• Ordinary paternity leave and pay just called paternity leave and pay

• Additional paternity pay and leave being abolished where the baby

is due/placed after 5 April 2015

• Being replaced by Shared Parental Leave and Pay


Shared Parental Leave and Pay

• Applies to births/placements expected on or after 5 April 2015

• ShPP is £139.58 per week (or 90% average weekly earnings if

lower)

• This is a choice between eligible couples

• Leave must be agreed by and notified to employer

• Couples can change their minds



• Eligibility

• Birth – where mother and father will have main responsibility for

care of the child in it’s first year

• Adoption – where primary and secondary adopter will have main

responsibility for the care of the child

• Stage 1 test – Joint Economic Activity Test

• Been engaged in employment or self employment in the UK for any

26 weeks of the last 66 weeks that immediately precede the

QW/MW

• Average weekly earnings that are not less than £30 for any 13

week period in the tax year prior to the tax year of the expected

birth/placement



• Stage 2 test – Personal Eligibility to Share

• Leave - Have at least 26 weeks continuous service with the same

employer at QW/MW and still be working for that employer when

they intend to take leave

• Pay – Have average weekly earnings at or above LEL for NIC in

the 8 weeks prior to QW/MW

• Two notifications required – notice of entitlement and notice of

absence

• Not binding until curtailment of SML and SMP



• Curtailing of Maternity Leave and Pay

• 8 week notification period

• Must take compulsory leave on maternity and adoption

• Continuous or Discontinuous leave – single blocks or multiple

blocks

• ShPL1 form

• Discussion period re discontinuous blocks



Mum takes 25 weeks

SML

Mum takes 25 weeks

SMP

Dad takes 10 weeks

ShPL

Continuous

Dad has 10 weeks

ShPP

Mum has 4 weeks

ShPP

Total 39 weeks pay (25 + 10 + 4 = 39)

Mum takes 17 weeks

ShPL

Continuous

Total 52 weeks leave (25 + 10 + 17 = 52)

Baby

Born

Share Notice and

Curtailment given 8

weeks earlier

Sharing

starts for

Dad

Sharing

starts for

Mum

Child one

year old



Mum takes 25 weeks

SML

Mum takes 25 weeks

SMP

Mum has 14 weeks

ShPP

Total 39 weeks pay (25 + 14 = 39)

Mum takes 22 weeks

ShPL

Total 47 weeks leave (25 + 22 = 47)

Baby

Born

Share Notice and

Curtailment given 8

weeks earlier

Sharing

starts for

Mum

Child one

year old

5 weeks work

(Gran looks

after baby)



Mum takes 10 weeks

SML

Mum takes 10 weeks

SMP

Mum and Dad takes 21 weeks ShPL

each at the same time

Mum has 15 weeks ShPP and

Dad has 14 weeks ShPP

Total 39 weeks pay (10 + 15 + 14 = 39)


Baby

Born

Share Notice and

Curtailment given 8

weeks earlier

Sharing starts for

Mum and DadChild one

year old



Mum takes 10 weeks

SML

Mum takes 10 weeks

SMP

Mum and Dad takes 21 weeks ShPL each

alternate weeks

Discontinuous

Mum has 15 weeks ShPP and

Dad has 14 weeks ShPP

Total 39 weeks pay (10 + 15 + 14 = 39)


Baby

Born

Share Notice and

Curtailment given 8

weeks earlier

Sharing starts for

Mum and DadChild one

year old


Shared Parental Leave

• KIT days = 10 in Maternity Leave Period

• SPLIT days = 20 per parent in Shared Parental Leave Period

• Backdated Pay Rise – Mrs Alabaster rules do not count unless pay

rise is in 8 week period for average weekly pay calculation

• Leave has to be taken in complete weeks

• Watch out re contractual payments – how are employers to deal

with this?

• Leave and Pay to cease by child's first birthday

• Recovery is same as other statutory payments


BREAK


Auto-Enrolment and Pension

Update

• Staging Dates

• Pension Scheme

• Qualifying Earnings

• Phased In Pension Rates

• Opt In/Join

• Opt Out/Leave

• Postponement

• Communications


Assessing Your Workforce

16 yrs up to

22 yrs

22 yrs –

SPA**

SPA** up to

75 yrsBelow £5,824*

Between

£5,824 and

£10,000*

Over £10,000*

Entitled Worker

Non Eligible Jobholder

Non Eligible

Jobholder

Eligible

JobholderNon Eligible

Jobholder

* Figures based on 2016-17 levels. Figures expected to change each tax year.

** SPA = State Pension Age


Auto-Enrolment Changes

• Correspondence simplified

• Exceptions for certain workers

• Pot Follows Member – April 2018

• Setting up schemes with pension providers

• New tax year for existing AE pensions


How to deal with AE

• Do It Yourself

• Francis Clark’s Payroll Services

• Process Within Sage Payroll

• Francis Clark Financial Planning

• Auto-Enrolment Service


Holiday Pay Calculations

• Mr Locke –v– British Gas - ECJ ruling re holiday pay and

commission payments

• November 2014 – 3 employment tribunal rulings re the following:

• Guaranteed overtime

• Non guaranteed overtime

• Any taxable payment that is made for time travelling to work

• No ruling on voluntary overtime


Holiday Pay Calculations

• So what advice can we give to help with this?

• Still no definitive answer at the moment

• Advice at the moment is not to pay but accrue for the extra in

accounts

• Calculation of extra holiday pay as follows:

• Average of last 12 weeks before holiday is taken

• Backdated claims


Rolled Up Holiday Pay

• Holiday Pay should be paid at the time holiday is taken

• Zero Hours Contracts

• Three instances where it can be rolled up

• It is clearly stated in the contract and proportion being used

• Clearly stated on the payslips as holiday pay

• Employer encourages employee to take holiday where practical


Payrolling Benefits

• This is voluntary from April 2016

• Employer must register for service before payrolling benefits

• What cannot be payrolled?

• Vouchers and credit cards

• Living accommodation

• Beneficial/interest free and low interest loans

• Take advice on how to deal with these


Tax Free Childcare Scheme

• Eligibility

• Children must be 12 or under (disabled under 17)

• Parent(s) must be in work and over 16

• Meet “minimum income limit”

• Resident in UK

• Not receiving childcare support

• Not on Childcare Voucher scheme

• Annual earnings less than £100,000 each

• Open an Online Account

• Receive 20p for every 80p saved

• Childcare Vouchers


Real Time Information - Update

• Year end deadline is 19 April 2016

• P35 questions are not necessary but if on system need to be

submitted

• Penalties for late payment and late submission

• Appeal within 30 days of date of penalty either online or in writing

• Address details requested for all employees

• SCON must be actual number not dummy number from April 2015

• EPS should have tax month on it


Payroll Update 2016/17

QUESTIONS ?

Payroll Update

2016/17


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Payroll Update and Sage Payroll Seminar 2016

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