CAANLegislation Update

Diana Bruce

Senior Policy Liaison Officer

Policy & Research

INDEX

• Real Time Information• Legislation Update

Real Time Information

Terminology

DIP Data Improvement Project

EPS Employer Payment Summary

EAS Employer Alignment Submission

FPS Full Payment Submission

(First FPS)

NVR NINO Verification Service

Key Issues

• All employers and pension payers subject to RTI by October 2013

• Exempt employers paper RTI returns• Do not need to pay by BACs for RTI• Payment details sent to HMRC• No more P14s, P35 or P38A• P46, P46(PEN) and P46(expat) cease

Key Issues

• Still required to issue a P60 to employees• Still required to issue P11Ds and P9Ds• Payroll and Pension procedures review• EAS will be required for alignment• First FPS may act as the EAS for some

RTI Employers

• Entered into an agreement with HMRC– i.e. volunteers in pilot

• HMRC provided specific direction– Those directed to commence RTI pre 6

October 2012• 6 October 2013 all employers (except exempt)

brought into RTI regulations

Full Payment Submission

• Once first FPS sent deemed in RTI• Breakdown of PAYE/NICs calculation for each

employee• On boarding date

– Date after the employer requested to send first RTI submission

Full Payment Requirements

• Varies according to circumstances – Commencement of employment– Cessation of employment– End of tax year– Aggregation– Expatriates– Pension payments

Potential New Payroll Data Items

• There are many data items required depending on what your payroll contains including:– Passport number– Old payroll ID v new payroll ID– Irregular payment indicator– Number of earnings period covered– Number of normal hours worked– Partner details in respect of ASPP claims

Data Item Considerations

• Does HR record passport number?• Can your software report old v new payroll ID• Do you record number of hours worked?• Do you process irregular payments?• Do you have employees with more than one job

where the employments should be aggregated?• New HR process for partner details?

Employment Alignment Submission

• Variation of FPS – Invitation if more than 250 employees;– Split PAYE scheme

• Must show each individual employed since the start of the tax year

• Changes to EAS expected April 2013• Criteria for EAS detailed on invitation

EAS Considerations

• How will you arrange the EAS?– Matching process; are your records accurate?

• Multiple parts?– PAYE scheme operated on separate

instances e.g. different bureaus– PAYE scheme containing different pay

frequencies– Exceeds 23.8Mb in size

EAS Considerations

• Only one (unless parts) permitted• No amendment facility• Must include all in tax year including any leavers

– HMRC will consider any employees not included in EAS to have left and NPS will be updated• Watch out for dormant casual

employees!

Employer Payment Summary

• Mostly optional– FPS may provide all relevant data– Should be sent to report amounts recoverable

e.g. statutory payments, NICs compensation, CIS deductions suffered and NICs holiday deductions

NINO Verification Request

• Validation or obtaining a NINO• Up to 100 NINO requests per single submission• HMRC will respond by:

– Internet via the Data Provisioning Service– EDI directly to employer or bureau– Can also be generated via FPS or EAS

Scenarios

• FAQs available including:– Net pay paid into more than one account– Supplementary runs– Multiple employments across two or more

PAYE schemes– Overpayments– Underpayments– Error reporting

HMRC Powers

• Employer fails to make RTI return HMRC may if conditions are met, 17 days or more after the end of the Tax period;– Specify (judgement) amount of liabilities; and– Serve notice on the employer requiring

payment with 7 days of the issue of the notice

Starter and Leaver Process

• Leavers– Leaver Statement– Payslip may be sufficient

• Starters– PAYE rules remain– Future no P45 part 3 or P46 details

Starter

• Leaver statement incorrect treat as not received• If received after the FPS disregard

– Important to receive in a timely manner!• Employer must verify;

– PAYE situation i.e. only job etc– Seconded ex-pat with various definitions– Is a pension being paid and how much?– Is pension bereaved spouse or civil partner?

Employer Considerations

• RTI changes calculation process in software– Compares values of cumulative tax– What is your software planning?

• Include functionality to compare• Left to user to undertake e.g. P35 figures

Business Considerations

• Payroll Bureau• Accountants• Clients

– Don’t know yet what is involved– How much will they charge?– Part-managed who will do what?– Service Level Agreements

Legislation – other areas of interest

Contracted Out Defined Contribution Schemes

• Abolition 6 April 2012– COMP, APP & Contracted Out part of COMB– Fact sheets published– No rebates– Removal of NI Categories F, G, S

Equalisation of State Pension Age

• The Pensions Act puts into law changes to the State Pension age timetable.

• From April 2016, women's State Pension age will rise faster than originally planned, equalising with men's at 65 by November 2018.

• Between December 2018 and October 2020, men and women's State Pension ages will be increased from 65 to 66.

Equalisation of State Pension Age

• Under the current law State Pension age will already increase to: – 67 between 2034 and 2036 – 68 between 2044 and 2046

• The Government have announced that State Pension age will now increase to 67 sooner between 2026 and 2028.

Automatic Enrolment

• Staging Dates– Based on number of employees in PAYE

scheme; or– number in largest PAYE scheme

• Complex PAYE structures and corporate groups• Takeovers and mergers• Bringing forward your date

Staging dates by employer size

120,000 or more 1 October 2012

50,000-119,999 1 November 2012

30,000-49,999 1 January 2013

20,000-29,999 1 February 2013

10,000-19,999 1 March 2013

6,000-9,999 1 April 2013

4,100-5,999 1 May 2013

4,000-4,099 1 June 2013

3,000-3,999 1 July 2013

2,000-2,999 1 August 2013

1,250-1,999 1 September 2013

800-1,249 1 October 2013

500-799 1 November 2013

350-499 1 January 2014

250-349 1 February 2014

240-249 1 March 2014

Categories relative to age and earnings

Age (inclusive) Earnings

16 to 21 22 to SPA SPA to 74

Under lower earnings threshold (£5,035)

Entitled worker

Between £5,035 and £7,475

Non-eligible jobholder

Over earnings trigger for automatic enrolment (£7,475)

Non-eligible jobholder

Eligible jobholder

Non-eligible jobholder

Employer duties

• Eligible jobholder – automatically enrol and make contributions– if using postponement, provide a notification to the

eligible jobholder– process any opt-out notice– automatically re-enrol approximately every 3 years

– keep records of the automatic enrolment process

Qualifying earnings

• Qualifying earnings includes any of these components of pay due to be paid to the worker:– salary

– wages

– commission

– bonuses

– overtime

– statutory sick pay

– statutory maternity pay

– ordinary or additional statutory paternity pay

– statutory adoption pay

NEST

• National Employment Savings Trust– New– National– Trust based– Simple and low cost option

Consequences of non-compliance

• It will be a criminal offence for employer not to:– set up in first place– auto-enrol– re-enrol every 3 years

• It will be a criminal offence for employer to:– make an inducement

Summary

• Find out your staging date• Find out how your current scheme fits in with

requirements• Communicate

– Line manager– Colleagues– Employees– Pension provider– Software provider…………

Help and support

• The Pensions Regulator guidance and online tools– News alert www.tpr.gov.uk/news

• www.pensionsadvisoryservice.org.uk• www.businesslink.gov.uk• www.unbiased.co.uk IFA• CIPP half day course now available!!!!

• CIPP members– Weekly news / articles / webcasts– Pension reforms online forum

Tax & NICs Integration

• Consultation looked at:– Economic distortions– Fairness– Admin burdens on employers

Tax & NICs Integration

• CIPP members said– NICs more complex than PAYE– Operate NICs in the same way as PAYE– Align taxable and Nicable items

Tax & NICs Integration

• Next Steps– Working Groups

• Earnings basis of Income Tax and NICs• Annual and or cumulative NICs

– Expert Panel

Tax & NICs Integration

• Timetable– Budget 2012 High level options identified– Spring 2012 Stage 1 consultation on options– Autumn 2012 Stage 2 refines options– Budget 2013 Detail of reforms if any decided – 2013 – 2015 Legislation drafted– 2015 – 2017 Systems changes– Around 2017 reforms come into effect

Attachment of Earnings

• AEO Handbook moved– http://hmctscourtfinder.justice.gov.uk/courtfind

er/forms/aehandbook_e.pdf

Child Maintenance Enforcement Commission

• Simplified Calculation process– Use of employer data via HMRC– Fixed assessments income variance of +/-

25%– Facility for deduction tables v Protected

Earnings amount

Child Maintenance Enforcement Commission

• Online submissions– Government Gateway– Pre populated schedules– Upload payment schedules directly from

payroll software

Child Maintenance Enforcement Commission

• New specification from 2012– Employer Reference number– Non Resident Parent number– Reason code– Monthly schedule but flexible– No changes to definition of “earnings”– FAQs available on CIPP website

Software Enhanced Recognition Scheme

• October 2011– Replaces two existing schemes

Good Friday 2012

• Falls on 6 April 2012– Payday falls on 6 April but pay 5 April

• Treat as week 1

Share Schemes and Cessation of Employment

• 6 April 2012– 0T non-cumulative against share-based

payments not included in P45

Redundancy Rates

• 1 February 2012– £430 per week– £23.50 Daily Guarantee Payment

Income Tax Allowances 2012 - 2013

Personal Allowance (Age under 65yrs) £8,105

Personal Allowance (age 65-74yrs) £10,500

Personal Allowance (age 75yrs and over)

£10,660

Married couple’s Allowance (born before 6/4/35 aged 75yrs and over)

£7,705

Tax Thresholds 2012 - 2013

Basic Rate 20% £0 - £34,370

Higher Rate 40% £34,371 - £150,000

Additional Rate 50% Over £150,000

Statutory Payment Rates 2012-20132012 per week

Statutory Adoption Pay

Earnings Threshold

Standard Rate

£107

£135.45

Statutory Maternity Pay

Earnings Threshold

Standard Rate

£107

£135.45

Ordinary Statutory Paternity Pay & ASPP

Earnings Threshold

Standard Rate

£107

£135.45

Statutory Sick Pay

Earnings Threshold

Standard Rate

£107

£85.85

Small Employer Relief 3%

Calls for Evidence

• Collective redundancy rules• Effectiveness of TUPE regulations• Employment Law Reforms

Contact Details

• Diana Bruce– Diana.bruce@cipp.org.uk