PAYE Update Workshop Tim Chapman MIPP Payroll Manager
PAYE Update Workshop • Introduction • 5 April 2009 – Year end • What’s New 2009-10 • Miscellaneous • Outsourcing payroll
PAYE Update Workshop 5th April 2009 – Year End
PAYE Update Workshop • File on-line - and claim £75 • Check your stationary levels • Keep up to date • Important dates to remember
PAYE Update Workshop Manual PAYE payments due
PAYE Update Workshop Electronic PAYE payments due
PAYE Update Workshop Important Inland Revenue dates
PAYE Update Workshop What’s new for 2009/2010? • Personal allowances for tax • NIC thresholds • SSP/SMP/SAP/SPP rates • NIC/LEL/ET/UAP/UEL • Doing PAYE on-line • New P45
PAYE Update Workshop Income Tax
PAYE Update Workshop NI rates and earning limits from 6 April 2009 Earnings Limits
PAYE Update Workshop SMP The amount of SMP paid to an employee for payment weeks starting on or after Sunday 5 April 2009 is: • First six weeks of payment – the earnings-related rate, which is 90 percent of the employee’s Average Weekly Earnings • Remaining weeks – the lesser of the standard rate which is £123.06 a week or the earnings-related rate, which is 90 percent of the employee’s Average Weekly Earnings
PAYE Update Workshop For the 2009-10 tax year a ‘small employer’ is an employer who paid (or was liable to pay) total gross Class 1 NICs of £45,000 or less in the individual employee’s qualifying tax year. These are the same thresholds as last year.
PAYE Update Workshop Definitions of term used: Lower Earnings Limit (LEL) is currently £90 per week and is the point at which the earnings count for benefit purposes. Those who earn below the LEL do not build up any contributory benefits.
PAYE Update Workshop Definitions of term used: Earnings Threshold (ET) is currently £105 per week and is the point above which employees begin to pay Class 1 NICs. Although no Class 1 NICs are payable at or below the ET, those which earn between the LEL and ET are deemed to have paid Class 1 NICs for contributory benefit purposes.
PAYE Update Workshop Definitions of term used: Upper Earnings Limit (UEL) is currently £770 per week and is the point at which primary Class 1 NICs cease to count for benefit purposes.
PAYE Update Workshop Definitions of term used: Upper Accrual Point (UAP) prior to the introduction of the UAP, the upper earnings limit was the end point for state pension accruals. The UAP will now be the upper limit of accruals.
PAYE Update Workshop Doing PAYE online all year round • From 6 April 2009, if you have 50 or more employees you must send employee starter and leaver information and similar pension information online • Under government proposals, all employers, regardless of how many employees you have, must send this information online from 6 April 2011
PAYE Update Workshop Doing PAYE online all year round The details you must send online are: • P45 (Part 1) – Details of employee leaving • P45 (Part 3) – New employee details • P46 – Employee without a form P45 • Year End P35/P14
PAYE Update Workshop Doing PAYE online all year round - PENALTIES • From April 2009, there will be penalties for sending in-year forms on paper when they should be sent online • For the first three quarters of the 2009-10 tax year, you will be written to you if you have sent paper forms when you should have filed online, reminding you of the new requirements and offering guidance and support • If you send any paper forms during the fourth quarter (or later), you will be charged a penalty!
PAYE Update Workshop • Holiday Pay • Redundancy Pay • National Minimum Wage • Changes to Maternity Benefit • NI changes for Women • E-payslips
PAYE Update Workshop Holiday Pay
PAYE Update Workshop Redundancy • Length of continuous employment • Age • Weekly pay, up to a legal limit (£350 from 1 February 2009) The total amount for redundancy is based on: The first £30,000 of any termination payment is tax-free
PAYE Update Workshop Redundancy Amount paid: • Half a week’s pay for each complete year of continuous service below the age of 22 • Full week’s pay for each complete year of continuous service between the ages of 22 and 40 • Week and a half’s pay for each complete year of continuous service above the age of 41
PAYE Update Workshop National Minimum Wage • £5.73 per hour for workers aged 22 and older • A development rate of £4.77 per hour for workers aged 18-21 inclusive • £3.53 per hour for all workers under the age of 18, who are no longer of compulsory school age
PAYE Update Workshop Changes to maternity benefits • For women whose EWC is on or after 5 October 2009, the position is different • For employers, additional costs
PAYE Update Workshop Changes to maternity benefits During OML, a woman is entitled to all the benefits of her contract other than pay including: • Accruing statutory and occupational holidays • Keeping her company car • Enjoys any benefits such as medical insurance For women whose EWC is before 5 October 2008, there is no right to carry forward access to these benefits in to their Additional Maternity Leave (AML).
PAYE Update Workshop Changes to maternity benefits For women whose EWC is on or after 5 October 2009 however, the position is different. They are entitled to continue to enjoy those benefits they had access to during their OML during their (AML), so they retain their company cars, access to medical insurance etc. However, every employee’s entitlement will depend upon her terms and conditions. For employers there may well be an on-cost in the extension of these benefits, especially if any of them involve salary sacrifice schemes.
PAYE Update Workshop Parental leave considerations If an employer has entered a salary sacrifice arrangement to provide non-cash benefits to an employee, the employer must understand that they have no entitlement of operating the salary sacrifice against any statutory payments (SSP, SMP, SPP, SAP and APL). Salary sacrifice only applies to contractual payment amounts under the terms of the contract of employment. However, the employee is entitled to continue to receive the contractual non-cash benefit in kind during maternity, paternity and adoption leave without any actual salary sacrifice being applied and at the expense of the employer.
PAYE Update Workshop NI Changes for women Many women seem unaware of the changes to their State Retirement Age (SRA). For those born between April 1950 and April 1955, the SRA increased from 60 - 65 between 2010 and 2020. This could seriously affect retirement plans.
PAYE Update Workshop E-payslips • Everyone’s talking about e-payslips • Which on-line approach to take • The employee benefits
PAYE Update Workshop Everyone’s talking about E-payslips • Electronic version of the paper payslip • Accessible online whenever an employee needs them • Some say, e-payslips will completely replace the paper product and reduce Payroll print and distribution costs significantly
PAYE Update Workshop Which online approach to take • Who are you planning to offer it to? Would it be appropriate for all employees? • Whatdo you want to offer? Is it just payslips or will you want to provide more HP options such as absence management • Where will you host the service? A secure platform will be needed to protect employee data • When will you move to e-payslips? Would you change completely or still offer a mixture of online and paper based payroll information
PAYE Update Workshop The employee benefits E-payslips certainly have advantages from an employees perspective, offering instant 24 hour access to their latest payslip information and a central point to find payslips when copies are required for mortgages, bank loans etc.
PAYE Update Workshop Outsourcing Payroll Why outsource payroll?
PAYE Update Workshop Outsourcing Payroll Cost – Big businesses can afford to maintain big payroll departments. For small businesses however, an in-house payroll service is a money burner. If your business has fewer than 20 employees, there’s a very good chance that you can save money by outsourcing your payroll operations.
PAYE Update Workshop Outsourcing Payroll Productivity – Payroll management is a time-consuming activity. With this burden removed, your employees can focus on doing more productive things, and you may even be able to trim your staff’s size.
PAYE Update Workshop Outsourcing Payroll Accuracy – Payroll mistakes can be painful, angering employees and – more ominously – the government. A good payroll-services provider is far less likely to make serious error than your in-house staff.
PAYE Update Workshop Outsourcing Payroll Reliability – In-house payroll activities function as reliably as the people doing the work. With a payroll service, output speed and quality won’t vary in accordance with holidays and illness.
PAYE Update Workshop Outsourcing Payroll Speed – Since payroll-services providers are specialists, they can process even the most complex payrolls at lightning-fast speed. The can also accommodate a temporary influx of seasonal workers without acquiring new systems that will remain dormant the rest of the year.
PAYE Update Workshop Outsourcing Payroll Insight Accountability – If payslips are delayed or paperwork is mishandled, it’s the payroll-services provider’s responsibility to fix things. Flexibility – Repetitive payroll work can act like an anchor on your business. Your staff will be free to focus on other work.
PAYE Update Workshop Outsourcing Payroll Security – Do you have the time and energy to closely supervise your business’s payroll for time and rate abuses and other shady activities? Most payroll services firms have technologies that can spot and alert clients to various types of payroll fraud, such as payment manipulation and ‘phantom workers’.
PAYE Update Workshop Outsourcing Payroll Worry – There’s a lot to be said for the peace of mind that outsourcing payroll services can bring to a business owner or manager. No headaches, no hassles : You’re left to focus on running a profitable business.
PAYE Update Workshop Any questions? Tim Chapman MIPP Payroll Manager, Simpkins Edwards email@example.com Mary-Jane Campbell Partner, Simpkins Edwards firstname.lastname@example.org T: 01392 211233 F: 01392 413173