Living Wage Introduced 01.04.16

From 01.04.16 the Government are introducing a new mandatory National Living Wage for all workers aged 25 and older. This will be £7.20 an hour.

The National Minimum Wage will continue to apply to employees under the age of 25.

For employers in sectors such as retail and hospitality where many workers are paid at the National Minimum Wage this increase will be significant. For example:-

An employee working 40 hours per week will receive an increase of £1,040 per annum so for a business with 25 employees who are all eligible for the new rate, the costs start at £26,000 per annum.  In addition to this increase both the Employers National Insurance Contribution and the Work Place Pension Contribution must be recalculated to ensure that employers realise what costs they will be facing.

To compensate for the increase, the Government have also introduced a rise in the employment allowance from £2,000 to £3,000 to reduce some employers National Insurance Contributions.

PAYROLL CHANGES 06.04.2013

The way you report PAYE is changing from 6 April 2013 and you must act now

This is the biggest change to payroll reporting since 1944 and the change is compulsory. This will affect everyone who runs a payroll, in particular anyone who still runs a paper system, which is now obsolete.

So what is Real Time Information – RTI?

Historically HMRC expected reports for your payroll on an annual basis (P35 and P14) but these reports are now expected every time you make a payment to an employee. This is so that HMRC are informed in Real Time of all PAYE information. So if you pay your staff weekly, then each week you must submit the required forms online through a suitable payroll package. You must run a payroll each time you actually pay any money to an employee, on or before the date you provide the payment.

RTI will:

  • Enable HMRC to pursue late payments more effectively
  • Support the payment of Universal Credits
  • Reduce Tax Credits and fraud
  • Simplify the starters and leavers process

What do you need to do?

If you are signed up to BFMS Payroll Bureau Service or we have historically dealt with payroll for you, then you do not need to do anything other than what we have asked you to complete already

If you run your own payroll, you need to get RTI ready now.

HMRC provide free online software but only for simple payroll reporting with a limit of 9 employees. If you are currently using this, then check that it is still suitable for your business reporting requirements.

For businesses employing over 9 staff, have a more complex payroll or provide a professional payslip, you will either need to outsource your payroll to us, or purchase suitable commercial software along with annual software support and set up your payroll yourself.

There are many changes to the current process but for general guidance we have provided some information:-

The main changes are:

  • Only real employees can be paid.

No more temporary date of births, NI numbers or addresses. Employees will only be paid when their full details have been provided on a P46 and any P45 information has been entered. This must include full name (including middle names) date of birth, gender, full address including postcode. All employees must complete form P46 even if they give you a P45

  • Disclosure of contracted hours

Each employee must state their contracted hours and these hours must be entered into the payroll system. Irregular workers can complete an irregular hour’s section.

  • The pay date must match the processing date

If you pay your employees say Monday to Sunday, but the pay is paid into their banks on the following Friday, the process date must match the pay date, not the process date.

  • Non paid employees in the period must be put on hold

Even if you are not making a pay run for one of your periods, you must still submit an online payroll and flag your employees as still being employed, if you don’t HMRC may remove them from your company.

  • Once a pay run has been completed it is closed

If you run a payroll, but then realise later that an error has occurred, this is to be adjusted next time

Reporting changes:

Before you move across to RTI, you must complete an Employer Alignment Submission (EAS) and match your records to HMRC

Each time you make a payment, you must send HMRC a Full Payment Summary (FPS)

You must also send an Employer Payment Summary (EPS) for any deductions from the P32 such as CIS suffered, Maternity, Paternity and Sick Pay

When an employee leaves your company, you still issue them with a P45 but you no longer need to send one to HMRC

When an employee starts your company, you must get a completed P46

For more information on RTI or for a payroll bureau quotation, please contact the office and ask for Gemma or Alison.

 

Unfair Dismissal Update

With effect from 01.02.2012 the limit on the amount of a weeks’s pay for the purpose of calculating redundancy payments and the basic award for unfair dismissal increased to £430. The maximum compensatory award for unfair dismissal increased from £68,400 to £72,300. These limits apply for dismissals which take effect on or after 1 February 2012.

 

With effect from 06.04.2012 a further change is the increase in the qualifying period for bringing a claim of unfair dismissal before the Employment Tribunal. This has increased to two years. Employees whose period of employment began before 5 April 2012 will still be subject to one year qualifying period.

National Minimum Wages

The current rates are as follows:-

Age 21 or more                         £6.08

Age 18 to 20                              £4.98

Age 16 and 17                           £3.68

Apprentices *                             £2.60

 

* Aged 18 or under or 19 and over but in the first year of their apprenticeship – otherwise the development or adult rate applies according to age

 

As from 01 October 2012 the rates will become:-

Age 21 or more                         £6.19

Age 18 to 20                              £4.98

Age 16 and 17                           £3.68

Apprentices *                             £2.65