CAAN
Legislation 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)
NINO Verification Service
NVR
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
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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
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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
3,000-3,999
1 July 2013
50,000-119,999
1 November 2012
2,000-2,999
1 August 2013
30,000-49,999
1 January 2013
1,250-1,999
1 September 2013
20,000-29,999
1 February 2013
800-1,249
1 October 2013
10,000-19,999
1 March 2013
500-799
1 November 2013
6,000-9,999
1 April 2013
350-499
1 January 2014
4,100-5,999
1 May 2013
250-349
1 February 2014
4,000-4,099
1 June 2013
240-249
1 March 2014
Categories relative to age and earnings
Age (inclusive)
Earnings
16 to 21
Under lower earnings
threshold (£5,035)
SPA to 74
Entitled worker
Between £5,035 and
£7,475
Over earnings trigger for
automatic enrolment
(£7,475)
22 to SPA
Non-eligible jobholder
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:
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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
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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 2012-2013
2012 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
Statutory Sick Pay
Earnings Threshold
Standard Rate
Small Employer Relief 3%
£107
£135.45
£107
£85.85
Calls for Evidence
• Collective redundancy rules
• Effectiveness of TUPE regulations
• Employment Law Reforms
Contact Details
• Diana Bruce
– Diana.bruce@cipp.org.uk