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CAAN Legislation Update

CAAN Legislation Update. Diana Bruce Senior Policy Liaison Officer Policy & Research. INDEX. Real Time Information Legislation Update. Real Time Information. Terminology. Key Issues. All employers and pension payers subject to RTI by October 2013 Exempt employers paper RTI returns

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CAAN Legislation Update

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  1. CAANLegislation Update Diana Bruce Senior Policy Liaison Officer Policy & Research

  2. INDEX • Real Time Information • Legislation Update

  3. Real Time Information

  4. Terminology

  5. 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

  6. 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

  7. 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

  8. 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

  9. Full Payment Requirements • Varies according to circumstances • Commencement of employment • Cessation of employment • End of tax year • Aggregation • Expatriates • Pension payments

  10. 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

  11. 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?

  12. 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

  13. 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

  14. 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!

  15. 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

  16. 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

  17. 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

  18. 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

  19. Starter and Leaver Process • Leavers • Leaver Statement • Payslip may be sufficient • Starters • PAYE rules remain • Future no P45 part 3 or P46 details

  20. 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?

  21. 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

  22. 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

  23. Legislation – other areas of interest

  24. 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

  25. 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.

  26. 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.

  27. 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

  28. Staging dates by employer size

  29. Categories relative to age and earnings

  30. 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

  31. 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

  32. NEST • National Employment Savings Trust • New • National • Trust based • Simple and low cost option

  33. 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

  34. 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…………

  35. 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

  36. Tax & NICs Integration • Consultation looked at: • Economic distortions • Fairness • Admin burdens on employers

  37. Tax & NICs Integration • CIPP members said • NICs more complex than PAYE • Operate NICs in the same way as PAYE • Align taxable and Nicable items

  38. Tax & NICs Integration • Next Steps • Working Groups • Earnings basis of Income Tax and NICs • Annual and or cumulative NICs • Expert Panel

  39. 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

  40. Attachment of Earnings • AEO Handbook moved • http://hmctscourtfinder.justice.gov.uk/courtfinder/forms/aehandbook_e.pdf

  41. 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

  42. Child Maintenance Enforcement Commission • Online submissions • Government Gateway • Pre populated schedules • Upload payment schedules directly from payroll software

  43. 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

  44. Software Enhanced Recognition Scheme • October 2011 • Replaces two existing schemes

  45. Good Friday 2012 • Falls on 6 April 2012 • Payday falls on 6 April but pay 5 April • Treat as week 1

  46. Share Schemes and Cessation of Employment • 6 April 2012 • 0T non-cumulative against share-based payments not included in P45

  47. Redundancy Rates • 1 February 2012 • £430 per week • £23.50 Daily Guarantee Payment

  48. Income Tax Allowances 2012 - 2013

  49. Tax Thresholds 2012 - 2013

  50. Statutory Payment Rates 2012-2013 Small Employer Relief 3%

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