HMRC removes Earlier Year Update from payroll processes

Pierce is alerting businesses to a big change to payrolling as from April 2019, the Earlier Year Update (EYU) will no longer be a valid submission for the tax year 2019 /20 onwards.

Currently used to fix any inaccuracies in reporting, HMRC is introducing the change to make the processes simpler for businesses and to allow HMRC systems and employer payroll records to align sooner.

HMRC will extend the use of the Real Time Information (RTI) Full Payment Submission (FPS) from April 20 2019, to allow employers to continue to report revised year-to-date payment data after the deadline of April 19.

Since RTI was rolled out, this decision to cease EYU has been long awaited by businesses. Currently, if an employer notices an inaccuracy in payroll data, they submit an EYU to correct the amount. This involves the employer calculating the difference between the original submission and correct position for each employee by submitting the difference on an EYU.

The use of RTI Full Payment Submission (FPS) will be extended by HMRC to allow employers to continue to report revised Year to Date (YTD) payment data after the current deadline of April 19, however the EYU will be accepted for the 2018-19 tax year.

For further information about EYU and to find out how this will impact your payroll processes, contact Lisa Kennery on 01254 688 100 or email l.kennery@pierce.co.uk.

Planning ahead for extreme weather

As our excitement for Christmas begins to build, so too does the prospect of plummeting temperatures and weather warnings hampering, hindering or halting us as we struggle to work.

If extreme weather hits the UK this winter, school closures, train delays and vehicle breakdowns will make it a struggle for staff to get to the workplace. Last year, the ‘Beast from the East’ created a predicted £1bn loss to the UK economy.

Of course businesses can’t control the weather, but they can prepare for it by putting the correct processes in place. So what rules should businesses follow if their workers can’t make it into the office and what are the rights of employees?

Schools out

If a school is closed, then parents can take ‘dependent leave’. The parent is expected to use this time not to look after their child, but find alternative child care.

However, many employers are flexible in these circumstances and will allow employees to take holiday at short notice, make the time up on another day or, if appropriate, work from home.

Travelling troubles

If the bad weather prevents you getting into work then essentially your employer does not have to pay you as it is your responsibility to make it into your workplace. The only exception to this would be if your employer provides transport for you and this is cancelled.

Employers may allow workers to request time off as part of their annual leave or work from home. Employers should not force or put pressure on employees to attempt the journey if there are safety warnings against travelling.

However, if your boss decides to close your workplace then you will still get paid. If you are on a zero hours contract though, or your employer has a contractual right to decline to offer you work at short notice, they may not have to pay you.

Also, if there is advance notice of bad weather, the employer could give notice to require employees to take their holiday.

Planning is key

Planning ahead of the arrival of adverse weather is essential to ensure disruption is minimised.  Businesses should act now to put processes in place before briefing workers on situation specific procedures. Doing so will help to maximise both staff safety and company productivity until clearer skies return.

Lisa Kennery, Payroll Manager

 

Exporting is great!

The UK witnessed a sharp fall in the value of the pound following the Brexit announcement, making goods and services priced in sterling more competitive in the global market.

That makes it a great time for businesses to consider exporting. However, 29% of those SMEs who would like to trade internationally say they lack the knowledge or expertise to do so.  To tackle this issue, Pierce invited industry professionals to our head office to share their knowledge with businesses wanting to export for the first time, or increase their exporting activities.

Statistics show that firms who export are 34%* more productive in the first year and exporters achieve 59%* faster productivity growth. Our event proved that exporting is great and here are some reasons why.

*Statistic taken from PIMS Annual Report, DIT (2013); Harris and Li (2007)

Top tips

Delegates heard that there is essential work that needs to be done before companies begin exporting.

Mandy Lockett, International Business Director at East Lancashire Chamber of Commerce provided us with tips and advice about exporting basics.

  • Conduct market research: the economy and markets are constantly changing – getting the right intelligence and understanding demand is crucial for success.
  • Negotiation: British people are typically shy at negotiating, but every country does it so you need to sharpen your negotiating techniques.
  • Payment methods:  payments for domestic deals are usually 30, 60 or 90 days net (open account), but when exporting, other options are available and need to be understood.
  • Quotation and terms and conditions: exporting can bring risk, so build safety nets within your terms and conditions.
  • Branding and packaging: consider whether your goods/services are suitable for overseas customers and whether they comply with the overseas markets.
  • Commodity code: carefully choose the correct code to be compliant with HMRC regulations.
  • Pricing: quotations need to build on UK selling price and take into consideration any modifications, extra packaging, bank finance charges, pre-shipment inspection, special certificates, offering extra warranty, insurance, freight charges, agent commission and potential negotiation.  

Support available

Whether you’re new to exporting or want to develop your exporting opportunities, there is a wealth of help available. East Lancashire Chamber of Commerce is in the top three chambers in the UK for international support.

Stef Heywood, International Trade Advisor at the chamber, shared details of the European Regional Development Fund (ERDF), an £8.2 million fund to help job creation by supporting 750 enterprises in becoming exporters.

Divia Patel-Smith, International Trade Advisor at the Department for International Trade (DIT) explained how they can provide strategic advice to businesses in the region from their global network. The DIT has a high success rate: for every £1 it spends, £22 is generated for the UK economy. On a daily basis, the DIT website has new exporting opportunities uploaded from businesses looking for specific services and products from the UK.

With 36%* of UK SMEs believing that trading internationally is inherently risky, Simon Watson, Director of International Trade at NatWest, explained how banks can provide support. Banks can help businesses understand and manage risks and provide assistance with foreign exchange, duties, taxes, supplier debt and due diligence.

*Statistic taken from a Natwest and RBS survey of 200 UK SMEs called ‘World Economy Barometer: Into the Groove’.

Success

Concluding the presentations was Michael Hill, Director of Optima Control Solutions, who shared his experience of exporting. Using the help of NatWest Bank and DIT, Michael successfully delivered his first exporting project by supplying a lithographic coating line for a company in Korea and described it as a “game changer for his business”.

Share your exporting stories with us on Twitter using the hashtag #exportingisGREAT

Apprenticeship levy – are you ready?

The government’s apprenticeship levy comes into force this spring and businesses in England should prepare for changes to their wage bill, writes Lisa Kennery.

From April 6 2017, employers with an annual wage bill of over £3m must pay the new levy, which replaces taxpayer funding of apprenticeships. It will generate £2.5bn per year to spend on apprentice training.

The pay bill is made up of the total amount of your employee`s earnings that are subject to class 1 national insurance

Theses earnings are made up of:

  • wages
  • bonuses
  • commissions
  • pension contributions

They exclude benefits in kind, such as company cars, healthcare and childcare.

The levy is set at 0.5% of a company’s total wage bill and is paid to HMRC through PAYE, changing the process for calculating payroll. The levy due will vary dependant on the bill each month.

All eligible companies will be given a £15,000 offset allowance. Therefore, an employer with an annual wage bill of £5m will spend £10,000 a year on the levy:

  • Levy sum: 0.5% x wage bill of £5m = £25,000
  • £25,000- £15,000 allowance = £10,000 annual levy payment

Groups of companies with more than one PAYE scheme will only receive one offset allowance of £15,000. Levy payments are placed into a digital account which employers can access to pay for training for apprentices appointed after April 2017. It will be determined by employers how to split the allowance between those companies.

As an incentive for businesses to start apprenticeship schemes, the government automatically tops up the levy payment by 10% so employers get more out than they put in.   

Levy funds will remain in the account for 24 months before expiring, encouraging businesses who don’t currently offer apprenticeships to establish a training scheme.

Once the levy comes into force, employers will have to inform HMRC if they are eligible. Businesses with a lower but increasing wage bill, should monitor their payroll and alert HMRC once it reaches £3m.

The levy should be paid to HMRC as part of your usual PAYE payment by 19th of the month, or 22nd if paying electronically.

The changes will also help smaller businesses who aren’t eligible to pay the levy. The government will pay 90% of the apprentice training costs through co-investment, leaving them to pay the remaining 10%.

Businesses with fewer than 50 members of staff will receive 100% funding from the government if they recruit a 16 to 18-year-old apprentice. This will run until at least 2018 when the government will issue further advice.

The full technical details of the apprenticeship levy are yet to be finalised and once confirmed it will inevitably raise further questions for employers.

The levy will undoubtedly increase the burden of administration for eligible companies. This is something that Pierce Chartered Accountants can help you with. For more information and for the latest updates on the apprenticeship levy, contact Lisa Kennery.

Festive Drinks and Buffet Photo Gallery

Thanks to all who attended our Christmas drinks last night. Wishing you a merry Christmas and happy new year

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Pension fine fears prompt record month for Pierce payroll team

Fears of £10,000 per day fines for failing to comply with pensions auto enrolment legislation contributed to a record month of new payroll clients at North West accountancy practice Pierce.

workie

The growing burden of payroll-related red tape which must be shouldered by SMEs in the region was another factor in attracting 22 new payroll clients to Pierce Chartered Accountants, which offers a full range of accountancy and business support services.

A failure to comply with can result in fines of up to £10,000 a day. In the first quarter of 2016 3,057 companies were served with Compliance Notices from the Pensions Regulator, of which 806 were charged with a fixed penalty notice.

Pierce, which has headquarters in Blackburn, Lancashire, is now managing payroll administration services to around 500 additional people with client companies.

Pierce now handles the payroll for over 400 companies and 3,500 people.

Lisa Kennery, Payroll Manager at Pierce Chartered Accountants said: “The auto enrolment process can place a heavy burden on those managing its administration. Many businesses need to source advice from professionals when setting up pension auto enrolment in order to ensure that they comply with regulations and that the process is set up correctly.

“When advising clients, it has become apparent that some do not process the right software, knowledge or resources to properly manage their pensions and payroll capacity. We advise them on how to set up a robust system, but many opt to outsource to us.”

Under the pension Act 2008, every employer in the UK must put eligible staff into a pension scheme and contribute towards it.

All employers have to operate PAYE as part of their payroll, unless none of their employees earns over £112 a week, receives benefits and expenses, have another job or a pension. PAYE is HMRC’s system to collect Income Tax and National Insurance.

Change to Employment Allowance from 6 April 2016

Some Businesses are able to claim an additional £1000 relief in employers National insurance, the allowance increasing to £3000 , however others are now exempt from claiming the allowance.  Exemption details and how to report this can be found below:

exempt

Change to Employment Allowance from 6 April 2016

From 6 April 2016, limited companies where the director is the only employee paid earnings above the Secondary Threshold for Class 1 National Insurance contributions will no longer be able to claim Employment Allowance.

The Secondary Threshold is set at £156 a week for the 2016 to 2017 tax year.

A company is no longer eligible for the allowance if:

  • only one employee (or director) in the limited company is paid above the Secondary Threshold
  • that employee is a director of the limited company

This means that companies with several employees, where the director is the only employee paid above the Secondary Threshold, will no longer be eligible for the Employment Allowance.

This change only applies to limited companies. If you’re self-employed, you won’t be affected by this change.

Stopping your Employment Allowance claim

If you are affected by these changes and at the start of the tax year your company is no longer eligible to claim the Employment Allowance, you should stop your claim. Select ‘no’ in the ‘Employment Allowance indicator’ field within your payroll software, and submit an Employment Payment Summary (EPS) to HMRC.

You must ensure you pay the full amount of employer Class 1 National Insurance contributions (NICs), without deducting the Employment Allowance.

These changes will not affect any claims made in previous years.

The additional employee test

If your company circumstances change and more than one employee or director earns above the Secondary Threshold, you’ll be eligible for Employment Allowance for the whole tax year.

This includes companies where:

  • all employees are directors where both earn above the Secondary Threshold
  • the company employs husband and wife directors where both earn above the Secondary Threshold
  • the company employs seasonal workers where one or more is an employee earning above the Secondary Threshold in a week
  • where you’re the only UK based employee of an international company that meets the other eligibility criteria, and you earn above the Secondary Threshold in a week

The decisive factor is that the additional employee(s) must be paid above the Secondary Threshold (£156 in the tax year 2016 to 2017).

Directors must be paid above the annual Secondary Threshold (£8,112 for 2016 to 2017, or pro-rata if the directorship began after the start of the tax year).

Changes in the year

If your company has several employees paid above the Secondary Threshold, but your circumstances change during the tax year and the director becomes the only employee paid above the Secondary Threshold, you can still claim the Employment Allowance for the tax year. You should stop it for the following tax year, unless there are further changes to your circumstances and a further employee is taken on and paid above the Secondary Threshold.

This guidance is yet another administration burden to any business especially the SME businesses whose workforce fluctuate. A constant review will be needed.

Top Ten things to know on your payroll for the 2016/17 tax year

top ten

  1. National Living Wage – WEF 1st April 2016 workers in the UK over the age of 25 will see a 50p increase to £7.20 per hour.The statutory rates for employees under 25 remain as follows:
    Aged 21-24 inclusive           £6.70
    Aged 18-20 inclusive           £5.30
    Aged 16-17 inclusive           £3.87
    Apprentices under 19 or in 1st year of apprenticeship £3.30
  2. NO employers national insurance contributions up to the upper earnings limit (£827 per week) for 25 and under in a recognised apprenticeship.
  3. Employment Allowance is increased to £3000 per annum. Those with one director only are no longer able to claim the relief.
  4. Student loan – Two plans are now in place. The Student loan Company will notify via HMRC.
  5. Payrolling Benefits  – Real time collection of tax on benefits in kind and expenses through voluntary payrolling. A registration process must take place with HMRC.
  6. Pension schemes – The end of contracted out pension schemes.
  7. All statutory rates to remain as the previous year :
    SSP £88.45 per week
    SMP/SPP £139.58
  8. Holiday pay – additional pay components such as commission and overtime to be included when calculating holiday pay!
  9. Scottish rates – These have been introduced but the rates are the same as the UK !
  10. If you have a PAYE scheme in place you MUST report all employees on your payroll including those below the lower earnings limit (£112 per week).
    For further information please contact the payroll department on 01254 688110 alternatively email payroll@pierce.co.uk.