PAYEpeople

Can the PAYE system be improved?

admin — Tue, 10 Aug 2010 14:59:15 +0000

In June’s Budget, the Coalition Government expressed their desire to explore how the current Pay As You Earn (PAYE) system could be improved.

On the 27th July, HM Revenue & Customs (HMRC) published a discussion document titled, ‘Improving the Operation of Pay As You Earn (PAYE)’. The document explores options to improve the current PAYE system so that information on PAYE deductions is collected at the time an employee is paid, instead of at the tax year end. A processed referred to as ‘Real-time information’.

Problems with the current PAYE system…

Little has changed to the current PAYE system since its introduction in 1944. PAYE is seen to work well for employees with regular, stable earnings. However, employees with more than one job or with a pension and a job can experience overpayment or underpayment of tax.

Research suggests that around 5 million people calm tax repayment or receive a tax bill because PAYE has failed to collect the correct amount of tax. There are also issues with student loan deductions; repayments can continue well after the loan has been repaid.

Is Real-time information the answer?

Recent improvements in HMRC’s own systems and technology have made it possible to improve the PAYE process.

For employers paying electronically, the Real-time information concept would send details of an employee’s pay to HMRC; deductions of tax, NIC and student loan repayments. The information would be sent automatically via a computerised payroll system at the point of making a payment to the employee.

Benefits of the Real-time information:

· Simply the process for both employers and HMRC.
· Employees are more likely to pay the correct tax.
· Year-end reporting would be considerably reduced.
· Real-time income information would help HMRC pay tax credits.
· HMRC would know the correct amount of tax and NICs that is due to be paid by employers.

To find out more about this issue, visit www.hmrc.gov.uk.

To download HMRC’s ‘Improving the Operation of Pay As You Earn (PAYE)’ document, click here.

1 in 6 would read colleague’s payslip…

admin — Fri, 06 Aug 2010 13:53:40 +0000

Research by the Institute of Payroll Professionals (IPP) found that one in six employees said they would read a colleague’s payslip if it was found on their desk and were confident of not being seen.

Other findings reveal that one in five employees discuss their salary with co-workers, while more than half talk to friends and family about how much they get paid outside of working hours. These statistics highlight how payslip confidentiality is still an issue that affects many organisations.

Elaine Gibson, Senior Policy and Research Officer for the IPP, was quoted at www.payroll-help.com saying, “Talking about how much money one makes is usually a social taboo in the workplace and most of the time there is an implicit understanding amongst colleagues not to their discuss salaries.

“Many organisations discourage workers from talking about their pay, some even going as far to implement clauses into employment contracts requiring confidentiality on pay.

“However, this will all change in October when the Equality Act 2010 will ban ‘gagging’ clauses which forbid staff members from comparing their pay levels with other employees.

“This will hopefully make organisations’ pay structures more transparent and will expose the pay gaps between employees who perform the same roles, especially in the cases of gender and disability-based inequality of pay.”

To find out more about the Equality Act 2010, visit www.equalities.gov.uk.

A REAL SICKENER!

admin — Fri, 23 Apr 2010 15:17:17 +0000

New sick leave rules affect you. The European Court of Justice has decided that statutory entitlement to paid annual leave will continue during long-term sick leave.

A Federation of Small Businesses (FSM) poll indicated that only 19% of businesses say this will make no difference to the way they employ staff whereas 38% of businesses like yours will be more cautious about taking on new staff with health problems, 21% will be less likely to take on new staff, 19% will consider removing their company sick pay policy and just pay the statutory minimum and 17% will be more likely to dismiss staff on long-term sick leave, but even there the ruling provides that payments in lieu of leave upon termination of employment must include any untaken statutory annual leave even if the employee has been on sick leave for the whole of the leave year.

The same ruling states that workers can now choose to take any missed annual leave at a later date if they were sick during a period of annual leave. That will clearly have a negative affect on your business as well.

“It is well known that small firms are the country’s key employers and have done all they can to retain their employees and take on new staff throughout the recession,” said John Walker, the Federation of Small Businesses National Chairman.

“However, measures put in place by the European Court of Justice on sick leave are hampering small businesses’ ability to do the job at hand and help tackle unemployment – which is at its highest for 17 years.

“Small businesses understand the need for good health in the workplace and are like a family, knowing and understanding the needs of their staff.

“But these FSB-ICM figures show that the changes in the law on sick leave are hampering employment opportunities to get long-term unemployed back into work.

“The European Commission must look at the measures on sick leave while reviewing the Working Time Directive and ensure these are rewritten so that sick leave is actually classed as sick leave so that small firms have the best conditions to take on more staff and help pull the economy back onto the road to recovery”

CHECK YOUR PAYSLIPS!

In order to ensure employees pay the right amount of tax and National Insurance, at the right time, HMRC introduced the biggest change to PAYE processing in 25 years with the introduction of a new system for processing PAYE, the National Insurance and PAYE Service (NPS), which has one single record for each individual customer containing all their PAYE details. It’s all to do with employees only having to make a single phone call for any queries they may have. The system implementation started in June last year with planned upgrades in November and, now, April this year.

HMRC have issued advice of various problems in tax code migrations, including such areas as allowances or underpayments carried forward from previous years but have now warned of some employees being on the wrong tax code.

Employees are advised to check their April payslips because it’s possible that they may have been advised of a different tax code to the (supposedly duplicate) one sent to their employer for the “correct” deduction of tax at source!

Employees are warned to look out for any unexpected a changes to the amount they are paid and to phone HMRC is they believe there is a problem.

Milestone and Austens Announce Merger

admin — Tue, 29 Sep 2009 14:30:01 +0000

Milestone (MSLTA Ltd) and Austens (EK Williams Ltd) are pleased to announce a merger of their licensed trade businesses to deliver expert accounting and payroll services to the entire country under the Milestone brand.

Milestone will focus on further developing the industry leading accountancy service with customers benefiting from the ability to identify and apply best practice from the two existing companies as well as a plan to bring exciting new services to the licensed trade. The payroll service will be carried out by a sister company, PAYEpeople, which is already established as a market leader within the licensed trade and also provides payroll bureau solutions to a wider range of retail customers.

The new combined accountancy business of Milestone will have what we believe to be the largest client base by far within the market and will deal with many different pub companies including Belhaven, Brains, Charles Wells, Enterprise, Everards, Fuller’s, Hall & Woodhouse, Marston’s, Mitchell & Butlers, Punch, S&NPE, St Austell and Wadworth. It will continue to offer comprehensive accountancy packages including management accounts, year ends, VAT returns, on site visits provided by commercial advisors and a tax service. Milestone will also continue to offer tailored packages to suit both small managed groups and smaller less complex businesses and now is able to offer an integral stocktaking service (so much in demand in the licensed trade).

Victor Wood, Managing Director of (formerly) Austens and now Milestone, said “This is a very exciting time for us, never has it been as important for licensees to have access to top quality independent financial support and advice and our new company provides exactly that.”

Alwyn Gill, Operations Director, added “This is great news for existing and potential customers bringing together two of the top trade accountants to form a new company providing a fully comprehensive national support package delivered through highly experienced local contacts.”

The minimum pay rate for apprenticeships has increased this week from £80 to £95.

admin — Tue, 29 Sep 2009 14:29:15 +0000

According to the TUC, young women will particularly benefit from the increase as they are most likely to receive the minimum pay rate. The latest Government figures show that the average pay rate for female apprentices in hairdressing and childcare is less than £95 a week. However, the average weekly pay for apprentices in general is more than £170 a week.

TUC General Secretary Brendan Barber commented: “The majority of apprentices are paid well above the minimum rate. But for many trainees, particularly young women, struggling on around £80 a week, an extra £15 will go a long way.

“The next move must be to protect apprentices with the minimum wage so that employers cannot exploit young trainees by ignoring the minimum pay rate. At a small cost to employers, this would improve the reputation of apprenticeships and encourage more young people to enrol.”

For the latest minimum wage rates *click here*

Childcare vouchers – now the costs start to hit home

admin — Tue, 29 Sep 2009 14:28:07 +0000

It wasn’t meant to be like this. Back in April 2005 when the tax and NICs exemption for employer-supported childcare was introduced it seemed like a win-win-win for employees, employers and the government. Employees could get help with the increasing costs of childcare, employers could deliver the scheme through salary sacrifice and cut their NICs bill, and the government could get women back into the workplace using good quality childcare, and so achieve its targets for ending child poverty. But four years on it’s a very different picture. Changes to the maternity regulations last October, as a result of a judicial review of the Sex Discrimination Act, have made employers question both the cost, and fairness of childcare schemes.

Women whose babies were due in early October 2008 were the first affected by the change in legislation that now requires all non-cash benefits (which includes childcare vouchers) to be provided for up to 52 weeks of maternity or adoption leave. Those employees are now coming to the end of their leave period, having enjoyed the provision of their benefit package throughout. It is those businesses that operate a salary sacrifice for childcare and do not have occupational maternity pay that are now counting the cost. Once contractual payments dry up, and for some this will be after a mere six weeks of leave, salary sacrifice schemes cannot operate against statutory maternity or adoption pay, and yet the employer still has to provide (and fund) the provision of vouchers. With salary costs an issue for many employers at present there is evidence that some are taking the drastic step of closing voucher schemes, citing not only cost pressures but also the unfairness of those on leave receiving free vouchers as compared to those who are at work.

Cost is not the only factor to consider. With yet another change in the regulations in respect of what constitutes registered childcare in England (effective on 18th July) employers have to be mindful that the tax/NICs exemption hinges on both the child and the childcare qualifying. The July changes bring to an end the scheme for nannies to be ‘approved’ as childcarers and so qualify under the scheme. They must now register with Ofsted, as must foster carers who work as childminders.

All in all a complex and costly benefit that may no longer tick the cost/benefit analysis box

£6.10 Minimum Wage risks increasing unemployment

admin — Tue, 29 Sep 2009 14:27:13 +0000

Figure more likely to be around the £5.95 mark announces analyst

A leading payroll specialist has challenged the TUC on their suggested minimum wage rise to £6.10 per hour.

Greater Manchester based PAYEpeople has been successfully forecasting minimum wage rises for the last 10 years using specialist payroll software, providing results that many leading firms now use for their own forecasting.

The TUC reported recently that the UK economy has room to accommodate a rise to £6.10 per hour.

The British Chambers of Commerce has a different point of view and is urging the Low Pay Commission to push to keep the National Minimum Wage (NMW) at its current level this year and until economic conditions have significantly improved.

Director General of the British Chamber of Commerce, David Frost, says: “We’re not opposed to the minimum wage going up when employment is high and the economy is doing well, but when jobs are being lost daily and a recession is in full swing, it makes no sense to increase it.

“Most businesses are prioritising survival. A rise in minimum wage would not help firms hold on to staff but would simply add to unemployment.”

TUC general secretary Brendan Barber said: “The minimum wage has never had any detrimental effect on the UK economy. In the current downturn there is a danger that the Low Pay Commission might be too cautious in setting the new NMW rate.

“Everyone agrees that setting it at too high a rate would cost jobs, but people rarely consider the same is true of too low a rate.”

Head of PAYEpeople Allan Pearson says the rise would have significant implications for all businesses and particularly those in the North West.

“This year North West retailers gave employees an average pay rise of 2.4% compared to the UK National Average of 3.8%. The TUC evidence to the Low Pay Commission recommends that the National Minimum Wage should increase to £6.10 per hour, an astounding 6.4% on the current rate of £5.73.

Figure more likely to be around the £5.95 mark

“Our previous experience suggests that most businesses cannot continue to support these kinds of increases. Our data suggests the minimum wage should increase by a further 3.8% to a more manageable £5.95 per hour. I also believe that the adult rate will start to apply to workers from the age of 21, currently this is 22.

“We expect the new figure to be more in line with these forecasts”.

Whilst Mr Pearson says he disagrees with the proposed hike, he is behind the government for their recent efforts in enforcing the minimum wage.

PAYEpeople is an outsourced payroll services provider and has helped national companies save as much as 20% of their processing costs.

Current Minimum Wage
Over 21s: £5.73 an hour
18 to 21-year-olds: £4.77 an hour
16 and 17-year-old: £3.53 an hour
From 1 October 2008

For the latest minimum wage rates *click here*

National Minimum Wage – A shock for 2009

admin — Tue, 29 Sep 2009 14:25:29 +0000

From October 2008 the National Minimum Wage will increase to

£5.73 for workers aged 22 and over;

£4.77 for 18-21 year olds; and

£3.53 for 16-17 year olds.

A change is on the horizon, it has been recommended that from October 2009 the National Minimum Wage age band for 22 and over will change to 21 and over.

Ministers met union figures and Labour Party activists at a National Policy Forum in Warwick to make plans for a possible fourth term.

Discussed in these talks included plans to reduce the qualifying age from 22 and over, to 21 and over. The TUC recommended last year that the the minimum wage should increase to over £6.00 per hour and this should apply to 18 year olds.

The measures agreed by the National Policy Forum will be voted on at the Labour Conference in September.

If you need any help relating to the National Minimum Wage, contact an advisor of PAYEpeople today on 01942 811767.

For the latest minimum wage rates *click here*