We often get the question from our contractor clients or other small Limited Company clients about whether they have to comply with auto enrolment at all.
The answer is not necessarily but they still need to consider their situation and let the Pension Regulator know what they are doing.
The first thing to do is to consider whether they genuinely have no staff. The details on this are here: https://www.thepensionsregulator.gov.uk/en/employers/what-if-i-dont-have-any-staff.aspx but the basic scenario is that if you only have Directors who have no employment contracts then you do not need to comply.
Once you have established your situation you need to let the Pension Regulator know that you have no staff. The Pension Regulator now has a specific web form to fill in here: https://automation.thepensionsregulator.gov.uk/notanemployer . Once you have done that you are off the hook!
For any other queries about Auto Enrolment please give us a call.
With the advent of Auto Entrolment pensions all Employers are going to become more familiar with the ins and outs of pension tax relief!
Unfortunately just to complicate a complicated system even more there are two fundamental ways that the Employee contributions can be calculated.
If a worker has agreed to the minimum contribution which at the moment is 1% of their “qualifying earnings” (minimum contributions shown here: https://www.thepensionsregulator.gov.uk/employers/contributions-funding-tax.aspx#s9379) (qualifying earnings shown here:https://www.nestpensions.org.uk/schemeweb/NestWeb/public/helpcentre/contents/what-are-qualifying-earnings.html) then then there are two ways that the employer can deal with this.
With a method called “Relief at Source” the employer will deduct 0.8% of the qualifying earnings from their after tax income and send it to the pension provider. They will then gross it up giving them basic rate tax relief at 20%. Higher rate taxpayers will get higher rate tax relief through their tax returns. The NEST pension which many of our clients have chosen uses this method: https://www.nestpensions.org.uk/schemeweb/NestWeb/public/helpcentre/contents/how-should-i-calculate-tax-relief-with-my-earnings-basis.html
However there is another method called the net pay arrangement where the employer will deduct the full 1% from the employers gross pay and the pension Company will not gross it up.When the submission is made to the pension company the payroll operator must be clear about which method is being used otherwise the tax relief will be wrong.
As you can see this is a potential minefield…………….!! That’s why when we were researching how to support our clients with Auto Enrolment we decided that by far the best way forward was to integrate it with our payroll systems. In this way everything is calculated and submitted in one place and errors can be minimised or eliminated.
Please give us a call for a no obligation discussion about your auto enrolment requirements.
We often get asked about what an employee or Contractor (who is an employee of a Ltd Company) can claim in the way of expenses while on business travel away from their normal place of work.
Firstly it is important to understand if the employee is away from their permanent place of work or at a temporary workplace. A temporary workplace is defined as “somewhere the employee only goes to perform a task of limited duration or for a temporary purpose”. The full rules are here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/517266/490.pdf
A temporary workplace also has a 24 month rule that prevents it becoming long term. As soon as it becomes apparant that the assignment will go beyond 24 months the workplace ceases to be temporary.
Why is this important? Well employees are not normally allowed to claim tax relief for commuting costs or costs while they are at work. When on business travel or on travel to a temporary workplace they can claim tax relief for travelling costs and for costs incurred while they were away. These costs must be costs incurred, ie the money must be spent. If an employer pays someone for the cost of a hotel but they stay with a friend this payment is just treated as extra wages.
There is one additional allowance which is for incidental expenses on overnight stays. An employer can provide up to £5 a night while staying overnight in the UK and £10 while staying abroad for out of pocket expenses. Otherwise the payments must be for costs actually incurred.
All this means that in practice a Contractor on a one year contract can claim their travel costs (either the actual costs of public transport or the fixed mileage rates for a using a private car) and also claim the actual cost for lunch if they buy it while at the workplace. Round sum allowances are not allowed and as soon as a contract is extended over 24 months these claims will have to stop.
For any more information on this complex area please give us a call.
Summer has finally arrived in the Central Belt. And along with press stories of sunburn and ice creams are a number of stories about the Pensions Regulator clamping down on Companies who have not complied with their workplace pension requirements. An example of this is a story in the Herald today Herald Story on Auto Enrolment.
The Pensions Regulator reports a surge in whistleblowing from employees of Companies who have failed to comply with the auto enrolment requirements. The number of whistleblowers contacting the Pensions Regulator has reportedly risen to 2,545 in the last year. With fines of up to £10,000 a day available and the recent news that Swindon Town Football Club were fined £20,000 in April for non compliance employers need to ensure they are in a position to comply.
When we analyse our clients we still have over 80% not at their staging date yet so the rest of 2016 and 2017 is going to be a busy time helping our clients comply. Through helping our larger clients through the process already we have a well oiled method of taking the pain away from this process. We have clients in NEST, The People’s Pension and other pension schemes that they already had. Our payroll integrated process removes duplicate data entry and creates a seamless process.
Our message to our clients is that burying their heads in the sand is not an option. The Employer contributions can be looked at in the context of other pay rises and if planned for far enough ahead should be manageable for all. Give us a call if you would like to discuss how easy it is to get going.
It’s P11d time of year again and for some businesses this will be the last year that they have to complete them.
For small businesses the area of employee expenses has always been one of the least understood and had some of the lowest compliance. Few small business owners are aware that up until April 5th 2016 if an employee of the Company did something as innocuous as pay for a train ticket for a business trip, and then get reimbursed for it from the Company, that payment should be recorded on a P11d even though there would be no tax consequence. To avoid this level of bureaucracy in the past it was possible to agree a dispensation with HMRC. These could either be individually agreed or there was an esoteric form called the P11dx which covered the standard ones that could be completed.
Since 6th April 2016 however the regime has changed. The P11d dispensation regime has ended and the associated benefits and expenses legislation has changed. The new legislation exempts expenses such as travel and subsistence from tax and NI as long as they are validated as legitimate expenses by the employer.
Additionally Companies may now “payroll” benefits such as Company Cars or Health Insurance. Unfortunately you have to register to do this before the start of the tax year to avoid doing P11d’s for that year. Full information on how to do this is available here: https://www.gov.uk/government/publications/payrolling-benefits-in-kind-draft-guidance/payrolling-benefits-in-kind
The combination of these changes should mean that P11ds become a thing of the past for most Companies. Some benefits will still need to be reported on a P11d though such as Interest Free loans from the company. Flat rate allowances will still need to be within HMRC guidelines or agreed with HMRC as well.
If you have any queries about employee benefits please do not hesitate to give us a call.