Auto Enrolment Rolls on for Another Year

Auto Enrolment Contributions

Beginning the 6 April 2018, employers may be required to increase the amount of contributions into their employees’ Auto Enrolment schemes.

The contribution levels will also rise again in a further year’s time, with employers paying a minimum of 3% towards the pension and the total minimum contribution reaching 8%, the employee making up the shortfall.

If as an employer you have already agreed to pay the total minimum contribution, then it will not affect employees, unless the particular scheme rules require an employee contribution. Of course, the employee and employer can agree to contribute more than the minimum, should they wish.

The table below shows the phases of contribution increases:

Dates

Total Minimum Contribution

Minimum Employer Contribution

Up to 5 April 18

2%

1%

6 April 18 to 5 April 19

5%

2%

From 6 April 19

8%

3%

If you require help in administering your payroll and pension scheme our payroll team will be happy to help.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Pensions Re-Enrolment: Don’t Get Caught Out

Pension re-enolment

As an employer, did you know that you have a legal duty to re-enrol certain employees back into an automatic pension scheme every three years, even if they opted out the first time? Failure to do so could result in a penalty…

If you were one of the thousands of businesses that auto-enrolled employees in 2014, you may be approaching the crucial re-enrolment phase, which should take place approximately three years after your original staging date.

Employers are required to complete the re-declaration of compliance with The Pensions Regulator (TPR), even if they do not have any staff to re-enrol. The main qualifying threshold or ‘trigger’ for employees to be automatically enrolled has been maintained at £10,000 per annum for 2017/18.

Consider the following steps to help ensure that you meet your legal obligations and avoid a potential penalty.

Step one: Choose your re-enrolment date

You have a six month window from which you can choose a date for re-enrolment – this can be either three months before or after the third anniversary of your original staging date. Employers cannot opt to postpone their re-enrolment date, so be sure to choose a date that is achievable for your firm.

Tip: Check your payroll systems and personnel are prepared to deal with a potential increase in employees who may need to be re-enrolled.

Step two: Re-assess your workforce

TPR stipulates that you only need to assess employees who were previously auto-enrolled and have subsequently either:

  • asked to leave (opted out of) the pension scheme
  • left the pension scheme after the end of the opt-out period
  • stopped or reduced their pension contributions to below the minimum level (and who meet the age and earnings criteria to be re-enrolled).

You are not required to reassess employees who:

  • are currently in the pension auto-enrolment scheme (and meeting the minimum contribution requirements)
  • are aged 21 or under
  • are of or over the state pension age
  • do not meet the age and earnings criteria for automatic enrolment.

Following assessment, you should re-enrol eligible staff into a qualifying pension and begin making contributions within six weeks of your re-enrolment date.

Tip: Don’t forget to continually monitor employees’ ages and earnings, which may change their eligibility status.

Step three: Write to those staff that you’ve re-enrolled

You should write to each employee who has been re-enrolled into the pension scheme. This should be done within six weeks of your re-enrolment date.

Tip: Template re-enrolment letters are available on the TPR website – visit www.tpr.gov.uk/reenrol-letter

Step four: Complete your re-declaration of compliance

You are required to complete your re-declaration of compliance with TPR to let them know that you’ve met your legal duties. This should be done within five months of the third anniversary of your staging date. You should do this even if you have not re-enrolled any staff into the pension scheme.

Tip: Make sure TPR has your current contact details as it will write to you about your re-enrolment duties.

Further guidance on re-enrolment is available on the TPR website: http://www.thepensionsregulator.gov.uk. Alternatively, if you would like to speak to our Payroll Team, please contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

The Rising Tide of Auto Enrolment

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Over the course of the next two years Auto Enrolment Pension contribution rates are rising. These changes will affect you as an employer as well as your employees.

Currently the total minimum amount is 2% of qualifying earnings, of which the minimum for the employer to pay is 1%. This means that the employee normally also pays 1%.

From 5 April 2018, these rates will increase. The new total minimum will be 5%, with the minimum employer contribution rising to 2%. From 5 April 2019, they will rise again to 8% and 3% respectively.

Of course, both the employee and the employer can chose to pay more into the scheme should they wish. For instance, if an employer wishes to contribute to his employees’ pension the whole 2% currently prescribed, the employee would not need to add anything, as the minimum amount has been reached.

If you are staging soon, or have perhaps passed your staging date, and would like any help don’t leave it too late! Our dedicated payroll team will be happy to help ease the burden.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Barrie Kenyon Features In This Weeks South Wales Argus

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Barrie Kenyon of Green & Co features in this weeks South Wales Argus discussing how some changes in the new tax year will effect employees as well as employers.

The new tax year has seen a raft of changes, with more legislative reform scheduled to come into effect over the next few years.

From changes in dividends, stamp duty, and national insurance (with a U-turn thrown in for good measure) the way that people are taxed is an ever-evolving landscape. However, it’s not just directors, landlords and the self-employed who have been targeted with new legislation.

To read the whole article, please click here.

Class 2 Voluntary Contributions

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Although the self-employed heaved a sigh of relief when the Chancellor reversed his decision to raise the rate of Class 4 NIC recently, other changes in the structure of National Insurance will give cause for concern, particularly for those with low earnings.

The abolition of the self-employed stamp (Class 2 NIC) from April 2018 means those who are currently below the Small Earnings Exemption and have been paying voluntary Class 2 contributions in order to secure contributory benefits will no longer be able to do so.  From that date they will have to pay Class 3 voluntary contributions which is currently £14.10 per week, compared to the Class 2 amount of £2.80 they are currently contributing.  In addition, the special rates for share fishermen (currently £3.45) and volunteer development workers (£5.60) will also be abolished, so they too will have to pay the higher Class 3 amount to maintain their contributions.

The situation is further complicated as in the past those with income below the Class 2 limit had to opt out of paying the stamp by applying for exemption, whereas now low earners have to opt in if they wish to make contributions – a fact many may not have been aware of, and may give rise to gaps in their records.

You can check your Class 2 record by logging onto your personal tax account at HMRC on-line, by post or by phone – details can be found here. If you have gaps in your contributions you can now backdate your Class 2 contributions for up to 6 years but you will need to do so before Class 2 is fully abolished.  You need 35 years of contributions paid or credited to be entitled to the full state pension.

If you would like to discuss your situation with one of the team at Green & Co, please contact us on 01633 871122.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

National Living Wage and National Minimum Wage

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As announced by the Chancellor in the Autumn Statement, the rate of the National Living Wage is set to increase to £7.50 per hour from April 2017.

In line with this, the government has accepted the recommendations of the Low Pay Commission for the National Minimum Wage and from April 2017 the new rates will be as follows:

£7.05 per hour for 21-24 year olds
£5.60 per hour for 18-20 year olds
£4.05 per hour for 16-17 year olds
£3.50 per hour for apprentices (under 19 or 19 and over and in the first year of their apprenticeship)

The National Living Wage and National Minimum Wage are legal requirements. If H M Revenue and Customs (HMRC) find that an employer has not paid the correct minimum wage, they can send a notice for the arrears as well as a penalty.

If you are unsure what you should be paying, please consult a specialist. Green & Co run a dedicated payroll department that can organise this for you. If you would like more information, please contact us on 01633 871122.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

 

 

Proposed NIC rise has been dropped!

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As mentioned in the recent Budget, the Chancellor had intended to increase the Class 4 National Insurance Contributions (NIC). The NI rate for the self-employed (Class 4) was meant to increase from 9% to 10% in April 2018, followed by another rise to 11% in April 2019. This would have brought NIC for the self-employed more in line with the employment rate, which is currently 12%.

Today, however, the Chancellor Philip Hammond has made a complete u-turn, announcing that the government will scrap the increase. This action has been taken because many feel the change would break the manifesto promise not to increase National Insurance, Income Tax or VAT.

Chancellor Hammond has explained that “it is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made. In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.”

This means that the 4.8 million Britons who are currently self-employed  can rest assured that, for now, the Class 4 NIC rate will stay at 9%.

If you have any questions regarding this change, or any of the other changes announced in the Spring Budget, please don’t hesitate to contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

 

Named and Shamed: The Importance of the Minimum Wage

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With last Saturday marking the beginning of the new National Minimum Wage, it has never been so important for employers to ensure they are paying their employees the correct wages.

Last month, HMRC continued its Name and Shame scheme by publishing a further 197 companies who owed a collective £465,000 in arrears. Since the Name and Shame scheme was introduced in October 2013, 687 business have been named who owed an overall £3.5million to employees.

It is an employer’s responsibility to be aware of the minimum wage rates and to ensure that all their employees are paid accordingly. Employers who pay less than the minimum wage, not only have to pay back the arrears, but also face penalties of up to £20,000 per worker, and in extreme cases can be prosecuted.

From 1st October the Minimum Wage Rates are:

£7.20 per hour – 25 yrs and over

£6.95 per hour – 21 to 24 yrs

£5.55 per hour – 18 to 20 yrs

£4.00 per hour – 16 to 17 yrs

£3.40 per hour – apprentices under 19 yrs

£3.40 per hour – apprentices over 19 yrs and in the first year

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.