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.

Autumn Budget 2017: What you need to know

Autumn Budget Summary - Green & Co

Yesterday, the Chancellor announced his second Budget of 2017. Among the key changes to note for this year are:

  • The personal allowance will rise to £11,850 and the higher rate tax threshold for the UK will rise to £46,350 for 2018/19.
  • Automatic enrolment pension minimum contributions increase significantly from 6 April 2018. Employer’s minimum contribution will increase from 1% to 2% with the total minimum contribution increasing to 5% (including 3% staff contribution).
  • The inheritance tax residence nil rate band rises to £125,000 from 6 April 2018.
  • Half of any interest tax relief for personal buy-to-let borrowing will be limited to a 20% tax credit from 2018/19.
  • The VAT threshold will be frozen at £85,000 until March 2020.
  • The diesel supplement for company cars will be increased from 3% to 4% from April 2018.
  • The First time buyers of residential property outside Scotland will pay no stamp duty land tax on the first £300,000 of the purchase price for a home, provided its value does not exceed £500,000.

Download our budget summary to see the rest of the changes announced by Mr Hammond.

If you have any questions about the summary’s contents or how any aspects of your tax and financial planning may be affected by the Budget, please contact us to discuss them.

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.

Preparing for Auto Enrolment Seminar – 13 April 2016

We are delighted to announce that Stephen Rowntree from The Pension Regulator will be presenting at our Auto Enrolment seminar on Wednesday 13th April.

You may be aware from seeing ‘Workie’ the striking physical embodiment of the workplace pension on your TV screens, that the law on workplace pensions has changed. Every employer with at least one member of staff now has new duties, including enrolling those who are eligible into a workplace pension scheme and contributing towards it.

Why should you attend?

All UK employers must enrol their workforce in a workplace pension scheme by their ‘staging date’. It is important that you start to prepare now for Auto-Enrolment so that you can control costs and minimise disruption to your business. Not only that, but we are lucky enough to have Adam Tudor from Now Pensions presenting and he will also be available for a Q and A session at the end of the event!

Eventbrite - Preparing for Auto Enrolment Seminar

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Pension Auto Enrolment Top Tips

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Thousands of British Businesses are starting Automatic Enrolment in the coming 12 months here are our Top Tips for success:

  1. Don’t ignore the issue – it won’t go away! Also you cannot try to encourage employees to choose not to enrol, it may come back to haunt you.
  2. Make sure that the Pension Regulator has all the correct contact information for yourself and whoever processes your payroll.
  3. Find out your Staging Date, as there are daily fines for missing it.
  4. Assess your workforce to see who is eligible based on their age and earnings. Don’t discount self-employed, contractors or agency workers, check whether you need to consider them also.
  5. Communication is an essential part of Auto Enrolment. It’s not only about advising the employee of their responsibilities, but also recognising you may need to rely on this as evidence if an employee pleads ignorance further down the line.
  6. Make sure that all contracts and policies include mention of Auto Enrolment and all of the procedures involved.
  7. Don’t panic! We have already successfully enrolled many of our clients, and are a phone call away for any advice or help. Automatic Enrolment isn’t going away – and neither are we.

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

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

The Monster Of Auto Enrolment

workie

The government has introduced a new character to our television screens this month: Workie. The multi coloured monster is designed as the physical embodiment of workplace pensions and will be fronting a media campaign to remind businesses of their responsibilities.

Pensions Minister Baroness Altmann was personally involved in the character’s creation. While admitting is was a quirky campaign, it has a serious message. “We need everyone to know they are entitled to a workplace pension – and we need all employers to understand their legal responsibility to their staff, but also to feel more positive about engaging with workplace pensions,” she added.

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

Photograph: Department of Work and Pensions/PA

Auto Enrolment Toolkit

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The Pensions Regulator is due to release a toolkit to help users of HMRC Basic PAYE tools with their upcoming Auto Enrolment responsibilities. Currently there is no functionality within Basic PAYE tools to process Auto Enrolment, and the Pension Regulator has confirmed that it has no plans to either. Which leaves the roughly 200,000 users needing to look at other options for when they stage.

With this is mind, the Pensions Regulator is to release a basic toolkit to enable users to ensure they comply with the regulations. However, the tool lacks many options that employers may need to use, such as only processing contributions based on banded earnings. Some of the many disadvantages of this tool is that, due to its highly manual nature, the process will be time consuming with a possible lack of accuracy. The human error factor means there is an increased likelihood that mistakes will be made. These mistakes will take additional time to locate and correct.

While it is a good thing that the software is free, and doubtless that will pull many Basic PAYE tools users into using it, there are many other options out there to help aid compliance issues. Employers need to seriously consider their options and make sure that they have an adequate system in place to cope with the demands of Auto Enrolment. Or else the penalties can be quite high.

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

Image courtesy of dan at FreeDigitalPhotos.net