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

rising tide of auto enrolment.jpg

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.

New Allowance for Pension Advice

Pension Advice.jpg

A new allowance which will enable people to access pensions advice in a tax efficient way will commence in April 2017.

Under existing rules, if you require advice regarding pensions you will normally have to pay a fee to a Financial Adviser. A new allowance being introduced in April will mean that you will be able to use funds saved in a defined contribution type pension fund to pay for the advice instead. The ability to access the advice in this manner essentially means that the cost of the advice is tax free.

The amount which can be accessed is £500. It can be accessed up to 3 different times provided it is in different tax years.

Be aware that the allowance can only be used to pay for regulated advice and cannot be used by those in final salary schemes unless they also have a defined contribution pension plan at the same time.

If you would like further information or would like to discuss your situation please contact our tax team.

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

Year End Tax Planning Tips For Companies

 iStock-587220926.jpg

Corporation tax is set to reduce to 19% with effect from 1 April 2017 but opportunities still remain to reduce and defer corporation tax liabilities. Here are some you may wish to consider.

MAXIMISE CAPITAL ALLOWANCE

The annual investment allowance (AIA) provides 100% tax relief for qualifying expenditure incurred up to a limit of £200,000 for 12 month periods starting on 1 January 2016. The allowance can only be claimed in the period in which the expenditure was incurred. You should be aware that cars are excluded from this relief.

If you have a 31 March year end, it would be sensible to review capital expenditure plans and consider bringing forward any purchase to before 31 March, thereby utilising this allowance which might otherwise be lost.

On the other hand, if the £200,000 limit has been exceeded, then further purchases should be delayed until after the year end, if possible.

PENSION CONTRIBUTIONS

Relief for employer contributions is given in the chargeable accounting period in which the contributions are paid. In most cases it is sensible to ensure that all contributions are paid before that date in order to accelerate the relief. In the context of a 31 March year-end, if the payments are made before 31 March, relief is given at 20%. This would reduce to 19% for contributions paid after this date.

DEFERRING INCOME OR PROFITS

Consider delaying a transaction to shift profits forward into the next financial year, so as to delay by one year any corporation tax payable. This will also have the effect of reducing the corporation tax payable from 20% to 19%.

There are several ways of deferring income to the next tax year. Sales could be pushed forward to the next period, selling goods on consignment, or if a seasonal trade, changing the year end to exclude a more profitable period or to include a loss-making one.

CLAIM RESEARCH & DEVELOPMENT TAX CREDITS

Companies that have undertaken research and development work could qualify for generous tax reliefs. For an SME, for every £1 of qualifying R & D expenditure, an additional £1.30 is allowed in the tax computation. A loss making SME may be able to surrender the loss arising as a result of the R & D claim for a cash credit of 14.5%

CLEAR OVERDRAWN LOAN ACCOUNTS

The tax charged on a company loan to a “participator” is equal to 32.5% of the amount of the loan outstanding at the year-end, unless the loan has been repaid or cleared within nine months of the end of the accounting period. Companies should therefore review outstanding loans and consider clearing them within the nine months to avoid the tax charge.

CONSIDER ROLL OVER RELIEF

Any company that has realised gains on the disposal of land and buildings used in a trade should consider whether the corporation tax on this can be deferred by way of business asset roll over relief. This may be available if the company reinvests all of the disposal proceeds in new qualifying assets, either within 12 months before the disposal or up to 3 years after. Partial relief could be available if all the proceeds are not reinvested.

For further information please contact the tax team at Green & Co.

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

RGBauto-march16-frontRGBauto-march16-back

 

 

Ways To Save Tax Ahead Of The 5 April Year End

UntitledThe end of the tax year of 5 April is fast approaching, and this is always a good time of year to think about ways to structure your business and personal finances so that they are as tax-efficient as possible. With new rates and various legislative changes due in the 2016/17 year, here are some of the planning strategies you may wish to consider.

Click here to read our ways to save tax ahead of the 5 April year end.

 

 

Pension Auto Enrolment Top Tips

ID-100238635

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

National Insurance Contributions Top Up Scheme

ID-100146041

Those people who reach state pension age prior to 6 April 2016 are being offered the chance to make voluntary national insurance contributions to boost their state pension. The contributions are known as class 3A and the scheme through which the contributions will be collected commenced12 October 2015.

It is open to people who reach state pension before 6 April 2016 as they are ineligible for the new state pension that launches on this day.

The class 3A contributions can increase the state pension up to a maximum of £25 per week and the cost to the individual will depend on their age. The contribution level also takes into account average life expectancy.

An extra £10 of state pension a week will cost a 65 year old £8,900 and for a 75 year old it will cost £6,740.  In most cases surviving spouses/civil partners will be able to inherit at least 50% of the extra pension.

The scheme closes 5 April 2017.

More information on the scheme and an online calculator can be found at: www.gov.uk/statepensiontopup.

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

Winter 2015 Newsletter

ID-10080584

With winter fast approaching, take the weight off your feet and chill as we bring you up to date on everything you need to know this season!

Green & Co Winter 2015 Newsletter

This edition focuses on:

  • Property Tax Relief: Winners And Losers
  • All Change For Dividends
  • Pension Allowances: The Next Steps
  • Tax Round Up
  • Tax Tip
  • Reminders For Your Winter Diary

Image courtesy of Ohmmy3d at FreeDigitalPhotos.net