For businesses large, medium or small, payroll is a major and frequently complex aspect of their operations, especially as there are constant changes every year made by the government. There are a number of upcoming issues that employers should be aware of, some of which are outlined here.
Increase in National Minimum Wage penalties
From February 2014 the government is cracking down on employers who do not pay their employees at least the National Minimum Wage. For those caught failing to comply there is a significant increase in the maximum penalty from £5,000 to £20,000.
Flexible working rules
All employees will now be able to benefit from new rules that, from autumn 2014, will allow them to request flexible working. These changes mean that where workers are employed by the same employer for at least 26 weeks they will be entitled to make one request in a period of 12 months to work flexibly.
Repayment threshold for student loan repayments rises
As from 6 April 2014 there will be a higher threshold for the repayment of student loans, going up to £16,910 from £16,365. The monthly threshold will be £1,409 and the weekly one £325. There is no change in the rate of deduction, which stays at 9%.
Workplace pensions – automatic enrolment
Letters have been sent to employers giving a date for when they have to automatically enroll particular workers in a pension scheme that they will have to contribute towards. This is due to a change in the law that has a requirement that employers help more of their employees save towards their retirement.
Draft legislation for rates, limits and thresholds for NIC
The Draft Regulations for 2014/15-tax year confirm the various rates, thresholds and limits for National Insurance Contributions. These are subject to approval by Parliament.
Payroll outsourcing
Payroll is a vital part of any business’s operations and getting it right is crucial. It is also rather a mundane part of an organization’s work and can take considerable training of employees to handle it in-house; that costs time and money. As HMRC continues to make changes to the tax system, the in-house team also has to keep up to date or risk the business running into legal and compliance problems.
Outsourcing payroll to another organization, such as an umbrella company, means that the chosen company deals with all aspects of the administrative process. Such a company will deal with invoicing for contractors, ensuring they are paid correctly and providing services such as tax advice, compliance with expenses claims and professional insurances. This frees up time for other employees to concentrate on the business’s core activities leading to increased productivity and higher rewards.
Note: phishing email for Employer Bulletin
False links are contained in a fake copy of HMRC Employer Bulletin 46 and employers are warned to check the URL link to HMRC website carefully. The link is not to the HMRC website but is a document containing a Trojan virus. Suspicious emails should be forwarded to phishing@hmrc.gsi.gov.uk before being deleted.
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