PAYE Update Workshop Tim Chapman MIPP Payroll Manager

PAYE Update Workshop  Introduction  5 April 2009 – Year end  What’s New  Miscellaneous  Outsourcing payroll

5 th April 2009 – Year End PAYE Update Workshop

 File on-line - and claim £75  Check your stationary levels  Keep up to date  Important dates to remember

PAYE Update Workshop Manual PAYE payments due TuesdayPAYE for April due FridayPAYE for May due SundayPAYE for June due WednesdayPAYE for July due FridayPAYE for August due MondayPAYE for September due ThursdayPAYE for October due FridayPAYE for November due TuesdayPAYE for December due FridayPAYE for January due FridayPAYE for February due MondayPAYE for March due

PAYE Update Workshop Electronic PAYE payments due FridayElectronic PAYE for April due SaturdayElectronic PAYE for May due WednesdayElectronic PAYE for June due FridayElectronic PAYE for July due TuesdayElectronic PAYE for August due ThursdayElectronic PAYE for September due FridayElectronic PAYE for October due TuesdayElectronic PAYE for November due FridayElectronic PAYE for December due MondayElectronic PAYE for January due MondayElectronic PAYE for February due ThursdayElectronic PAYE for March due

PAYE Update Workshop Important Inland Revenue dates SundayIR Will levy interest on O/S PAYE 2008/ TuesdayP14 and P35 year end to Inland Revenue SundayP60 to employees MondayCopy P9D P11D to employees MondayP11D(b) P9D P11D to Inland Revenue SundayPayment of Class 1A NIC due SundayP46(car) submission due 1 st quarter MondayP46(car) submission due 2 nd quarter MondayP46(car) submission due 3 rd quarter FridayP46(car) submission due 4 th quarter MondayIR Will levy interest on O/S PAYE 2009/10

 Personal allowances for tax  NIC thresholds  SSP/SMP/SAP/SPP rates  NIC/LEL/ET/UAP/UEL  Doing PAYE on-line  New P45 What’s new for 2009/2010? PAYE Update Workshop

Income Tax £ per year (unless stated) Change Income tax personal and age-related allowances Personal allowance (age under 65)£6,035+ £440£6,475 Personal allowance (age 65-74)£9,030+ £460£9,490 Personal allowance (age 75 and over)£9,180+ £460£9,640 Married couple's allowance* (aged less than 75 and born before 6th April 1935)£6,535+ £330£6,865 Married couple's allowance* (age 75 and over)£6,625+ £340£6,965 Married couple's allowance* - minimum amount£2,540+ £130£2,670 Income limit for age-related allowances£21,800+ £1,100£22,900 Blind person's allowance£1,800+ £90£1,890 Pension scheme allowances Annual allowance£235,000+ £10,000£245,000 Lifetime allowance£1,650,000+ £100,000£1,750,000 *Married couple's allowance is given at the rate of 10 percent.

PAYE Update Workshop NI rates and earning limits from 6 April 2009 Lower Earnings Limit Earnings Threshold Upper Accrual Point Upper Earnings Limit Weekly£95£110£770£844 Monthly£412£476£3,337£3,656 Yearly£4,940£5,715£40,040£43,875 Earnings Limits

PAYE Update Workshop EmployeeEmployer Not contracted-out (Earnings above ET up to UAP)11.0%12.8% (Earnings above UAP up to UEL)11.0%12.8% (Earnings above UEL)1.0%12.8% Contracted-out Salary Related (COSR) (Earnings above ET up to UAP)9.4%9.1% (Earnings above UAP up to UEL)11.0%12.8% (Earnings above UEL)1.0%12.8% Contracted-out Money Purchase (COMP) or COMP Stakeholder (Earnings above (ET up to UAP)9.4%11.4% (Earnings above UAP up to UEL)11.0%12.8% (Earnings above UEL)1.0%12.8% The Contracted-out Rebates will remain unchanged from 6 April 2009 Contracted-out Salary Related (COSR)Employer3.7% Employee1.6% Contracted-out Money Purchase (COMP)Employer1.4% (includes COMP Stakeholder schemes)Employee1.6%

PAYE Update Workshop SSP daily rates table for days of sickness from 6 April 2009 to 5 April 2010 * Un-rounded daily rates No of QDs in weekNo of days to pay £ £££££££ *Un-rounded daily rate are shown for employers with computerised payroll systems. SSP

PAYE Update Workshop  First six weeks of payment – the earnings- related rate, which is 90 percent of the employee’s Average Weekly Earnings  Remaining weeks – the lesser of the standard rate which is £ a week or the earnings- related rate, which is 90 percent of the employee’s Average Weekly Earnings SMP The amount of SMP paid to an employee for payment weeks starting on or after Sunday 5 April 2009 is:

PAYE Update Workshop For the tax year a ‘small employer’ is an employer who paid (or was liable to pay) total gross Class 1 NICs of £45,000 or less in the individual employee’s qualifying tax year. These are the same thresholds as last year.

Lower Earnings Limit (LEL) is currently £90 per week and is the point at which the earnings count for benefit purposes. Those who earn below the LEL do not build up any contributory benefits. PAYE Update Workshop Definitions of term used:

Earnings Threshold (ET) is currently £105 per week and is the point above which employees begin to pay Class 1 NICs. Although no Class 1 NICs are payable at or below the ET, those which earn between the LEL and ET are deemed to have paid Class 1 NICs for contributory benefit purposes. PAYE Update Workshop Definitions of term used:

Upper Earnings Limit (UEL) is currently £770 per week and is the point at which primary Class 1 NICs cease to count for benefit purposes. PAYE Update Workshop Definitions of term used:

Upper Accrual Point (UAP) prior to the introduction of the UAP, the upper earnings limit was the end point for state pension accruals. The UAP will now be the upper limit of accruals. PAYE Update Workshop Definitions of term used:

 From 6 April 2009, if you have 50 or more employees you must send employee starter and leaver information and similar pension information online  Under government proposals, all employers, regardless of how many employees you have, must send this information online from 6 April 2011 PAYE Update Workshop Doing PAYE online all year round

The details you must send online are:  P45 (Part 1) – Details of employee leaving  P45 (Part 3) – New employee details  P46 – Employee without a form P45  Year End P35/P14 PAYE Update Workshop Doing PAYE online all year round

 From April 2009, there will be penalties for sending in-year forms on paper when they should be sent online  For the first three quarters of the tax year, you will be written to you if you have sent paper forms when you should have filed online, reminding you of the new requirements and offering guidance and support  If you send any paper forms during the fourth quarter (or later), you will be charged a penalty! PAYE Update Workshop Doing PAYE online all year round - PENALTIES

PAYE Update Workshop

 Holiday Pay  Redundancy Pay  National Minimum Wage  Changes to Maternity Benefit  NI changes for Women  E-payslips

PAYE Update Workshop Holiday Pay Working PatternBefore 1 April 2009After 1 April 2009 Full-time (5 day week)4.8 weeks (24 days)5.6 weeks (28 days) Part-time (4 day week)4.8 weeks (19.2 days)5.6 weeks (22.4 days) Part-time (3 day week)4.8 weeks (14.4 days)5.6 weeks (16.8 days) 6 day week4.8 weeks (28 days - the maximum statutory entitlement) 5.6 weeks (28 days - the maximum statutory entitlement) Compressed hours eg 36 hours in 4 days 36 hours x 4.8 weeks = hours per year 36 hours x 5.6 weeks = hours per year Annualised hours eg 1,600 hours at an average of 33.5 hours week 33.5 hours x 4.8 weeks = hours per year 33.5 hours x 5.6 weeks = hours per year Bank HolidaysCan be included in the 4.8 weeks leave - check your contract Can be included in the 5.6 weeks leave - check your contract

Redundancy PAYE Update Workshop  Length of continuous employment  Age  Weekly pay, up to a legal limit (£350 from 1 February 2009) The first £30,000 of any termination payment is tax-free The total amount for redundancy is based on:

Redundancy PAYE Update Workshop Amount paid:  Half a week’s pay for each complete year of continuous service below the age of 22  Full week’s pay for each complete year of continuous service between the ages of 22 and 40  Week and a half’s pay for each complete year of continuous service above the age of 41

 £5.73 per hour for workers aged 22 and older  A development rate of £4.77 per hour for workers aged inclusive  £3.53 per hour for all workers under the age of 18, who are no longer of compulsory school age National Minimum Wage PAYE Update Workshop

 For women whose EWC is on or after 5 October 2009, the position is different  For employers, additional costs Changes to maternity benefits PAYE Update Workshop

During OML, a woman is entitled to all the benefits of her contract other than pay including: Changes to maternity benefits PAYE Update Workshop  Accruing statutory and occupational holidays  Keeping her company car  Enjoys any benefits such as medical insurance For women whose EWC is before 5 October 2008, there is no right to carry forward access to these benefits in to their Additional Maternity Leave (AML).

Changes to maternity benefits PAYE Update Workshop For women whose EWC is on or after 5 October 2009 however, the position is different. They are entitled to continue to enjoy those benefits they had access to during their OML during their (AML), so they retain their company cars, access to medical insurance etc. However, every employee’s entitlement will depend upon her terms and conditions. For employers there may well be an on-cost in the extension of these benefits, especially if any of them involve salary sacrifice schemes.

If an employer has entered a salary sacrifice arrangement to provide non-cash benefits to an employee, the employer must understand that they have no entitlement of operating the salary sacrifice against any statutory payments (SSP, SMP, SPP, SAP and APL). Salary sacrifice only applies to contractual payment amounts under the terms of the contract of employment. However, the employee is entitled to continue to receive the contractual non-cash benefit in kind during maternity, paternity and adoption leave without any actual salary sacrifice being applied and at the expense of the employer. Parental leave considerations PAYE Update Workshop

Many women seem unaware of the changes to their State Retirement Age (SRA). For those born between April 1950 and April 1955, the SRA increased from between 2010 and This could seriously affect retirement plans. NI Changes for women

 Everyone’s talking about e-payslips  Which on-line approach to take  The employee benefits E-payslips PAYE Update Workshop

Everyone’s talking about E-payslips PAYE Update Workshop  Electronic version of the paper payslip  Accessible online whenever an employee needs them  Some say, e-payslips will completely replace the paper product and reduce Payroll print and distribution costs significantly

Which online approach to take PAYE Update Workshop  Who are you planning to offer it to? Would it be appropriate for all employees?  What do you want to offer? Is it just payslips or will you want to provide more HP options such as absence management  Where will you host the service? A secure platform will be needed to protect employee data  When will you move to e-payslips? Would you change completely or still offer a mixture of online and paper based payroll information

The employee benefits PAYE Update Workshop E-payslips certainly have advantages from an employees perspective, offering instant 24 hour access to their latest payslip information and a central point to find payslips when copies are required for mortgages, bank loans etc.

Why outsource payroll? Outsourcing Payroll PAYE Update Workshop

Cost – Big businesses can afford to maintain big payroll departments. For small businesses however, an in-house payroll service is a money burner. If your business has fewer than 20 employees, there’s a very good chance that you can save money by outsourcing your payroll operations. Outsourcing Payroll PAYE Update Workshop

Productivity – Payroll management is a time-consuming activity. With this burden removed, your employees can focus on doing more productive things, and you may even be able to trim your staff’s size. Outsourcing Payroll PAYE Update Workshop

Accuracy – Payroll mistakes can be painful, angering employees and – more ominously – the government. A good payroll-services provider is far less likely to make serious error than your in-house staff. Outsourcing Payroll PAYE Update Workshop

Reliability – In-house payroll activities function as reliably as the people doing the work. With a payroll service, output speed and quality won’t vary in accordance with holidays and illness. Outsourcing Payroll PAYE Update Workshop

Speed – Since payroll-services providers are specialists, they can process even the most complex payrolls at lightning-fast speed. The can also accommodate a temporary influx of seasonal workers without acquiring new systems that will remain dormant the rest of the year. Outsourcing Payroll PAYE Update Workshop

Insight Accountability – If payslips are delayed or paperwork is mishandled, it’s the payroll- services provider’s responsibility to fix things. Flexibility – Repetitive payroll work can act like an anchor on your business. Your staff will be free to focus on other work. Outsourcing Payroll PAYE Update Workshop

Security – Do you have the time and energy to closely supervise your business’s payroll for time and rate abuses and other shady activities? Most payroll services firms have technologies that can spot and alert clients to various types of payroll fraud, such as payment manipulation and ‘phantom workers’. Outsourcing Payroll PAYE Update Workshop

Worry – There’s a lot to be said for the peace of mind that outsourcing payroll services can bring to a business owner or manager. No headaches, no hassles : You’re left to focus on running a profitable business. Outsourcing Payroll PAYE Update Workshop

Any questions? PAYE Update Workshop Tim Chapman MIPP Payroll Manager, Simpkins Edwards Mary-Jane Campbell Partner, Simpkins Edwards T: F: