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Auto enrolment: It’s the Law!

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I recently read a scary statistic from an auto-enrolment survey which said 1 in 10 SMEs plan to ignore auto-enrolment completely whilst 11% of small business owners are still unaware of what auto-enrolment even is. Please do not let this be you. If you have somehow managed to miss all the national TV and radio advertising, billboards or official letters from The Pensions Regulator telling you of your duties, or forgot about it, thinking you don’t need to do anything, you could be running the risk of leaving it too late and receiving some nasty penalties for breaking the law.

We urge you to act on any letter you receive from The Pensions Regulator informing you of your ‘Staging Date’ and what your responsibilities are as an employer and what you must do and when. You must think about this now if you haven’t already and allow yourself at least 6 months to get everything in place in time.

This guide will help you get started.

If you do not already have a pension scheme in place, you must first choose a pension scheme. Once you have a suitable scheme in place you must inform your payroll provider.
For our clients we will provide the following assistance:

* Assess all workers each time we process the payroll
* Auto-enrol them into the pension scheme if and when they are eligible
* Make the necessary deductions from the payroll
* Provide pension reports
* Provide the required payroll file to submit to the pension provider
* Provide correspondence letters for new joiners

We cannot stress enough how important it is for you to think about your workplace pension duties as an employer now. It’s the law!

Auto enrolment for Directors?

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Since Automatic enrolment will affect many more small employers in the next couple of years, there is some confusion regarding those companies with only one or two directors. We recently spoke to The Pensions Regulator who gave us their clarification on this.

The Pensions Regulator will write to ALL employers informing them of their staging date at least 12-18 months before that date. They will expect employers to start planning and getting a pension scheme in place for their workers and to register that pension scheme within 5 months of the Staging date to avoid penalties and breaking the law. If there are only directors in the company, none of whom are workers for the purposes of automatic enrolment, then you can inform The Pensions Regulator by emailing customersupport@autoenrol.tpr.gov.uk stating the following:

1. Confirm your company is not an employer for the purposes of automatic enrolment for one of the following reasons:
* There is only one director and there are no other staff working for the company
* The only people working for the company are directors and none of them has an employment contract
* The only people working for the company are directors and only one of them has an employment contract
* The company has ceased trading (include date ceased)
* If you believe there is another reason why you believe you do not have any automatic enrolment duties, provide a brief explanation

2. The letter code for the company. This is a 10 digit number found on all letters sent from The Pensions Regulator
3. The PAYE scheme number
4. The companies house number
5. The name, email address, address and telephone number of contact at the company

If the company’s circumstances change so that there are at least two people working for the company under contracts of employment then you will need to inform The Pensions Regulator as soon as possible.

Under 21’s National Insurance

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From 6th April 2015, a new NI band called the Upper Secondary Threshold (UST) has been created to facilitate the abolition of employer National Insurance contributions for employees under the age of 21. The Upper Secondary Threshold is £815 per week. Earnings above this threshold will remain subject to secondary Class 1 National Insurance Contributions. There are four new National Insurance category letters for these employees; M,Z, I and K. M will be used for not-contracted our standard rate contributions for under 21 year olds, so you will need to make sure your payroll software will apply these new NIC letters accordingly. Once the employee is 21 they are to be changed and calculated using the appropriate normal NI letter.

No more P35 Questions

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HMRC has said that from 6th March 2015, the end of tax year P35 checklist will no longer be required. Employers will still however be required to report the Final Submission for the Year indicator with either their RTI Full Payment Submission (FPS) or EPS. The end of year checklist consists of seven declaration questions but HMRC states this is now part of the ‘defunct’ P35 process.

This notification has been made rather late though for many employers as not all software developers may have made the appropriate adjustments in time for the 2014/15 year end, so some employers may still have to complete the P35 checklist as usual. The removal of the checklist does not affect any other part of the year end process or it’s deadlines. The deadline date for the final FPS submission is 19th April. Once passed, any further change can only be made through the submission of an Earlier Year Update (EYU). p35

Shared Parental Leave

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On 1st December 2014, new regulations giving Shared Parental Leave and Pay came into force in Great Britain. This applies to eligible couples whose baby is due to be born or the child is placed with the adopting couple on or after 5th April 2015. This will replace Additional Statutory Paternity Pay and leave.

If eligible, employees can start their Shared Parental Leave (SPL) if they or their partner ends their maternity or adoption leave or pay early. The remaining leave will be available as SPL and the remaining pay may be available as Statutory Shared Parental Pay (ShPP). The mother must take a minimum of 2 weeks maternity leave meaning this will allow parents to share 50 weeks’ maternity leave and up to 37 weeks’ pay.

Employees can take this leave in up to 3 separate blocks instead of taking it all in one go and can also share the leave with their partner if they are also eligible. Parents can choose how much of the SPL each of them will take. If both parents are taking Shared Parental Leave, they can take it at the same time as each other or at different times. The employee must give at least 8 weeks notice before a block of leave begins. This leave and pay must be taken between the baby’s birth and first birthday, or within one year of adoption.

For more details and a new calculator for maternity, paternity and shared parental pay click here