Administering payroll: what to be aware of

There are few facts that can be relied upon to be constant, however one of them is that there will always be changes impacting upon your payroll processes. Some will occur across the board and impact all employers and others will only impact employers if they are faced with a particular situation.

Late submission Automatic Penalties
April 2013 saw the introduction of Real Time Information (RTI) which, for the first time since PAYE was introduced in 1944, placed the obligation on employers to submit details of payments being made to their employees ‘on or before’ the date that payments were made to employees.
As with any new legislative obligation, RTI brought with it the risk of penalties to employers who failed to submit the Full Payment Submission (FPS) or a nil payment Employer Payment Submission (EPS), in a timely manner.
Initially, employers were given a grace period of one year until April 2014, which was further extended until 6th October 2014. This was later amended again to allow a phased rollout of late submission automatic penalties and saw employers with 50 or more employees being subject to these penalties as from 6th October 2014 and smaller employers enjoying a delay until 6th March 2015.
The first penalty notices are expected to be issued in January and employers who receive them will have 30 days in which to either pay the penalty, or to appeal the penalty because they don’t believe it to be due.
The reasons for appeal can be many and varied but will fall into two main categories, ‘factual’ or ‘reasonable excuse’. Factual maintains that the penalty is not due because the return was not late, whereas, reasonable excuse accepts that the penalty is due, but there was good reason for the return being submitted late (i.e. IT problems). Since April 2014, payroll software has contained a list of reasons which can be used to identify why a return for a single or group of employees has been submitted late. It would be useful if you familiarised yourself with how this works in your own software so that penalty noticies can be headed off before they arise.
Penalties can be appealed automatically through your own PAYE online account, or that of your agent, or it can be appealed in writing. Automatic penalties will be issued on paper, not online or by email, so a notification received via the Generic Notification Service (GNS) that informs you that you may need to take action to avoid a penalty is not a penalty notice. The penalty notice will only be sent to an employer and not to an agent, although you might want your agent to deal with the appeal.

Shared Parental Leave & Pay
Statutory Maternity Leave (SML) and Statutory Maternity Pay (SMP) has existed for mothers since the 1980s and seeks to help the expectant mother to stop work before and after the birth of her baby in the interests of her own and the baby’s health.
Since their introduction, both leave and pay have been subject to adjustment, expansion and challenge through the courts. Similarly. both have also experienced the introduction of further legislative leave and pay regimes that look to provide similar support to the partner of the mother in receipt of maternity leave.
For births with a due or matching date of 5 April 2015 a new Statutory leave and payment regime will be available to a mother and her partner or to primary adopters and their partner (secondary adopters) in the form of Shared Parental Leave (SPL) and Shared Parental Pay (ShPP).
Ordinary Statutory Paternity Pay will be renamed Statutory Paternity Pay and Additional Paternity Leave and pay is to be abolished, but will continue to exist where the expected due date is on or before the week ending 4 April 2015.
SPL will, for the first time, allow working couples who share the care of their child, either in a birth or adoption situation, to share any remaining maternity or adoption leave. This will also include, if eligible, the right to share maternity (SMP) or adoption pay (SAP), in the event that the mother or primary adopter, chooses to end their leave early and return to work.
In maternity leave situations, the mother must take a minimum of two weeks (four if she works in a factory) compulsory leave, but in order to create entitlement to SPL and/or ShPP, the mother has to curtail her maternity leave period and pay.
A mother can return to work (thus ending her maternity or adoption leave) and then give notice telling her employer when she wants the leave and wants her pay period to end or, whilst still taking maternity leave and/or SMP (or adoption leave and SAP), a mother can give notice that she will end her maternity leave and/or SMP or Maternity Allowance on a future date.
ShPP is paid at either the standard weekly rate (currently £138.18 rising to £139.58 for the year 2015-16) or 90 per cent of the AWE whichever is lower however, unlike SMP and SAP (from 5 April 2015) there is no enhanced earnings rate payable for the first six weeks, even where leave and pay is curtailed before the enhancement is taken.
Early births can happen, so be aware that there is the potential, as there always is with changes such as these, for the first cases to arise from February or March if the baby arrives early.

Employer NIC and the under 21s
In recent years there has been a desire from government, whatever political persuasion, for businesses to grow and this latest new initiative aims to encourage that growth by removing the cost of employer NICs on earnings up to £815 per week where an employee is under the age of 21.
From the 6 April 2015 the rate of employer Class 1 secondary NICs for employees under the age of 21 will be 0 per cent up to the new ‘Upper Secondary Threshold’ (UST). Secondary NICs will however continue to be payable on all earnings above this threshold. There will be no change to the basic rules and calculations of National Insurance.
NIC for employees who are aged 16 or over and under the age of 21 will be administered by using any one of seven new NI category letters and this new initiative provides a timely prompt to ensure that employers hold the correct date of birth for employees.
Three new subjects have been covered, all of which may or may not impact directly on payroll processes in the coming year, but all of which need to be familiarised with if you are responsible for administering the payroll in your educational establishment. If you haven’t already done so, take the opportunity now to ensure that you have established procedures that enable you to remain up to date with changes, because, as we established at the outset of this article – the one constant in payroll is change.

Further information