Neil Cameron, who leads the C+T Payroll Team, looks at the three main changes to running a payroll for the year ahead.
1.The Apprenticeship Levy
Affecting: all employers with a pay bill of more than £250,000 per month The Apprenticeship Levy is a new cost for employers from April 2017. This charge is based on employee earnings subject to Class 1 Secondary National Insurance Contributions (NICs), which is Employer’s National Insurance. The Levy applies to all UK employers in the private and public sectors, though an allowance means that the Levy will only be payable if you have a monthly wage bill above £250,000 (£3 million per year).
The Levy is charged at a rate of 0.5% of the pay bill subject to Employer’s National Insurance. There is a monthly allowance of £1,250, which covers the charge for pay bills up to £250,000 per month. A pay bill above £250,000 will incur a levy charge at 0.5%. Those organisations with fluctuating seasonal monthly pay bills will also be affected, but can rollover the monthly allowance if it isn’t used to its full extent in some months of the year. Levy payments will be collected monthly by HMRC through PAYE payable alongside tax and National Insurance.
2. Gender pay gap reporting
Affecting: all employers with 250 or more employees From 6 April 2017 the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 for private and voluntary-sector employers came into force. They require all employers with 250 or more employees to publish prescribed information about their gender pay gap results. These must be published on the organisation’s public-facing website and reported to the government online, using the gender pay gap reporting service.
The following information should be published:
- Gender pay gap (mean and median averages)
- Gender bonus gap (mean and median averages
- Proportion of men and women receiving bonuses
- Proportion of men and women when divided into four groups ordered from the lowest to highest pay
- Also, an employer must provide a high-level narrative to explain the findings and flag potential issues.
You are required to publish and report your organisation’s figures if you are a relevant employer for gender pay gap reporting purposes. The Equality and Human Rights Commission can enforce any failure to comply with the regulations. In summary, employers need to review all benefit arrangements to assess whether they fall within the new rules and which employees could be affected.
3. Salary sacrifice
From 6 April 2017, HMRC introduced measures to limit the Tax and National Insurance Contribution (NIC) advantages where Benefits in Kind (BiKs) are offered under salary sacrifice arrangements, or where an employee can choose between cash allowances and BiKs. There are no changes to tax and NI advantages of salary sacrifice arrangements for:
- pension saving into a registered pension scheme
- employer provided pensions advice
- employer-supported childcare (including childcare vouchers)
- cycle to work schemes
- ultra-low Emission Cars (ULEVs, cars emitting CO2/KM 75g or less).
Employees and employers in existing contracts under salary sacrifice arrangements are protected for the length of that contract, subject to certain backstop dates. The new measures took effect for all new contracts for BiKs involving salary sacrifice arrangements entered into on or after 6 April 2017. Employees already in a contract for BiKs at that date will become subject to the new rules at the earlier of:
- an end, change, modification or renewal of the contract
- 6 April 2018, except for cars, accommodation and school fees when the last date is 6 April 2021.
In summary, employers need to review all benefit arrangements to assess whether they fall within the new rules and which employees could be affected.