12th January 2016
Payroll is set to experience a plethora of changes over the course of 2016. In the last instalment of this Top Ten guide, Neil Lagden, Head of IRIS FMP Payroll Services offers his thoughts on the final five issues that Payroll departments may need to be aware of in the coming year.
Changes to P11Ds
Under the changes to the PAYE regulations, payrolling – namely collecting tax on benefits in real time – comes into force from tax year 2016/2017. So for P11Ds due for completion by July 2017, benefits such as medical, cars and vans will be subject to tax through the payroll.
While not all benefits can be payrolled, including accommodation, credit tokens and vouchers, there are benefits to this approach for payroll. For example, an employer registered with HMRC to payroll benefits does not have to complete the annual P11D for employees or send one to HMRC – the benefit is removed from the tax code and put through the payroll as a notional payment.
The most common benefits can be payrolled which should lead to a reduction in administration.
Shared Parental Leave for Grandparents
Following the introduction of Shared Parental Leave last year, the Chancellor has unveiled a plan for shared parental leave and pay to be extended to one nominated working grandparent. – a move in direct response to recent research revealing that shows two million grandparents have given up a job, reduced their hours or taken time off work to look after their grandchildren.
The plan will involve extending the current system of shared parental leave to cover grandparents, as well as the child’s mother and father. The total of 50 weeks of leave will not be extended, but the plan is aimed at giving greater flexibility to families in the first year of a child’s life.
Parents will be able to share up to 50 weeks of leave and up to 37 weeks of parental leave pay, currently £139.58 a week or 90% of average weekly earnings, whichever is lower, with a nominated working grandparent.
HMRC: Changes to operating procedures
HMRC is facing a massive shake-up, from the digitisation of the tax system to the closure of 137 offices that will be replaced with thirteen regional centres.
The impact could be significant. When the recent report commissioned by the government stated that HMRC’s customer service is so bad it poses a ‘genuine threat to tax collection’, it is clear that already over-burdened customer service desks may struggle under the weight of having to deal with more enquiries.
For Payroll Departments having to pick up the slack, getting answers to queries regarding payslips and other tax issues will become a very real problem.
Given the less than glorious history associated with such major government IT and restructuring projects, payroll teams would be well advised to get the house in order soon.
Possible Tax Simplification
The Office of Tax Simplification (OTS) is continuing its push to address the complication created by running National Insurance and income tax separately – especially for small companies.
With a growing belief that simplification is overdue and a potential to reduce the administrative burden, the OTS has embarked upon a study into closer alignment of income tax and National Insurance contributions. The outcome of this review, including the changes that could be introduced to bring the two systems closer together, will no doubt up for discussion during 2016.
Part-Time Season Tickets
New flexible season tickets will soon be available on certain lines across the country, including C2C between London and Essex, and the Great Northern Route on Thameslink. This means that commuters will be able to buy part time season tickets, if they wish.
For companies that offer season ticket loans, this raises questions for the payroll team about how these schemes will be administered to include flexible or part time season tickets and ensure they are correctly processed.
Strategic Investment in HR
With employment levels at an all-time high and organisations struggling to recruit key skills, 2016 is set to be a year of outsourcing. HR Managers will look to minimise the administrative overhead and concentrate on key added value activities including performance management, training and skills development, employee wellbeing and aligning the workforce with the business strategy.
Outsourcing routine HR processes, including payroll, will enable over-stretched HR teams to concentrate on building the strong, committed and well skilled workforce required to support the expected economic growth.