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Automatic Enrolment exemption

Automatic Enrolment exemption

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This old chestnut again.  The Pension Regulator is no longer accepting written exemption aplications.  It instructs you to go to https://automation.thepensionsregulator.gov.uk/notanemployer and complete the form instead.  Most of my clients and one director and one co secretary.  The co secretary in most cases is the wife on  c. £8k .  I believe the only possible box that can be ticked is the first, "There is only one director and there are no other staff working for the company."  as there is no employment contract and I believe we could argue there is not an implied one either.  I just don't want this to come back and bite us later.  Is this the route most others are taking in cases like this?

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Euan's picture
By Euan MacLennan
16th Jul 2015 11:09

Make the wife a director

... particularly if she is a shareholder as will often be the case.

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By WillowTree
16th Jul 2015 12:05

Do you think this is the only option Euan?  I can see a lot of our clients wouldn't necessarily be keen on this.

 

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By Kazmc
16th Jul 2015 12:55

TPR

We had a representative from TPR come and do a Q&A session a few weeks ago and he said that they would be issuing further guidance on this scenario within a few months. We have therefore put on hold for now exempting any companies with this set up (we do not have any staging in the immediate future)

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By LJCASE
16th Jul 2015 12:56

I didnt realise this...

... I've sent a few letters on clients behalf. I've received no acknowledgement so shall I reapply for all online for safety do you think?

 

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Euan's picture
By Euan MacLennan
16th Jul 2015 13:07

No - I don't

WillowTree wrote:

Do you think this is the only option Euan?

If the wife is paid £8K - the maximum to avoid NIC - she will be a 'Non-eligible jobholder' in terms of the incomprehensible AE jargon, which means that she does not have to be auto-enrolled, but has the right to opt in.  The husband can ask (but - heaven forfend - not tell, let alone threaten!) his wife if she wants to opt in and if she says no, there is no need to set up a pension scheme.  The only requirement is then simply to tell TPR within 5 months of the staging date that the company has complied with the AE requirements, which is no more onerous than telling TPR that the company is not an employer.

There was discussion on this forum some months ago about whether a company secretary was an office holder and hence, not a worker, under the Pensions Act which introduced these workplace pensions.  As the TPR website has not included this possibility, I would be hesitant about declaring that the company is not an employer on the grounds that a paid wife is not "staff".

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By WillowTree
16th Jul 2015 13:31

I think then, reviewing what you have replied Euan, and what Kazmac mentioned, I should also put a halt to any more exemption claims until TPR issues more guidance.  They really don't make it simple, do they.

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By paulwood
16th Jul 2015 13:31

Sorry if you've seen this already but

I came across this link in another thread on AW but thought it worth posting again rather than searching for the thread.

http://www.thepensionsregulator.gov.uk/employers/What-if-I-dont-have-any...

This gives the criteria as it stands at the moment. The following page I also found useful

http://www.thepensionsregulator.gov.uk/automatic-enrolment-enquiries.asp...

What concerns me is that we have to go hunting for this information. Who did the Regulator tell that you could now complete an online form to exclude Director payrolls from AE and that writing to them was no longer the right thing to do?

I'm signed up to receive news updates but don't actually receive anything.

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By GrahamASA
16th Jul 2015 20:06

Related parties exemption coming up?

I understand exactly what you're saying and if the wife is an employee (with or without a contract) she isn't regarded as part of the "there is only 1 director and no other staff" exemption.

Being an employee does not require a formal employment arrangement, i.e. a contract. If she works for the company as an employee as one would expect in any reasonable case and is on the payroll she is an employee. Company Secretaries are not regarded directors (well not as far as I can see in the TPR guidance or technical material) so the exemption doesn't extend to her.

Depending on the salary level and age of course she might not qualify for AE anyway... but that doesn't negate the obligation to the TPR.

Honestly, I don't think the TPR thought this through very well and I think it's slowly (very slowly!) dawning on them that they really ought to have either: (a) included related parties (i.e. spouse, partner, child, parent) etc. in the 1 director and no other staff exemption or (b) have extended the exemption to 1 director and a nominal company secretary, with the obvious anti-avoidance safeguards.

Whether they will extend the exemption or not is anybody's guess but in my opinion, related parties and company secretaries should have been there in the first place...

 

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By WillowTree
17th Jul 2015 08:41

Paul Wood, this is the email we received last week from TPR in response to our latest letter claiming exemption:

"Thank you for your email dated the 23 June 2015
For individuals who are no longer an employer for the purposes of automatic enrolment, i.e. ceased trading or employers who are ‘director only’ companies, there is now an automated deactivation form which will require certain pieces of information to be provided. Upon submission of the required information, our records will be automatically updated and a confirmation email will be issued.

With this in mind, please can we ask that you provide us the details of exempt employers via our website – the form can be found here; https://automation.thepensionsregulator.gov.uk/notanemployer.

Please note that exemptions via email and letter notifications will no longer be processed.

If you have any further questions, please contact us."

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By paulwood
21st Jul 2015 12:44

Thanks Willowtree - to be honest I was hoping this would become an online submission rather than having to write a letter to the Regulator each time. Did they still accept the letter or expect you to complete the online submission instead?

It is still frustrating (and equally concerning) that they don't seem very effective at communicating these sort of changes with those that most need to know about these things.

GrahamASA - I think you are right, if you look like an employee that is good enough for the Regulator and if you are not eligible (i.e. Because the salary is always going to be below the threshold) the Employer only has to put a pension scheme in place if the non-eligible worker requests to join one.

In that case a declaration of compliance is required instead of the sending a 'not an employer' submission above.

Something else that bothers me is the closure of PAYE schemes and how joined up the data is between TPR and HMRC (which should be seamless and in real time obviously). If we close a scheme now do we also have to send a 'not an employer' submission to TPR?

If anyone from HMRC or TPR is reading I would appreciate their view on this.

 

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