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I’m sick of this!

9th Dec 2013
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The abolition of PTS

PTS, or to give it its full name the Percentage Threshold Scheme, entitles qualifying employers to reclaim some of the SSP paid to employees.

When an employer pays out SSP this is the formula that determines if any of it can be reclaimed:

1.     Add together the SSP that has been paid to employees in the tax month.

2.     Add up the total NI payable (employer and employee) for the same tax month and work out 13% of this.

3.     If the amount in 1 is more than the amount in 2, the difference can be reclaimed.

We get a lot of questions about reclaiming SSP and it’s quite surprising how many people think you can reclaim all SPP paid regardless. 

Well now no one will have to worry about it anymore because from 6 April 2014 it’s being abolished!  Yet despite its abolition, I cannot find a single mention of it on HMRC’s website. 

If you have small payroll clients they need to know about this if they don’t already.  And what’s taking its place?  Yes, it’s the Health and Work Service

Here’s the official line:

The Health and Work Service (HWS) will make independent expert health and work advice more widely available to employers, employees, and General Practitioners (GPs).

The service will be funded through the abolition of the Statutory Sick Pay Percentage Threshold Scheme (PTS). This will ensure public funds are used in a more effective and targeted way to help employers reduce sickness absence and costs.

This is the link to the 73 page review document about this new service:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181072/health-at-work-gov-response.pdf

Is anyone out there aware of the abolition of PTS? 

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Replies (7)

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Accountancy, taxation
By ACCOUNTWRYTELTD
09th Dec 2013 13:31

The abolition of PTS


No we were not aware of this, but are now!  What a blow for SME's.

Realistically can the government really consider that employers having employees off sick (especially key members of staff) be seen to be encouraging it when having that key member of staff at work is earning the employer considerably more than the SSP recoverable?  Maybe these decisions should be outsourced to businesses who fully understand what a business does in order to maximise value for money.

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By mikegabb
09th Dec 2013 14:00

PTS abolition

I stumbled across this by chance a couple of months ago somewhere on the web and have maintained a stunned silence ever since!

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By tom2another
09th Dec 2013 14:01

Another State Liability Con

Before 1983, sick pay was paid by the state, then, as an administrative simplyfication it was paid on the States behalf by the the employer & recouped out of the NI contributions.

Then, the reclaim was reduced in 1991, then further reduced in 1994/95.

And now the goverment has suceeded in pushing the whole lot on to the poor bloody employer.

See:-

http://www.hmrc.gov.uk/manuals/spmmanual/spm10905.htm

Notice no reduction in NI contributions, which were set up to pay for this.

Why there has been no riots on the street - Poll Tax Style - is beyond me.

 

Tom

 

 

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Replying to adam.arca:
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By mikegabb
10th Dec 2013 11:27

PTS abolition

tom2another wrote:

Why there has been no riots on the street - Poll Tax Style - is beyond me

Could be a ticking time bomb like the removal of the 10p tax band that was pretty much ignored until it hit people's pay packets. Trouble is this will hit the business first, the workers will only notice once the business closes as a result!

 

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By djames
09th Dec 2013 14:53

When were they planning to tell employers this?

I'm absolutely staggered at this.  Thanks for the link, Tom - a bit of mind numbing reading for the most part, but there, hidden half way through, is the key bit for small employers.   

Although not strictly a payroll bureau, we administer the payroll for around 40 small client businesses, all but 2 of which have under 5 employees and qualify for PTS.   In any one year, between a third and half of these may have employees taking at least 1 week off sick, and the costs of the sick pay are met (in the most part in full) by PTS.    Many of these businesses are in the retail trade and are already on their knees (with high rates bills, increasing gas/elec/water costs, increasing insurance costs, increasing legislation burdens).   In several cases, clients have had employees off sick for 6 months or more.   It's all very well for government to tell small businesses that sick leave needs to be managed more efficiently, but how the hell does a one owner business, with his key member of staff off on long term sick (which he now has to pay himself), hope to do that while trying to do the job of 2 people.  He sure as hell can't replace that person for the same money as he now has £90pw less to work with.  And he sure as hell can't get rid of that member of staff as he will be taken to tribunal.

I can't help but feel that, once I inform these small employers that they will now have to fully meet the cost of sick pay (which is out of their control), it will be the last straw for many of them.

I have 3 small employers who have already been taken to tribunal and had to settle 'out of court' for not following 'correct procedures' in laying staff off, sacking staff etc (in one case, an employee had been caught stealing and had admitted the theft but the employer had to pay him £1000 out of court as one step in the dismissal procedure had been missed).  Note that we don't offer employment legislation services but do point them towards the services of one.  However, most of our clients cannot afford their costs.

I have total sympathy with those small business clients who are telling me that it is not worth employing staff anymore and are either closing up shop or who are battling to cope themselves, working up to 80 hours per week.

As I was not aware of this (and, on the whole, I am obviously looking out for things like this), I think many small employers will be caught out by this change next year.

Perhaps this is being kept quiet because, as Tom says, there could be poll tax type riots on the street!

 

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By jillpalmer
10th Dec 2013 12:56

NIC Employment Allowance

I do wonder if it could be because of the £2,000 ERS NIC allowance from April 2014. This rebate will be processed through the payroll and RTI.Some employers will then not have an N.I. liability(where there was one before) so the PTS scheme would result in all the SSP reclaimable.

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By mikegabb
10th Dec 2013 16:56

NIC Employment Allowance

Something else I wasn't aware of! Must do more CPD!! So instead of not paying over much NI because SSP has been paid out, employers won't be paying over much NI because of this allowance, freeing up funds to bear the payment of SSP? Sounds OK but seems like there might be some big winners and some big losers.

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