Pros and Cons of HMRC’s Basic PAYE Tools for Auto Enrolment

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Basic PAYE Tools (BPT) is a free and basic tool to help employers process their payroll. However, Basic PAYE Tools does not and will not help you with your automatic enrolment duties. It is not capable of assessing any employees to calculate their worker category and it will not enrol any employees into a pension scheme for you. If employers choose to keep using BPT then they will have to calculate and process their automatic enrolment (AE) duties manually. This will be time consuming and open to human error. If an employer does not correctly and fully comply with their AE duties, then they will be fined by the Pensions Regulator (TPR) for non-compliance. Therefore, it is crucially important that all calculations are 100% correct.

Employers who utilise Basic PAYE Tools are under no legal obligation to use payroll software but the Pensions Regulator does advise that software will help with employer compliance. BPT does not have a payslip facility. This is important when we look at auto enrolment as employers must show both employer and employee contributions on payslips.

TPR has confirmed that they will not be adding automatic enrolment as a function to HMRC Basic PAYE Tools (BPT). As we look ahead in 2017, a staggering 750,000 small and micro employers are due to reach their staging date. If employers continue to use Basic Tools then the Regulator warns;

‘Limited functionality may increase the risk of accidental non-compliance in specific worker scenarios not covered by a basic tool.’

Making the move from Basic PAYE Tools should not be that difficult. Many good payroll providers allow you to import the employee details through a CSV import. Good commercial payroll software such as BrightPay have developed a quick and easy import function where BPT users can import their data into the payroll software in about 30 seconds. Book a BrightPay demo today to see just how easy the entire process can be.

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