I agree - in a company that already has P11D's I don't see there being any 'benefit' to payrolling. Plus there's the catch-up from coding out the benefit from the prior year, to being payrolled in the current year.
I remain unconvinced about payrolling benefits - HMRC keeps extolling it's virtues but I'm yet to see who actually benefits except HMRC themselves. For medical benefits it's usually simple with one annual figure to divide by twelve, but others are more complicated and putting them in a monthly payroll doesn't save work for employers and employees still pay the tax - now just brought forward.
And employers still have to file the P11D(b) at the end of the year so class 1A gets paid. Surely it would be best to enable that to be included in the payroll too, and save what should be unnecessary work?
As for mandating, this has been a voluntary option for a few years now and still no sign of it being mandated, nor of a solution for those two benefits that can't be payrolled.
I see why HMRC wants it, and how it could help them (and therefore potentially the taxpayer), but I'm still not at all positive about it on employers' and employees' behalf, nor my own as someone who does payroll and P11D's for clients.
Your software might allow it but unfortunately that doesn't mean it shows the same at HMRC's end. HMRC just applies EA as an all or nothing from month 1, so unless they can change something you'll have a disparity between the two sets of figures.
My point exactly. If HMRC want them to pay tax/NI as an employee, just make them be an employee, rather than create this over-complicated faff. Can't someone refer them to their Office of Tax Simplification?
Employees DO pay tax on holiday pay, and sick pay, and contractors get the same tax relief as employees on pension contributions, albeit possibly in a different way. Contractors usually get paid more because there are less associated costs - employer's NI, pension, holiday pay etc.
However, these two groups are not the same - contractors take on greater risk by running their own company, or being self-employed, need to complete more admin and therefore can claim expenses employees cannot, thus paying less tax.
I don't see why we should see a need to equalise groups who are clearly different.
Unregulated accountants will simply submit everything as though they are the client, therefore using the client's logins (probably setting up those login details themselves so client might not even have access) and unless HMRC/CH does some digging to work out where the tax returns etc. have been submitted from, how will anyone stop this?
Avoids AML, agent accounts for MTD, membership fees etc. and the dodgy ones will continue to rip off unsuspecting clients while the honest ones will charge smaller fees which keeps the clients away from the big firms who charge a lot more for not necessarily any better work.
It's a tricky situation so good luck to them trying to sort it all out!
The problem with that is that any Government scrapping the state pension will be ripped to shreds, no matter how well they do it, so that's just not under consideration. They have to do something as the state pension is not enough any more, but imposing enrolment on everyone would be no different to increasing NI rates, which is another political no-no.
The stepped contributions idea is necessary as no lower-paid employee would afford 5% taken off them in one go, they'd all opt out, which spoils the point of AE. Even 8% overall is not going to get those employees much of a pension when they retire, and I worry that I'll fall into that bracket Steve Webb mentioned who won't be able to afford to retire as the state pension gets squeezed and retirement ages go up.
I'm surprised that Ken has nobody with employees staying in an AE scheme - when you say 'opt in', do you mean every employee that was AE'd has opted out? That's far from my experience in a payroll bureau.
So, to go beyond the question of who keeps what data etc:
do I need to encrypt every email to clients to ensure they are secure?
if so, is this something that goes on in the background if we have the right software, or do my clients need to have a password to open each of my emails?
taking this to a more extreme level, is a letter addressed to a person secure or can it be intercepted? Should we apply a ww2-like cipher for clients to decode?
or as with others, do we just carry on as normal and hope for the best??
My answers
I agree - in a company that already has P11D's I don't see there being any 'benefit' to payrolling. Plus there's the catch-up from coding out the benefit from the prior year, to being payrolled in the current year.
I remain unconvinced about payrolling benefits - HMRC keeps extolling it's virtues but I'm yet to see who actually benefits except HMRC themselves. For medical benefits it's usually simple with one annual figure to divide by twelve, but others are more complicated and putting them in a monthly payroll doesn't save work for employers and employees still pay the tax - now just brought forward.
And employers still have to file the P11D(b) at the end of the year so class 1A gets paid. Surely it would be best to enable that to be included in the payroll too, and save what should be unnecessary work?
As for mandating, this has been a voluntary option for a few years now and still no sign of it being mandated, nor of a solution for those two benefits that can't be payrolled.
I see why HMRC wants it, and how it could help them (and therefore potentially the taxpayer), but I'm still not at all positive about it on employers' and employees' behalf, nor my own as someone who does payroll and P11D's for clients.
Your software might allow it but unfortunately that doesn't mean it shows the same at HMRC's end. HMRC just applies EA as an all or nothing from month 1, so unless they can change something you'll have a disparity between the two sets of figures.
What if the company has under-claimed?
My point exactly. If HMRC want them to pay tax/NI as an employee, just make them be an employee, rather than create this over-complicated faff. Can't someone refer them to their Office of Tax Simplification?
Employees DO pay tax on holiday pay, and sick pay, and contractors get the same tax relief as employees on pension contributions, albeit possibly in a different way. Contractors usually get paid more because there are less associated costs - employer's NI, pension, holiday pay etc.
However, these two groups are not the same - contractors take on greater risk by running their own company, or being self-employed, need to complete more admin and therefore can claim expenses employees cannot, thus paying less tax.
I don't see why we should see a need to equalise groups who are clearly different.
Unregulated accountants will simply submit everything as though they are the client, therefore using the client's logins (probably setting up those login details themselves so client might not even have access) and unless HMRC/CH does some digging to work out where the tax returns etc. have been submitted from, how will anyone stop this?
Avoids AML, agent accounts for MTD, membership fees etc. and the dodgy ones will continue to rip off unsuspecting clients while the honest ones will charge smaller fees which keeps the clients away from the big firms who charge a lot more for not necessarily any better work.
It's a tricky situation so good luck to them trying to sort it all out!
The problem with that is that any Government scrapping the state pension will be ripped to shreds, no matter how well they do it, so that's just not under consideration. They have to do something as the state pension is not enough any more, but imposing enrolment on everyone would be no different to increasing NI rates, which is another political no-no.
The stepped contributions idea is necessary as no lower-paid employee would afford 5% taken off them in one go, they'd all opt out, which spoils the point of AE. Even 8% overall is not going to get those employees much of a pension when they retire, and I worry that I'll fall into that bracket Steve Webb mentioned who won't be able to afford to retire as the state pension gets squeezed and retirement ages go up.
I'm surprised that Ken has nobody with employees staying in an AE scheme - when you say 'opt in', do you mean every employee that was AE'd has opted out? That's far from my experience in a payroll bureau.
So, to go beyond the question of who keeps what data etc:
do I need to encrypt every email to clients to ensure they are secure?
if so, is this something that goes on in the background if we have the right software, or do my clients need to have a password to open each of my emails?
taking this to a more extreme level, is a letter addressed to a person secure or can it be intercepted? Should we apply a ww2-like cipher for clients to decode?
or as with others, do we just carry on as normal and hope for the best??
I agree, otherwise why would the employer arrange a lease for its employee?