Kate Upcraft summarises what we should look out for in the key announcements for payroll and pensions which are timetabled so far in 2018.
There are lots to look forward to for payroll professionals in 2018. For a start there is the exciting prospect of five different income tax rates for Scottish taxpayers from 6 April.
We won’t know definitively until mid-February, when the Scottish Budget needs to be ratified, but you can rest assured that software developers are preparing as much as they can for the changes. There is no impact on NIC which isn’t devolved to the Scottish government.
We are still not sure how HMRC plan to handle tax relief on pension contributions for those in Relief at Source pension schemes. Payroll systems typically give 20% relief by default, leading to the 19% Scottish cohort being over-relieved and a need for a 1% extra claim for the 21% cohort if the new tax rates go ahead.
The minimum workplace pension contributions and NMW rates also change in the first week of April, hard on the heels of the long Bank Holiday weekend from 30 March - 2 April.
The IFS pointed out this week that these cost pressures for businesses, a near 17% rise in just three years, are leading to job losses.
Before that there will be the last staging dates for auto-enrolment and a policy paper is expected on defined benefit pension schemes.
Larger employers and public sector bodies also must be mindful of the deadline for reporting the gender pay gap within their organisation. There haven’t been that many employers who have reported these figures yet, but those who have done so have come under pressure to correct their submissions as the statistics look so improbable.
|Date/Month||What to look out for||What this means||Impact|
|1 February||Last staging date for auto-enrolment||Applies to PAYE schemes set up by 30.9.17||All new PAYE schemes since 1.10.17 have duties start date as soon as first worker engaged on FPS|
|14 February||Deadline for Scottish Budget to be passed||Scottish tax rates and bands confirmed||Five possible tax rates:19%/20%/21%/41%/46%|
|February||White paper on Defined Benefit (DB) pension schemes||Moves to allow consolidation and new powers for the Pensions Regulator?||More upheaval in remaining DB schemes?|
|February||Pimlico Plumbers case to be heard at Supreme Court||More clarity on who is a ‘worker’||Expect more TPR activity on workers who should be auto-enrolled.|
|13 March||Spring Statement||Not the Budget – that was on 22 Nov 2017||Chancellor responds to OBR forecasts. Anti-avoidance tax measures could be slipped in.|
|30 March||Gender pay gap reporting||Deadline for public sector to report||Data for 31.3.17 ‘snapshot’ must be uploaded by this date.|
|4 April||Gender pay gap reporting||Deadline for private sector companies with 250 employees or more||Data for 5.4.17 ‘snapshot’ must be uploaded by this date.|
|1 April||NMW increases||All rates increase||Effective for first pay period that begins on, or after 1 April 2018.Check effect on salary sacrifices especially for pensions.|
|6 April||Workplace pension rates increase||Auto enrolment minimum contributions increase to 2% for employer, and 5% in total||Ideally implement from 1.4.18 if the scheme rules allow, which avoids pro-rating old and new contributions.|
|6 April||Lifetime Allowance changes||Increases to £1.03m||New round of lifetime allowance protection elections.|
|6 April||New RTI data field||Additional field on FPS for student loan plan number||Inserted every time deduction is made, new generic warning msg will indicate if wrong plan in use.|
|6 April||Payrolling of cars||If cars are payrolled, new RTI fields are mandatory||Additional fields must be completed as per the P11D if cars are payrolled.|
|6 April||Five Scottish tax rates and bands in force?||Payroll software changes, communications policy required||Not clear yet what will happen to relief at source tax relief with 19% and 21% rates.New specialist codes SD0, SD1 and SD2 = 21%, 41% and 46% no allowances, SBR remains in use.|
|6 April||Student loan threshold changes||Both Plan 1 and 2 change||Increase of threshold to £25K for plan 2 will see significant annual reduction in payments.Variable interest rate earnings threshold increases to £45K.|
|6 April||Childcare vouchers closed to new entrants||Existing members by 6.4.18 can remain until leave job or scheme||Employees can choose 30-hour free childcare and receive vouchers too.Employees who opt for tax-free childcare have three months to give up vouchers.|
|6 April||Changes to NIC on pay in lieu of notice||‘post-employment notice pay’ always to be subject to tax and NI whether contractual or not||Increased cost of 13.8% employer’s NI plus potentially 0.5% apprenticeship levy|
|25 May||GDPR and new UK DP Act in force||Significant changes to data handling and third party contracts||Expect upsurge in Data Subject Access Requests|
|6 July||New style P11D to reflect OpRA||New calculation of ‘relevant amount’ for some benefits in kind||Particularly impacts cars provided by OpRA with no transitional protection|
About Kate Upcraft
Kate is a technical writer, editor and lecturer on all aspects of employing people - primarily payroll and HR matters.