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Accountants take ‘political payslip messaging’ to task

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The government’s request for software developers and employers to add a standard payslip message explaining April’s national insurance hike has received a mixed response from the payroll, tax and accounting professions.

8th Mar 2022
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Experts have also warned that employers choosing to ignore the message may find themselves bypassed if software firms decide to universally push it through by 'hard-coding' it into the payslip message field.

With the first payslips containing an increase in national insurance contributions due to land next month, the government has repeatedly asked employers to include messaging about the rise “to ensure taxpayers understand that their increased contribution is helping fund public services”.

According to HMRC’s latest Employer Bulletin, the message should read “1.25% uplift in NICs funds NHS, health & social care” - a statement which itself has attracted criticism for its accuracy around the use of the term ‘uplift’ in relation to the percentage point increase.

The request is not mandatory and employers will not face sanctions for leaving the message off payslips. HMRC has asked for the wording to appear on all employee payslips until 5 April 2023, when the new health and social care levy applies.

Supporters of the move point to a need to communicate the change rather than saddling payroll departments or finance teams with a raft of employee questions on the issue.

A CIPP spokesperson told AccountingWEB that they welcomed HMRC’s payslip message. “Communication will be key to help alleviate some of the pressure on payroll teams and preventing an influx of queries on the topic,” they commented. “So much we talk about in the world of payroll centres on effective communication, and this is one of those areas where communication is key.”

While messaging about a new tax or national insurance rise appearing directly on payslips is unprecedented, HMRC points to the increased transparency provided by similar initiatives, such as the introduction in 2014 of the Annual Tax Summary, which breaks down exactly how their tax is spent by the Exchequer.

Care and management of the tax system?

However, critics of the message have declared it a blunt instrument that falls outside of the usual remit for a non-ministerial department such as HMRC. 

The Revenue’s former Executive Chair and First Permanent Secretary Edward Troup took to Twitter to voice his (polite) disagreement with the request. “HMRC asking employers to push the political narrative for a tax rise,” he stated. “Are we sure this falls within HMRC’s legal powers for ‘care and management of the tax system?”

 

 

Nimesh Shah, CEO at accounting firm Blick Rothenberg went slightly further with his criticism: “This feels like government propaganda to justify the NIC increase at a time when there are huge pressures on working families

“The government has instructed HMRC to do this because they will be concerned this will be viewed as a direct tax increase,” continued Shah.”It’s an underhand tactic from HMRC to direct employers to do this – the fact is this is an increase to NIC which will impact both employers and workers, and employers have no legal obligation to do this.”

Dan Neidle, tax partner at law firm Clifford Chance, commented that asking employers to include political messaging in payslips to try to "sell" the NICs increase to employees was “unprecedented and improper”. Writing on LinkedIn, Neidle said the move appears designed to “bolster the popularity” of the increase. “That's politics,” he added, “and HMRC shouldn't be part of it.”

Responding to accusations that the request strays outside its remit, HMRC stated that the message is designed to provide entirely factual information to let employees know about the rise and nothing more.

“We strongly encourage employers to do this where they are able to, but it is not a mandatory requirement,” an HMRC spokesperson told AccountingWEB. “From 2023-24 the health and social care levy must be shown as a separate deduction from pay for all employees.”

Potential hard-coding issues for payroll vendors?

HMRC has contacted payroll software providers separately to ask that they include this messaging in their software.

This has raised concerns in the payroll community that it could be ‘hard coded’ into payslips, with the potential for confusion if the department, bureau or firm is running a pensions payroll for example where no NICs are payable.

Writing in February 2021 AccountingWEB Software Award-winning payroll vendor BrightPay said the message will be automatically added to the payslips of affected employees, but users will have the ability to remove the message if they wish, while payroll provider Moorepay has also confirmed they will add it.

Employers use payslips in a variety of ways to let employees know about employment-related matters, such as who to contact in the event of a query, raise specific departmental issues or simply to wish their staff a happy Christmas. Ian Holloway, payroll consultant for i-Realise, commented that if software developers mandate the message and employers accept it, employers will no longer be able to use the facility for employment-related issues as the HMRC note takes up 52 of the 54 characters in a standard payslip message field.

“I would advise employers to contact their software developers in the first instance to ascertain their plans for this message,” commented Holloway. “At the very least, it should be an option that an employer can choose.”

Hear more about the new health and social care levy in AccountingWEB’s Any Answers Live webinar: Prepare for the start of the new tax year. The interactive session starts at 9am on Monday 14 March 2022, with the chance to watch on demand shortly after the webinar has finished.

Replies (101)

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Replying to dwgw:
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By Rgab1947
10th Mar 2022 11:21

Nah he is angling for getting to the House of Lords.

Definately on this Gov's side.

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Replying to dwgw:
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By Rgab1947
10th Mar 2022 11:21

Nah he is angling for getting to the House of Lords.

Definately on this Gov's side.

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Replying to Rgab1947:
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By matthewleitch
10th Mar 2022 12:16

I have no chance of getting into the House of Lords, and no interest in doing so.

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By EddieReddy
09th Mar 2022 11:25

"Uplift", lol :D

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By Open all hours
09th Mar 2022 11:47

Seen elsewhere the suggestion : ‘This breaks the Conservative manifesto pledge from 2019’.

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Replying to Open all hours:
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By matthewleitch
09th Mar 2022 12:00

But would you rather they broke their rash promise because, under the circumstances, they have a better plan or hold to their original, inadequately thought through promise? At the time nobody foresaw the pandemic or its financial/economic consequences. Their main intention, I suspect, was to allay worries that Brexit would lead to rising taxation. They probably thought about that - a bit - but what actually happened next will not have crossed their minds, or the minds of politicians in any opposition party.

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Replying to matthewleitch:
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By Open all hours
09th Mar 2022 18:40

I would rather they stayed in their place as servants of the people. I would rather they were honest about this being a 10.4% increase. I would rather they got a grip on the waste in the NHS. Too many ‘retire’ early, get paid off and jump back in when the coast is clear. I would rather not have to choose between a Johnson and a Corbin. I would rather not think about the % HSCL will be in 10 years time.

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Replying to Open all hours:
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By matthewleitch
09th Mar 2022 20:22

The point about 10.4% or 1.25% is not dishonesty. It is 1.25% of the relevant income amount and that's the more usual way of talking about it.

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Replying to matthewleitch:
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By Open all hours
10th Mar 2022 05:31

In this instance an increase of 1.25 percentage points is an actual increase in real terms of 10.4%. I agree it is the more usual way of talking about it but that is only because the public have been misled in this same way for years.

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Replying to Open all hours:
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By matthewleitch
10th Mar 2022 09:15

It is not deceptive and never has been. If you told people a tax rate was going to increase by 10.4% they would assume that 10.4 would be added to the tax rate and go bananas.

Perhaps HMRC chose the word 'uplift' to try to avoid the ambiguity of 'increase', but only to see some people think the word is propaganda.

There are some serious problems with our taxation system and the way it is explained but this little message is not one of them.

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By unclejoe
09th Mar 2022 11:51

Here is the message I would put on payslips next tax year:
Dear employee. You will see that your NI contribution has gone up for this year. I am sure you don’t care whether your deductions are income tax, NI, or the new levy which comes in in April 2023; what you want to know is how much you lose from your pay packet. If you are on a salary of about £25K, the total tax take on each extra pound you earn is one third. But please don’t forget that we, as your employer, have to pay just over 15% NI in addition. It really does not make any difference if that tax is taken from your pay, or from us before we pay you – it represents 15% extra pay that we could pay you if we didn’t have to pay it to HMRC. Take that into account and your tax rate is 45%.
You may think it fair that your managers on £50k+ are paying double the income tax that you are, in our fair progressive system. But they pay significantly less NI so that for each extra pound they earn they only pay an additional 10% in total; factor in the employer contribution and about half their pay is tax.
As you struggle to decide whether you can afford to both keep your children warm and fed this winter, you may be comforted to know that the extra tax money is enabling the NHS to spend more than £7m on “inclusion and diversity” monitoring staff, some of whom are on £100k+ salaries.

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Replying to unclejoe:
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By matthewleitch
09th Mar 2022 12:01

That kind of message, in that style, would certainly and rightly be regarded as 'political'.

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Replying to matthewleitch:
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By Hugo Fair
09th Mar 2022 12:12

Yes, but you're missing the point ...

However unwise (albeit satisfying) as a message, it would be the opinion of the Employer - not an attempted diktat formulated in what used to be the Central Office of Information before it was disbanded and usurped by the Cabinet Office.

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Replying to Hugo Fair:
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By matthewleitch
09th Mar 2022 12:32

It is a 'request' not an 'attempted diktat'.

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Replying to matthewleitch:
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By Hugo Fair
09th Mar 2022 12:57

I said 'attempted' because it's not working ... but 'request' is a very polite way of describing the heavy-handed missives passing my desk. Here's just one:

"Dear Developer,

You will recall that on 16 November 2021 we emailed you to request that payroll software developers, where possible, put a message on all payslip templates to explain what the upcoming increase in National Insurance contributions (NICs) will be used for. The message applies to all payslips for the Tax year 2022-23 and should read “1.25% uplift in NICs funds NHS, health & social care”.
As we approach April 2022, we want to take the opportunity to remind you to, where possible, include this message in payslip templates.

If you are unable to update your payslip templates directly, but your software allows employers to add free format messages to payslips, we would be grateful if you could ensure the following guidance is included in your support models:

"On 7 September 2021 the government announced a new 1.25% Health and Social Care Levy to fund investment in the NHS, health and social care. The Levy will be effectively introduced from April 2022 when the rate of National Insurance Contributions (NICs) for working age employees, self-employed people and employers will increase by 1.25% and be added to the existing NHS allocation. From April 2023, the Levy will be formally separated from NICs and also apply to the earnings of individuals working above State Pension age and NICs rates will return to 2021-22 levels.

To ensure taxpayers understand that their increased NICs is helping fund public services, we are requesting that employers and payroll agents, where possible, put a message on payslips explaining what these funds will be used for. The message applies to all payslips for the Tax year 2022-23 and should read “1.25% uplift in NICs funds NHS, health & social care”.

Where appropriate, please also include guidance to your users on how to include a free format payslip message in your software.

Please note that our HMRC Employer Bulletin published on 8 December 2021 referenced the request for employers to include this message in their employees’ payslips from April 2022 and advised that payroll software developers have been informed. We will also be reiterating this message to employers in our next HMRC Employer Bulletin published on 8 February 2022. To reduce possible contact, if you have not already done so - you may want to let your users know your plans at the earliest opportunity."

So, it's a 'request' that starts by telling you (the developer) the wording you should incorporate in your Payroll software ... and then moves on to veiled threats by telling you that if you can't or won't enforce this in your software then you should send a lengthy message to your clients that sets out what is admitted to be the government's political stance (with the inference that you support this).
And then the 2nd veiled threat where you are reminded that HMRC have informed your clients (via the Employer Bulletin) that you've been 'requested' to do all this ... with the inference that you are failing if you don't comply (and your clients will look at you with jaundiced eyes in future).

Strictly speaking you're right it's not a diktat, but so am I ... it is an attempted diktat where they think they're being clever using their beloved 'nudge' method (but which appears to be back-firing as software developers write to their appreciative clients to explain what has been requested and how to avoid it).

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Replying to Hugo Fair:
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By matthewleitch
09th Mar 2022 13:08

It's not a diktat. It's a request. They are being quite open about their request, telling employers too, and telling you that they are telling employers. Everyone knows the situation and that these are requests only, with suggested wording.

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Replying to unclejoe:
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By Paul Crowley
09th Mar 2022 21:39

Brilliant
I tell clients that slip into higher rate tax that the extra 10% extra they pay on the bit over £50,000 is trivial compared with a full time worker on minimum wage

It does not always go down too well
They look for sympathy that is not forthcoming

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By tedbuck
09th Mar 2022 12:04

It is a disgraceful way of trying to justify a tax rise. If they feel it needs this sort of justification they shouldn't have done it in the first place.
The NHS is about the last thing worthy of support at the top levels. Front line workers, excluding GPs, yes but the management should be starved of the money they waste so gratuitously. My experience of hospital appointments, shared, I would add by the consultant, is that they are so incompetent that you wouldn't believe it possible.
Basically the Civil Service generally is not efficient and doesn't understand the outside world (Look at the PFI fiasco under Blair) so cannot deal sensibly with the outside world so get taken to the cleaners on a regular basis. (PPE equipment springs to mind.)( Or Nightingale hospitals without thought about the staff needed to run them - don't know how much that cost but I bet it was a few quid on my tax bill. I'm not saying the idea was wrong but it wasn't thought through to the staffing difficulties so it was just pointless.)
Instead of sorting out the problem, governments just throw our money at them and wring their hands and introduce a new tax to cover their inefficiencies.
I'm getting a bit fed up over it -

Grumpy Old Man.

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By matthewleitch
09th Mar 2022 12:37

A look at the comments on this page suggests that tax practitioners may have a very negative view of taxes and the HMRC. Perhaps this is a consequence of frequently being adversaries to HMRC and acting for clients so often to avoid paying more tax than absolutely necessary. Perhaps also it is a consequence of the daily struggle with the complexities of tax rules and HMRC's interpretations and systems.

Whatever the reason, it is important to remember occasionally that taxation is an essential element of an effective society. We need taxation. We just don't need too much of it and it doesn't really have to be as complicated as it is.

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Replying to matthewleitch:
Tornado
By Tornado
09th Mar 2022 13:01

"We need taxation. We just don't need too much of it and it doesn't really have to be as complicated as it is."

Possibly the only words you have written in this thread that most can agree with.

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Replying to Tornado:
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By matthewleitch
09th Mar 2022 13:49

Thanks, but all my comments have been reasonable.

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Replying to matthewleitch:
Tornado
By Tornado
09th Mar 2022 14:24

matthewleitch wrote:

Thanks, but all my comments have been reasonable.

They may seem reasonable to you, but you need to understand that other people will and do think differently.

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Replying to Tornado:
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By matthewleitch
09th Mar 2022 14:36

I mean they were reasonable, objectively. I try to do more than give opinions.

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Replying to matthewleitch:
Tornado
By Tornado
09th Mar 2022 15:01

matthewleitch wrote:

I mean they were reasonable, objectively. I try to do more than give opinions.

This implies that you were trying to take on the role of speaking on behalf of HMRC but in the end you were just taking a view that you think is reasonable in an objective way. The fact is that only HMRC know (as a body) what they are thinking and we can only guess at that.

I am all for trying to stand in other peoples shoes to try and understand their point of view, but that does not make them right even if I can see their point of view, or what I think is their point of view.

Ultimately, stated opinions matter more than reasonable, objective views by individuals. Without opinions to discuss and compromises to reach we will make no meaningful progress with anything.

Your only need to give us your opinions.

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Replying to Tornado:
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By matthewleitch
09th Mar 2022 15:28

I wasn't speaking for HMRC, never said I was, and nothing I said implied I was.

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By kestrepo
09th Mar 2022 14:49

The response to an employees enquiry about why they are earning less money could easily be responded to by confirming that it is the Governments fault that taxes have risen - they have even confirmed this as so on the payslip! The actual sentence itself doesn't seem thought out and barely makes sense as a stand alone statement - surely they could have come up with a better narrative. Even so I intend to just print the phase exactly as asked. Any questions from employees will be referred by me back to the HMRC PAYE hotline - that should give em' something to do!

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By ireallyshouldknowthisbut
09th Mar 2022 15:15

So there it is, votes from the peanut gallery:

Aweb for: matthewleitch
Aweb Against: everyone else

HMRC do seem to be pushing this one rather hard. Desperate stuff to drag businesses into being political mouthpieces for government.

Bought to you by the same government that is weeks away from criminalising protest.

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Replying to ireallyshouldknowthisbut:
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By matthewleitch
09th Mar 2022 15:32

Being in a minority within a very small group is not important and no indication of what is true.

Also, it is not true to say that protest will be criminalised. It is only disruptive protest that will be banned, and even then with caveats. Disruptive protests are a bad idea in the UK and typically harm the protesters' cause. Extinction Rebellion's protests affecting people trying to move around are a good example of this. It would be much better for the protesters to focus on more intelligent, more effective forms of protest/demonstration/influence.

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Replying to matthewleitch:
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By justsotax
09th Mar 2022 16:34

'disruptive protests'.....I think you will find that 'disruptive' will be a matter of opinion, most likely decided upon by this government......

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Replying to justsotax:
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By matthewleitch
09th Mar 2022 16:49

No, disruptive should be fairly straightforward in most practical cases. Blocking roads, blocking access to buildings, setting fires, looting, intimidating parents and children at school gates with loud shouting and fist waving, very loud and persistent noise - that sort of thing. In contrast, delivering petitions, holding indoor meetings, publishing reports, writing thousands of letters and emails, having thousands of small meetings, posting videos, and so on will be just fine, even if they are critical of the current political leaders.

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Replying to matthewleitch:
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By dwgw
09th Mar 2022 17:00

Thus spoke the self-appointed voice of reason.

Ah, if only everybody could be sensible and agree with me .....

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Replying to dwgw:
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By matthewleitch
09th Mar 2022 17:16

I try to be reasonable but I'm not the only one. This has been going on for centuries and I'm just one of millions.

When people make a point they are not always giving an opinion. It is much better to try to achieve more than that.

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Replying to matthewleitch:
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By justsotax
10th Mar 2022 12:00

sounds like you represent the Russia government........

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Replying to justsotax:
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By matthewleitch
10th Mar 2022 12:18

I don't represent the Russian government. I am the opposite of that sort of person because I am for reason and fairness. That's the point. Reason is more than opinion.

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Replying to matthewleitch:
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By justsotax
10th Mar 2022 13:34

you have a odd definition 'opposite', that's not an opinion....that's a fact....

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Replying to justsotax:
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By matthewleitch
10th Mar 2022 15:20

I am for reason and fairness. In contrast the Russian government is currently waging war on a neighbour to take their territory. It's irrational (because they could do so much better by other means and their stated reasons for doing it are multiply flawed) and unfair because they are just taking what they want regardless of what is fair for all parties.

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By Ian McTernan CTA
09th Mar 2022 15:45

I'll do what I generally do when HMRC try and tell me to do something which isn't legally mandated: ignore it.

Won't raise a stink, try and determine whether it's politically motivated or waste valuable time debating the merits or otherwise.

Just ignore it and carry on.

I do find it strange though that no one ever lauds the Govt for the massive increases in personal allowance (lowering everyone's tax bills) and increases in the NMW and take tax rises in total isolation. It's like Unions saying spine point increases aren't counted as pay rises....

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By matthewleitch
09th Mar 2022 15:54

The main point from all this seems to be that this is only a request with some suggested words. I would save myself the effort. In fact I would do this even if I was keen to explain to my employees why their tax has increased, because a brief message on the payslip is nowhere near enough.

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JD Portrait
By John Downes
10th Mar 2022 08:59

The payslips for my company will show the extra deduction as the "Sunak Surcharge".

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By dmmarler
11th Mar 2022 12:45

Of course NI is a tax, and it is not up to employers to explain what any changes are all about. It is up to the politicians. It would be far easier if it were part of general taxation so we did not get all this nonsense in the first place.

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By Paul Crowley
12th Mar 2022 20:00

Well Done Tom
This is the 100th reply to a Tech Pulse article

UNHEARD of before
Most get no comment at all

An Aweb award should be in the editorial thoughts

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Replying to Paul Crowley:
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By dwgw
13th Mar 2022 12:05

I thought the denial of being an MP or trying to get into the House of Lords would be the high points, until "I don't represent the Russian government" came along.

I don't think anyone would have seen these coming. Great stuff!

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Replying to dwgw:
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By matthewleitch
13th Mar 2022 16:26

In the last few months, when contradicting bizarre COVID-19 related conspiracy theories, I have also had occasion to deny being in 'the 77th'. This is a reference to some kind of secret psy-ops unit in a nation's army that creates and spreads misinformation online. I'm not in the 77th, had never heard of it before, and even now have no idea whether it actually exists or is just part of someone's conspiracy theory.

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Replying to Paul Crowley:
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By matthewleitch
13th Mar 2022 16:35

I hope that Tom will not be encouraged by the number of comments under this story, because if you look at the nature of those comments you can see that many weren't really constructive, realistic, or reasonable.

It is a recognized problem with online media that some writers are being measured/driven by 'engagement' metrics such as the number of comments, and the number of comments is almost always larger when a big row breaks out. This is encouraging some writers to provoke rows to raise their engagement numbers.

Tom wrote a story about HRMC that pressed 'outrage buttons' and got outrage. I don't think that was a good thing. He could have written something more interesting about the consequences of creating new types of tax, why governments do it anyway, the value or otherwise of saying that a tax is to be used for a particular type of expense, or ways that a government can introduce changes to a tax system in a way that is honest, open, and likely to be acceptable to most citizens. An excellent article on any of these important topics would, I suspect, have provoked fewer comments but more enlightenment.

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