CIPP Policy News Journal

As at 19 October 2016

2016-17

Produced by the CIPP Policy & Research Team

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 1 of 314 Introduction

This Policy News Journal has been produced by the CIPP Policy and Research team for the exclusive benefit of members. The Journal contains all relevant payroll News On Line items and is indexed and categorised for easy reference. Each item is in date order (the most recent entry being at the bottom) to ensure you know you have the latest updates on any given subject.

The Journal is produced on a tax year basis and by the end of each tax year will be closed off and restarted with any significant live news items being carried forward to the following year’s edition and then added to on a weekly basis with each edition of News On Line.

Using the index is easy – find your topic of interest and CTRL + click will take you straight there.

The titles of new news articles added in the last fortnight are highlighted in blue to ensure that they will be clearly visible in the index.

If you have any comments or suggestions about the Journal, please email [email protected]

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 2 of 314 Contents Apprenticeships ...... 11 Apprenticeship Levy draft legislation ...... 11 Government provides more detail about the apprenticeship levy ...... 11 Apprenticeship Levy operational guidance for employers ...... 12 CBI calls for a radical rethink of the Apprenticeship Levy design ...... 13 Thousands of apprentices to take part in major pay study ...... 13 Apprenticeship levy - Guidance for Software Developers ...... 14 Scotland to consult on the Apprenticeship Levy ...... 14 Scotland consult on the Apprenticeship Levy ...... 15 CIPP webcast on the Apprenticeship Levy ...... 15 Apprenticeship funding reforms October webinars ...... 16 Apprenticeship Levy Technical Consultation on the draft regulations ...... 17 Apprenticeship Levy guidance for software deveolpers - correction ...... 18 Attachment of Earnings ...... 19 Direct Earnings Attachments: employer guidance ...... 19 CIPP Policy & Research ...... 20 General News ...... 20 CIPP webcasts – have you listened in yet? ...... 20 Informal consultation ...... 21 CIPP Survey – Supervision under Money Laundering Regulations ...... 21 CIPP Annual Payslip Statistics Survey ...... 21 Policy Think Tank: Employee self serve ...... 21 Payroll bureaux and agents -pinpointing the pinch-points of GNS and employer prompts ...... 22 What is your experience of Beneficial Loans? Policy Think Tank – Solihull ...... 23 Payroll bureaux and agents - pinpointing the pinch-points of GNS and employer prompts ...... 24 Quick Polls ...... 25 CIPP poll on off-payroll working in the public sector ...... 25 CIPP quick poll on Gender Pay Gap reporting ...... 25 CIPP quick poll on Apprenticeship Levy ...... 26 CIPP Poll on flexible working ...... 27 A third of respondents plan on payrolling in 2017-18 ...... 28 Construction Industry ...... 29 Posted Workers Enforcement Directive: Impact on construction industry ...... 29 CIS System improvements ...... 29 Improving the operation of the Construction Industry Scheme ...... 31 HMRC survey on CIS deductions ...... 32 Construction Industry Scheme (CIS) ...... 32 Construction Industry Scheme: businesses based outside UK...... 32 CIS online service verification issues ...... 32 Webinars for the Construction Industry Scheme (CIS) ...... 34 Employment News ...... 35 Citizen News ...... 35 Immigration Bill receives Royal Assent ...... 35 Over £21m in penalties issued for employing illegal workers ...... 35 New illegal working offences come into force under Immigration Act ...... 36 Employment Law & Guidance ...... 37 Scotland Bill 2016 becomes an Act of Parliament ...... 37 Non-compete clauses in employment contracts under review ...... 37 Acas guide on sex discrimination in the workplace ...... 37 Enterprise Bill becomes law ...... 38 Trade Union Bill becomes law ...... 39 Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2016 ...... 39 Non-compete clauses: call for evidence ...... 40 Ethnicity Pay Gap Bill ...... 40 What does Brexit mean for UK employment law? ...... 41 Brexit: Employment Law ...... 42 Employment Tribunals ...... 44 Childcare vouchers and maternity leave ...... 44 Employers must include commission in holiday pay calculation ...... 44 Acas Early Conciliation: what is a 'month'?...... 45 Taxpayer pays £1.5m in Protective Awards case ...... 45 When staff handbook absence policy is contractual ...... 46 Subject access requests: shorter timeframe under General Data Protection Regulation ...... 46 The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 3 of 314 Regular voluntary overtime to be included in holiday pay ...... 46 Right to privacy not engaged by employer investigating emails ...... 49 Claim for payment of notice ...... 49 Definition of Employee ...... 50 Indirect religious discrimination ...... 50 Injury to feelings under Working Time Regulations for no rest breaks? ...... 51 Unfair Dismissal: Procedure and Polkey...... 51 Reinstatement after Unfair Dismissal ...... 52 Acas Code does not apply to Ill Health Dismissals ...... 52 Report on courts and tribunal fees ...... 53 Asda Equal Pay Claims ...... 53 Abuse of Migrant Workers not Unlawful Discrimination ...... 54 Court upholds decision to deny same-sex survivor's pension ...... 55 Carrying over Paid Annual Leave when Sick ...... 55 Daily penalties: HMRC victory in Court of Appeal ...... 55 Islamic headscarf ban is direct discrimination ...... 56 Indirect Sex Discrimination ...... 57 Territorial Jurisdiction ...... 58 Reasonable adjustments may extend to protection of pay ...... 58 What Uber's employment tribunal could mean for employers ...... 59 Employment Tribunal claims continue to fall ...... 59 Holiday Pay and Commission - British Gas v Lock ...... 60 Unequal pay during shared parental leave ...... 61 Communicating a Dismissal ...... 62 Misuse of personal data...... 62 Gender Pay Gap ...... 64 Gender Pay Gap report calls for more effective policy on shared parental leave ...... 64 CIPP quick poll on Gender Pay Gap reporting ...... 65 Mandatory Gender Pay Gap Reporting for public sector employers ...... 65 CIPP webcast on Gender Pay Gap reporting ...... 66 General Employment News ...... 67 BIS publishes response to consultation on labour market exploitation ...... 67 Simplifying tax for small companies ...... 67 Dividend tax rise impacts business ...... 68 Is family time through flexible working the future for men? ...... 69 McDonald’s staff offered move from zero-hours contracts to fixed hours ...... 69 Employment rate remains at record 74.1% while wages continue to rise ...... 70 Employers have fears around social media use in the workplace ...... 70 Work related stress causing one in four to be absent ...... 71 Consultation on simplifying tax for the future ...... 71 Mental health awareness week ...... 72 Tax credits: help your employees renew without delay ...... 73 Pay growth for most employees likely to remain stuck in the slow lane ...... 74 Petition against high heels dress policy receives over 100,000 signatures ...... 74 Home is where the stress is for one in five workers ...... 75 Survey shows more awareness of epilepsy is needed in the workplace ...... 75 Second Incomes Campaign: your guide to making a disclosure ...... 76 Phased returns to work webinars ...... 76 9 out of 10 employers would use the ACAS conciliation service again ...... 77 Advice and guidance for the workplace during the European Cup ...... 77 Celebrating one year of the Scottish Business Pledge ...... 78 Cost of essential bills has risen faster than average wages ...... 78 Unpaid Work Experience (Prohibition) Bill ...... 79 Payroll fraud costs UK firms £12bn per year ...... 79 Employment rate stays at record high of 74.2% ...... 80 New guidance on business and human rights ...... 80 Raising employment rate of over 55s could add £105bn to GDP ...... 80 Leading doctors push changes to sick note system ...... 81 Helping employees access tax relief ...... 81 ONS Economic review July 2016 ...... 82 UK workers experienced sharpest wage fall of any leading economy ...... 83 Legislative priorities announced by Welsh Government ...... 83 Statutory code of practice on English language requirement ...... 84 Employers struggling to effectively manage an ageing workforce? ...... 84 Jobseekers over £1,000 worse off in real-terms ...... 85 Rise in maternity discrimination prompts Committee action ...... 85 UK employees waste 20% of their time worrying about their finances ...... 86 The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 4 of 314 Understanding your payslip ...... 87 Pay and work rights complaints ...... 87 Thinking about introducing a work from home policy? ...... 87 National Work Life Week 2016 ...... 88 Research shows increase in zero-hours contracts ...... 88 Managing People – new guide from Acas ...... 89 Acas Model Workplace tool ...... 89 Northern Ireland Business Register and Employment Survey publish 2015 survey results ...... 90 Foresight - Future of an ageing population project ...... 90 Eligibility for Fit for Work referrals ...... 91 The Unpaid Britain Project ...... 91 Companies may have to reveal number of foreigners they employ ...... 92 Direct Debit now and in the future ...... 92 CIPP webcast on holiday pay and leave...... 93 Expenses, Benefits & Reward ...... 94 Company Cars ...... 94 Advisory Fuel Rates for Company Cars from 1 March 2016 ...... 94 Company car users can update their details online ...... 94 Advisory Fuel Rates for Company Cars from 1 June 2016 ...... 95 Advisory Fuel Rates for Company Cars from 1 September 2016 ...... 95 Company car tax for ultra-low emission cars ...... 96 General Expenses, Benefits & Reward News ...... 97 Salary Sacrifice schemes can be discontinued during maternity leave ...... 97 480(2016) Expenses and benefits tax guide...... 97 Trivial Benefits - non cash vouchers and Class 1 NICs ...... 97 490 (2016) Employee travel tax and NICs guide ...... 98 Travel and subsistence framework discussion paper ...... 99 CIPP webcast on expenses and benefits changes ...... 100 480 (2016)Expenses and benefits tax guide...... 100 Industry urges radical action to tackle sickness absence ...... 100 Approved professional organisations and learned societies ...... 101 July 6 2016 reporting deadline for expenses and benefits in kind ...... 101 Does your benefits package meet your employees’ needs?...... 102 Payrolling non-cash vouchers and credit tokens ...... 103 Consultation on salary sacrifice for the provision of benefits in kind ...... 103 Consultation on alignment of dates for making-good on benefits-in-kind ...... 104 Consultation on simplifying the PAYE Settlement Agreement (PSA) process ...... 104 Company car tax for ultra-low emission cars ...... 104 Worldwide subsistence rates ...... 105 Planning to payroll Benefits in Kind in 2017?...... 105 CIPP survey: Simplifying tax and NICs treatment of termination payments...... 106 CIPP survey: Alignment of dates for ‘making good’ on benefits-in-kind ...... 106 CIPP Survey: Consultation on salary sacrifice for the provision of BiKs ...... 107 CIPP response to consultation on simplification of tax and NI treatment of termination payments ...... 107 Simplifying the PAYE Settlement Agreement (PSA) process ...... 108 CIPP response to the consultation on alignment of dates for ‘making good’ on benefits-in-kind ...... 110 Expenses and benefits returns on magnetic media (EEC1) ...... 110 Statutory Maternity Leave and Child Care Vouchers ...... 110 Non-deductible and non-exempt expenses ...... 111 Tax-Free Childcare (TFC) ...... 112 Childcare providers are critical to the successful roll out of Tax-Free Childcare – spread the word ...... 112 Tax-Free Childcare ...... 113 Tax-Free Childcare: employees need to make an informed choice ...... 114 Tax-Free Childcare Implementation Advisor Forum ...... 115 Government News ...... 116 CIPP summary of Budget 2016 ...... 116 Tax rates and thresholds ...... 117 Apprenticeships ...... 117 Expenses and benefits ...... 117 Fuel Duty ...... 118 Insurance premium tax ...... 118 National Minimum Wage/National Living Wage ...... 118 Pension reforms ...... 118 Salary sacrifice ...... 119 Shared Parental Leave ...... 119 Tax administration and simplification ...... 120 The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 5 of 314 Tax avoidance and evasion ...... 120 Tax-Free Childcare ...... 121 Termination Payments ...... 121 Other areas of interest ...... 122 General Government News...... 126 Launch of new data sharing consultation ...... 126 Better use of data in government – open consultation ...... 126 BIS civil servants to strike over Sheffield closure plans ...... 127 Queen’s Speech 2016 ...... 128 ONS reports on internet users in 2016 ...... 129 Voter Registration for EU Referendum ...... 130 Queen’s awards include Office of Tax Simplification ...... 131 Tax Director of OTS steps down ...... 131 National Audit Office Diversity and Inclusion Annual Report 2015-16 ...... 131 BIS 2020 transformation programme ...... 132 Who’s who in the new Prime Minister’s Cabinet ...... 132 Office of Tax Simplification: new board members announced ...... 135 MPs to debate second EU referendum ...... 135 Autumn Statement 2016 date confirmed ...... 136 Finance Act 2016 ...... 136 Government Committee launch inquiry on executive pay ...... 136 Civil Service Compensation Scheme – Government Response ...... 137 Consultation on amending the definition of financial advice ...... 139 The use of agency workers during strike action in Welsh public services ...... 139 Legislation Day ...... 140 Adults in England to receive free digital skills training ...... 140 Managing sickness absence for SMEs ...... 141 New public body offering debt advice, money and pensions guidance ...... 141 Lifetime ISA: The Savings (Government Contributions) Bill...... 142 GOV.UK Verify ...... 143 Introducing GOV.UK Verify ...... 143 GOV.UK Verify – access government services safely, securely and privately...... 143 GOV.UK Verify update on progress towards live ...... 144 What kind of fraud does GOV.UK Verify prevent? ...... 145 GOV.UK Verify passes the test ...... 146 GOV.UK Verify: Technical delivery update ...... 147 Improving the experience of verifying with certified companies ...... 147 GDS - continuous iteration of research is the key to building services that meet user needs ...... 148 Can online activity history help GOV.UK Verify work for more people? ...... 148 GOV.UK Verify technical update ...... 149 HMRC Protecting customer data with 2 Step verification ...... 150 GOV.UK Verify: Technical delivery update ...... 150 HM Revenue & Customs ...... 152 Employment and Payroll Group ...... 152 Employment and Payroll Group minutes published ...... 152 Employment and Payroll Group minutes published ...... 152 General HMRC News ...... 154 Business Tax road map ...... 154 Direct Recovery of Debt and vulnerable customers ...... 154 Identifying genuine HMRC email communications V phishing emails and spam ...... 155 HMRC wins £635 million for the public in landmark case ...... 156 File late self-assessment returns now to avoid further daily fines ...... 156 NINO Verification Service- Employment evidence survey ...... 157 The quality of service for personal taxpayers ...... 157 HMRC responds to NAO criticisms of customer service ...... 158 Customer Survey – your experience of using automated penalty appeal service and your views on GNS messaging? ...... 160 Help HMRC launch a new digital service ...... 160 Telephone scam warning from HMRC ...... 161 Changes to HMRC online services login ...... 161 Re-platforming of the PAYE EDI Service ...... 162 HMRC Annual Report and Accounts 2015-16 ...... 162 New services available through Personal Tax Accounts ...... 164 Government Gateway Transition and Transformation ...... 164 Bank of England cuts Bank Rate to 0.25% ...... 165 Faster, easier tax repayments via Personal Tax Accounts ...... 165

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 6 of 314 Request to opt out of receiving your PAYE annual tax summary ...... 166 Tackling the hidden economy ...... 167 Telephone scam ...... 167 Telephone scam ...... 168 HMRC timetable to replace PAYE EDI channel ...... 168 HMRC ‘Building Our Future’ ...... 169 Tax fraudster ordered to pay up or face jail ...... 169 Government Gateway migration project ...... 170 HMRC launch Worldwide Disclosure Facility ...... 170 Museums and galleries tax relief consultation ...... 171 Over 5 million customers are using HMRC’s Personal Tax Account ...... 171 IR35 legislation in the broadcasting industry ...... 172 Accountant fined for blocking HMRC investigation ...... 173 Personal Tax Account – have you registered yet? ...... 173 HMRC’s new Tax Assurance Commissioner ...... 174 HMRC Employer Bulletins ...... 175 HMRC Employer Bulletin – April 2016 ...... 175 HMRC Employer Bulletin – June 2016 ...... 175 Employer Bulletin - August 2016 ...... 175 Employer Bulletin - October 2016 ...... 176 Making Tax Digital ...... 177 HMRC working with tax agents ...... 177 ABAB 2016 Annual Report and Making Tax Digital ...... 177 Making Tax Digital will require software compatibility ...... 178 Making Tax Digital ...... 179 Making Tax Digital consultations published ...... 180 Making Tax Digital for Business: Consultation events ...... 181 Treasury committee urges delay to tax changes ...... 182 National Insurance ...... 184 Employment Allowance further guidance for employers ...... 184 Application for deferment of payment of Class 1 National Insurance contributions (CA72A) ...... 185 Rates and allowances: National Insurance contributions ...... 185 National Insurance numbers with prefix KC ...... 186 National Insurance numbers with prefix KC ...... 186 National Minimum Wage/Living Wage...... 188 Low Pay Commission report on National Minimum Wage ...... 188 National Minimum and Living Wage guidance ...... 188 National Minimum Wage and National Living Wage law enforcement ...... 189 Consultation on the National Living Wage and National Minimum Wage rates ...... 189 National Living Wage: LPC looking for volunteers ...... 190 National Minimum Wage: Employer compliance ...... 190 Age Discrimination and the National Living Wage ...... 191 CIPP Survey: your views and experiences on the impact and rates of the NLW and NMW ...... 192 National Minimum Wage and National Living Wage ...... 193 Summary of the National Minimum Wage (Workplace Internships) Bill 2016-17 ...... 194 Early evidence on the impact of the National Living Wage ...... 194 NMW guidance and enforcement – did you know? ...... 194 Living Wage Champion Awards Open ...... 196 Largest ever list of National Minimum Wage offenders published ...... 196 £1m in back pay for non-payment of National Minimum Wage...... 197 The National Minimum Wage (Amendment) (No. 2) Regulations 2016 ...... 197 PAYE (Pay As You Earn) ...... 199 Aligning national insurance and income tax ...... 199 Aligning national insurance and income tax...... 199 Income tax and National Insurance alignment ...... 199 Employee Share Schemes ...... 201 User testing to improve 2015-16 share scheme returns – are you ready to file? ...... 201 Consultation on employee share schemes NIC elections ...... 201 Expat News ...... 203 Expat starter checklist ...... 203 Expat tax claim (R38 (Expat)) ...... 203 Consultation on non-dom reforms ...... 203 Benchmark Scale Rates for inward assignees ...... 204 General PAYE News ...... 206 Rates and thresholds for employers 2016 to 2017 ...... 206

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 7 of 314 Scottish S prefix tax codes ...... 206 Check-off u-turn in Trade Union Bill ...... 206 Further consultation on tips, gratuities, cover and service charges ...... 207 Pension flexibility - reporting of non-taxable death benefits through RTI ...... 207 Payroll Giving approved agencies ...... 208 New record for number of payments processed by Bacs ...... 208 Changes to internet security in the payments industry ...... 209 PAYE late filing penalties - continuation of 3-day easement and risk-based approach to charging penalties ..209 HMRC issues update to CA39 - Contracted-out salary related pension schemes ...... 210 CIPP survey on the BIS consultation on tips, gratuities, cover and service charges ...... 210 Getting Basic PAYE Tools working on Linux ...... 211 Primary school children should be taught about taxation and pensions ...... 211 What payroll information to report to HMRC ...... 212 1000 small businesses risk being locked out of Bacs after 13 June ...... 212 CIPP webcast on recent and future changes to payroll legislation ...... 212 Bacs extend deadline date for new security requirements...... 213 Payroll Giving sees a 3% increase ...... 213 Operating PAYE correctly on pension flexibility payments ...... 214 Making a request for Seafarers' NT Code (R44)...... 214 Data Provisioning Service (DPS) issue ...... 215 Appealing a penalty – what may count as reasonable? ...... 215 Treatment of income from sporting testimonials ...... 216 Simplification of the tax and National Insurance treatment of termination payments ...... 217 CWG2(2016) Employer Further Guide to PAYE and NICs ...... 217 New employee coming to work from abroad ...... 218 Notice of transfer of surplus Income Tax allowances (575(T))...... 218 PAYE accounts not showing the latest position ...... 218 RTI challenges faced by micro-employers ...... 218 Agricultural Wages in Scotland ...... 220 Reforms to public sector exit payments: Government Response to consultation ...... 220 Call for more employers to offer Payroll Giving to staff ...... 221 Public sector exit payments ...... 221 Intermediaries ...... 223 Off-payroll working in the public sector ...... 223 Employment status: employment intermediaries ...... 223 Employment Intermediaries Co-ordination Unit (EICU) could help you avoid automated penalties ...... 223 Employment intermediaries: reporting requirements ...... 224 Employment intermediaries: travel expense guidance ...... 224 Off-payroll working in the public sector - reform of the intermediaries legislation ...... 225 Employment Intermediaries – are you reporting or running the risk of penalties? ...... 225 CIPP Survey - Off-payroll working in the public sector - reform of the intermediaries legislation ...... 226 CIPP response to consultation on off-payroll working in the public sector ...... 227 Employment intermediaries: report template ...... 229 Payroll Software updates...... 229 Software developers: PAYE update 20 ...... 229 RTI technical specifications updated ...... 230 PAYE tax table specifications for Scottish Rate of Income Tax ...... 230 PAYE draft forms: specifications for substitute forms P60 for 2016 to 2017 ...... 230 Government Gateway SSLv3 ...... 231 Payroll Test Data Survey for Software Developers ...... 231 PAYE RTI 2017-18: Internet techpack and test services ...... 231 PAYE EDI technical specifications: expenses and benefits ...... 232 RTI Data Items Guide updated ...... 232 Software developers: Government Gateway downtime ...... 232 Statutory Payments ...... 233 Weekly rate of statutory redundancy pay ...... 233 Statutory Sick Pay recovery period under the Percentage Threshold Scheme ends ...... 233 The Continuity of Employment Test ...... 233 Statutory sick pay when an employee is in legal custody ...... 234 Statutory Sick Pay: manually calculate your employee’s payments ...... 235 Statutory Maternity Leave and Child Care Vouchers ...... 235 Pensions ...... 236 Automatic Enrolment ...... 236 Automatic enrolment thresholds 2016-17 ...... 236 Automatic enrolment: alternative quality requirements for defined benefit and hybrid pension schemes ...... 236 Automatic enrolment Q and A for business advisers ...... 237

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 8 of 314 Business Advisers - do you have a question about automatic enrolment? ...... 237 Who needs to complete a Declaration of Compliance? ...... 237 Auto escalation the next step for auto enrolment ...... 239 Pensions Regulator to list GPPs open to all employers ...... 240 Employers warned not to ignore automatic enrolment penalty notices ...... 240 Employers are hearing Workie’s message but what now? ...... 241 Automatic enrolment: Business as usual, just like real-time PAYE ...... 243 Costly to ignore penalty notices from The Pensions Regulator ...... 243 Expansion of Basic PAYE Tools for auto enrolment recommended ...... 244 Updated automatic enrolment detailed guidance ...... 245 Auto enrolment regulations update with extended Q&A ...... 246 Aviva launches pre-review of automatic enrolment ...... 246 Automatic enrolment and small employers ...... 247 Automatic enrolment declaration of compliance ...... 248 Bring your client’s staging date forward ...... 248 Corporate groups, ownership and staging dates ...... 249 Automatic enrolment webinar with extended Q&A ...... 249 NEST responds on changes to scheme rules...... 250 Declaration of compliance report ...... 250 Half of small businesses not ready to provide workplace pension ...... 250 Call for evidence – NEST: evolving for the future ...... 251 Automatic enrolment Compliance and Enforcement Policy ...... 252 Advisers help drive success of automatic enrolment ...... 252 Delay in automatic enrolment contribution rises confirmed...... 253 Automatic enrolment: Do you know how and when to use postponement? ...... 253 High compliance rates underpin success of automatic enrolment ...... 255 The Pensions Regulator update ...... 256 Automatic enrolment hits 200,000 employer landmark ...... 257 Automatic enrolment: Don’t let your clients’ holiday plans risk a fine ...... 257 Re-enrolment guidance for employers revamped ...... 257 Would you like The Pensions Regulator to speak at an event? ...... 258 Revised guidance on choosing a pension scheme ...... 258 Pensions Regulator hosts free business adviser events ...... 259 Extended refresher webinar - plus LinkedIn Q&A ...... 259 Automatic enrolment: Postponement and seasonal workers ...... 260 NEST: evolving for the future ...... 260 How business advisers can help clients to choose a pension scheme for auto enrolment ...... 261 New essential guide to re-enrolment ...... 262 Extended auto enrolment refresher webinar with Q&A ...... 263 LinkedIn live Q&A on automatic enrolment ...... 263 Pension revolution: Self-employed risk being 'left behind' ...... 263 Invitation to agents and payroll bureaux to participate in auto enrolment project ...... 264 General Pensions News ...... 265 Guaranteed Minimum Pension (GMP) Checker ...... 265 Should Government consider introducing compulsion in pensions? ...... 265 Countdown bulletin 16 April 2016 ...... 266 Registered Pension Schemes Manual (RPSM) ...... 266 New Pension Tracing Service website launched ...... 267 Pension schemes newsletter 78 ...... 267 Countdown bulletin 17 ...... 267 New Pensions Bill should protect savers and build on success so far ...... 268 Pension Finder Dashboard project ...... 269 Pensions Minister calls for exit charges cap across all pensions ...... 270 Do you pay in to the Pension Protection Fund levy? ...... 270 Spread the word and make sure we can all spot a pension scam ...... 271 Pension scheme administrators operating relief at source ...... 271 DC code and how to guides positive development says PASA ...... 272 Creating a pensions dashboard ...... 273 Expectations in retirement are unrealistic for many ...... 274 Pension schemes newsletter 79 ...... 275 NISPI countdown bulletin – June 2016 ...... 275 Baroness Ros Altmann resigns as Pensions Minister ...... 276 Guaranteed Minimum Pension checker ...... 276 New ministerial team at the Department for Work and Pensions ...... 277 The Pensions Regulator: Annual Report and Accounts ...... 277 Local government pension scheme changes ...... 278 Pension schemes newsletter 80 ...... 278 The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 9 of 314 NISPI Countdown Bulletin - August 2016 ...... 279 Widespread support for development of Retirement Quality Mark ...... 279 Pensions Industry Stakeholder Forum minutes ...... 280 Consultation on introducing a Pensions Advice Allowance...... 280 New ‘trace a lost pension’ tool launched...... 281 Pensions Dashboard prototype to be ready by spring 2017 ...... 281 Pensions industry sets out top 5 priorities for new Under Secretary ...... 282 Pensions Ombudsman update ...... 283 List of Recognised Overseas Pension Schemes (ROPS) notifications ...... 283 New Retirment Quality Mark launched ...... 283 Pension schemes newsletter 81 - September 2016 ...... 284 Pensions annual allowance tax calculator ...... 285 Are Defined Benefit schemes in crisis? ...... 285 Countdown bulletin 20 - October 2016 ...... 286 List of Recognised Overseas Pension Schemes (ROPS) notifications ...... 286 Review of the State Pension age ...... 286 Student Loans ...... 288 Student loan repayments: guidance for employers ...... 288 Student loan repayments: guidance for employers ...... 288 Employer prompts for student loan deductions ...... 288 Student Loan employer prompts being sent to pension providers ...... 289 Would showing different student loan deduction types on the payslip be an admin burden? ...... 289 CIPP webcast on Student Loans ...... 290 Student Loan guidance updated ...... 290 Student Loan notices: which plan to apply?...... 290 Tax Agents and Advisers ...... 292 HMRC working with tax agents ...... 292 Working Together Talking Points – catch up opportunities ...... 292 Tax Agent Toolkits updated ...... 293 Agent Online Self Serve renamed Agent Services ...... 293 Agent Update 53 ...... 294 HMRC Agent Dashboard ...... 294 Working Together Talking Points ...... 295 Working Together Talking Points ...... 296 Agent Update 54 ...... 297 HMRC Talking Point sessions ...... 297 Agent digital meetings ...... 297 2 Step Verification for HMRC business customers ...... 298 Tax Agent Toolkits - are you using them? ...... 299 Agent update 55 ...... 299 Tax Agents: Communicating in a digital age ...... 300 Talking Points – Agent digital meetings ...... 300 Agents unable to log in to their online account ...... 300 Agents unable to log in to their online account ...... 301 Automatic Exchange of Information Event for Tax Agents ...... 301 Talking Points – Agent digital meetings ...... 302 Talking Points - Agent digital meetings ...... 302 Tax Avoidance & Evasion ...... 304 Consultation on tackling tax evasion ...... 304 Tax transparency progresses with international expansion ...... 304 European Commission proposes public tax transparency rules for multinationals ...... 305 Government clamping down on gold bullion tax avoidance ...... 305 HMRC naming and shaming deliberate tax defaulters ...... 306 Tackling Disguised Remuneration: technical consultation ...... 306 Tax avoidance enablers to face tough new penalties ...... 307 Tackling offshore tax evasion: a requirement to correct ...... 307 What you need to know about tax avoidance ...... 308 Welfare Reforms ...... 310 Changes to DWP postal addresses ...... 310 Touchbase edition 111 ...... 310 DWP decision makers guide on benefits and pensions ...... 310 New universal credit web tool ...... 311 Universal Credit and employers ...... 311

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 10 of 314 Apprenticeships

Apprenticeship Levy draft legislation 5 February 2016

Draft legislation has been published introducing the new Apprenticeship Levy which will have effect from 6 April 2017.

Who does this legislation apply to? Employers across all four UK nations. Apprenticeships are part of skills training which is a devolved policy area meaning only employers in England will receive funds in their digital account to spend on apprenticeships training in England. It will be for authorities in Wales, Northern Ireland and Scotland to decide how the levy funding will be paid within their nation.

It will be a Levy on employers to fund new apprenticeships. Legislation will be introduced in Finance Bill 2016 and will provide for a levy to be charged on employers’ paybills at a rate of 0.5%. The levy will be payable through Pay As You Earn (PAYE) and will be payable alongside income tax and National Insurance. The “paybill” will be based on total employee earnings subject to Class 1 secondary NICs.

Each employer will receive one annual allowance of £15,000 to offset against their levy payment, which will mean the Levy will be payable on pay bills in excess of £3 million a year. There will be a connected persons rule, similar to the Employment Allowance connected persons rule, so employers who operate multiple payrolls will only be able to claim one allowance.

A Tax Information and Impact Note (TIIN) has also been published alongside an explanatory note.

Consultation responses

 Consultation outcome: Apprenticeship levy: employer owned apprenticeship training – 2 December 2015  CIPP response to the consultation on the apprenticeships levy - 1 October 2015

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Government provides more detail about the apprenticeship levy 24 March 2016

The government has published more information about the apprenticeship levy and how it will work. The levy will apply to all UK employers in both the private and public sectors.

It is payable on annual pay bills of more than £3 million. Employers with an annual pay bill of less than £3 million will not pay the levy. These employers will continue to have access to government funding to support apprenticeships.

The levy will be charged at a rate of 0.5% of an employer’s pay bill. Levy payments will be collected monthly by HM Revenue and Customs (HMRC) through Pay as You Earn (PAYE), payable alongside tax and National Insurance. Pay bill will be based on total employee earnings subject to Class 1 secondary National Insurance contributions (NICs).

There will be a £15,000 fixed annual allowance for employers to offset against their levy payment. A connected person rule, similar to the one used for the Employment Allowance, will mean that employers who operated multiple payrolls will only be able to claim one allowance for the levy.

Individual employers’ funding for apprenticeship training in England will then be made available to them via a new Digital Apprenticeship Service (DAS) account. Employers will be able to use this to pay for training for apprentices. The service will also support employers to identify a training provider, choose an apprenticeship training course and find a candidate.

Employers will be able to use their funding (up to a cap which will depend upon the standard or framework that is being trained against) to cover the costs of an apprentice’s training, assessment and certification. The Chartered Institute of Payroll Professionals Policy News Journal

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The levy will put apprenticeship funding in the hands of employers and will encourage employers to invest in their apprentices and take on more. Employers in England who pay the levy and are committed to apprenticeship training will be able to get out more than they pay in to the levy through a top up to their digital accounts.

The government will apply a 10% top-up to monthly funds entering levy paying employers digital accounts, for apprenticeship training in England, from April 2017. All funds entering a levy payer’s account will be increased, so every £1 will be increased to £1.10 in value.

Further information is available here.

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Apprenticeship Levy operational guidance for employers 22 April 2016

Further information on the operating model of the apprenticeship levy has been published. The guidance will help employers understand how the levy will operate from April 2017 and how funding for apprenticeship training in England will be accessed by all employers, whether they pay the levy or not.

Publication of the guidance Apprenticeship levy: how it will work is intended to be operational: something that employers can refer to and use to prepare ahead of the levy implementation in April 2017. It provides information on how employers will access funding for apprenticeships, what they will be able to spend the funding on and how.

Key areas of the guidance are:

 Paying the apprenticeship levy  What happens to the money once it is paid to HMRC  Buying apprenticeship training  What apprenticeship funding is available  Eligibility for training  Preparing for the introduction of the apprenticeship levy

The guidance will be updated in June, October and December with information about:

June 2016  provisional funding bands, which will set the maximum amount of funding which is available for each apprenticeship from April 2017  the provisional level of the government support that will be available towards the cost of apprenticeship training if you aren’t a levy paying employer, from April 2017  the provisional level of the extra payment you can get for hiring 16 to 18 year old apprentices, from April 2017  the provisional amount that will be paid for English and maths training for apprentices who need it, from April 2017  eligibility rules that set who you are able to spend apprenticeship funding on and where  more information on who can provide apprenticeship training and how you can set up your organisation to deliver apprenticeship training

October 2016  the final levels of funding, government support, 16 to 18 payments, and English and maths payments for apprentices starting from April 2017  full, draft funding and eligibility rules

December 2016  final detailed funding and eligibility rules  further employer guidance from HMRC on how to calculate and pay the apprenticeship levy

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 12 of 314 CBI calls for a radical rethink of the Apprenticeship Levy design 29 April 2016

The Confederation of British Industry (CBI) is calling on the Government to take the time to draw on business' vast experience to make sure that the levy works for everyone.

CBI Director-General Carolyn Fairbairn, highlights that businesses are committed to raising skill levels and support the Government’s ambition to boost apprentice numbers, but that there are growing concerns among firms about the current design and viability of the system.

The DG says that the Government has the opportunity to create a “once-in-a-generation revolution” in skills, but it is currently only likely to deliver another “once-in-an-administration shake-up.”

The CBI is calling for:

 A stronger role for the new Institute for Apprenticeships - include measuring and managing the system around the levy;  More flexibility in how firms can spend the levy – including on existing training and high-quality support for apprentices;  The digital system which manages levy spend must be ready and able to support the delivery of apprenticeship training which businesses need, in full and from the start.

For further details read the full press release from the CBI.

CIPP comment Operational guidance on the levy was recently published by the Department for Business, Innovation and Skills (BIS). Details are still being worked on and the guidance includes a welcome timeline of when updates will take place over the next few months ahead of implementation in April 2017.

BIS will continue to talk to employers and stakeholders right through further development and to implementation and beyond and the CIPP Policy Team is involved in these discussions. Please email us at policy with ‘Apprenticeship Levy’ in the subject box if you have any areas of concern you would like us to address on your behalf.

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Thousands of apprentices to take part in major pay study 2 June 2016

The 2016 Apprenticeship Pay Survey is an important research project providing information on training, hours and pay from current apprentices.

The findings will be used by government to help set pay policy generally and make improvements in apprenticeship training. The findings will not be used to target specific apprentices or employers for enforcement activity.

IFF Research, an independent research organisation, will be undertaking short telephone interviews with around 10,000 apprentices and will asked questions on pay and hours.

The questions apprentices are likely to be asked will include:

 the number of hours you spend working for your employer, in a typical week  the number of additional hours you spend learning and training on top of your normal work. This could include attending college, courses, workshops or training sessions at your employer’s premises or held externally, learning at home, learning from workbooks, time with your assessor and time filling in a portfolio.  how much you earn - ideally the amount you earn in gross terms i.e. before tax, national insurance and other deductions.

The answers to these questions will enable the Department for Business, Innovation & Skills (DWP) and the Skills Funding Agency (SFA) to look at wage levels nationally, measure changes with previous years and monitor whether employers are adhering to the rules on fair pay. The Chartered Institute of Payroll Professionals Policy News Journal

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Apprentices selected to take part in the survey will receive a letter prior to receiving a call from one of the researchers.

A similar survey was undertaken in 2014.

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Apprenticeship levy - Guidance for Software Developers 4 July 2016

HMRC software developer team have published to software developers some early guidance on how the Apprenticeship levy with work.

The guidance includes a number of FAQs along with three examples on how the allowance will be allocated across paybills in the region of £3 million.

SDST Apprenticeship Levy V1.5

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Scotland to consult on the Apprenticeship Levy 4 July 2016

The Scottish Government plans to launch a consultation to seek views on how the UK wide Apprenticeship Levy can enhance productivity and economy growth in Scotland.

The consultation will seek views on:  continued commitment to 30,000 high quality modern apprenticeship starts by 2020 – including an offer to support further opportunities if there is sufficient demand from industry  developing more graduate level apprenticeships  creating an employer fund for wider workforce development  providing support for those outside the labour market to prepare them to enter the skilled workforce employers need for their business.

Employability Minister Jamie Hepburn believes that the UK Government’s Apprenticeship Levy undermines the “uniquely Scottish” approach to modern apprentices.

“The introduction of this Levy is of fundamental concern for us. The UK Government has introduced this Levy without any consultation with Scotland, despite the fact that apprenticeship policy is devolved to the Scottish Parliament. We believe that this Levy undermines our uniquely Scottish approach to apprenticeships and imposes an unnecessary financial burden on employers. However we are determined to work with industry to ensure that opportunities to enhance workforce skills and productivity sit at the heart of our response to the introduction of the Levy.

“We know that businesses need clarity on the way forward. That is why we have already worked with industry to inform how we can best use this levy to support our young people and meet the needs of our business. Over recent months the Scottish Government has been engaging with a range of employers and representatives across a variety of sectors to better understand the impact that the Levy will have, and their thoughts on how Levy funding could be used in to enhance productivity and economic growth.

“After those discussions with employers it is clear that they are looking for a wider approach than what is being developed by the UK Government. This is why we have decided to consult with industry on how this levy can be used to support apprenticeships and wider skills development. An important part of this consultation will involve working with the newly established Scottish Apprenticeship Advisory Board as well as other industry bodies and individual employers.

“In Scotland, we are seeing some real success in supporting young people into work and making sure that they have the right skills for the future. We have surpassed our target to deliver 25,500 modern apprenticeship starts this year, this will now increase to 26,000 for the year ahead and we are looking to work with employers to support our ambitions

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 14 of 314 to increase starts to 30,000 by 2020. Our commitment to growing and enhancing the Modern Apprenticeship programme remains a key priority for this Government”

Mr Hepburn announced that, following the UK Government’s decision to implement an Apprenticeship Levy, the Scottish Government will launch a consultation on 13 July to seek views on how the Levy can enhance productivity and economy growth in Scotland.

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Scotland consult on the Apprenticeship Levy 15 July 2016

As previously announced by the Scottish Government a consultation has been published to enable employers to have their say on how Scotland should use its share of the funding from the UK Government’s apprenticeship levy.

From April 2017, some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.

Minister for Employability and Training Jamie Hepburn said:

“The introduction of this levy is of fundamental concern for us. The UK Government has introduced this levy without any consultation with Scotland, despite the fact that apprenticeship policy is devolved to the Scottish Parliament.”

In a letter to skills ministers, Mr Hepburn said:

“We are aware of the importance of involving employers in Scotland in shaping our response on how we should use our share of the funding. Devolved Administrations have yet to receive final details of the financial settlement that they will receive from the introduction of the Apprenticeship Levy.

“Over recent months the Scottish Government has been engaging with a range of employers and representative bodies across a variety of sectors to better understand the impact that the levy will have. It is clear from engagement to date that employers in Scotland are looking for a much broader offer than that being developed in England. I am keen that we work with employers to achieve this.

“That is why we have launched consultation with employers to develop a distinctly Scottish approach, which supports apprenticeships and wider skills development and drives closer engagement with industry in our efforts to enhance productivity and economic growth. We will use our findings from the consultation with employers and other interested parties to inform our Spending Review decisions in the autumn.

“The introduction of the levy will have a significant impact on the skills delivery in the devolved administrations. Given the level of interest and concern from businesses around the levy across the UK, I have proposed to host a meeting in Scotland with the Skills Ministers from across the UK .This is a high priority for all four nations so I would hope we could meet at the earliest opportunity.”

Further information on the background to Scotland’s response to the Apprenticeship Levy can be found here.

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CIPP webcast on the Apprenticeship Levy 29 July 2016

The CIPP Policy Team has produced a short webcast explaining what the Apprenticeship Levy is, how it is calculated, paid and reported and some of the implications employers need to consider ahead of the April 2017 implementation.

CIPP webcast on the Apprenticeship Levy

CIPP Professional Careers Academy

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 15 of 314 An apprenticeship is a way for young people and adult learners to earn while they learn in a real job, gaining a real qualification and a real future. 82%* of employers believe that hiring apprentices help businesses to grow their own talent by developing a motivated, skilled and qualified workforce.

What does an apprenticeship look like? We can help you find an apprentice for your business. An apprenticeship can typically include:  A recognised qualification relevant to your industry  Functional skills in mathematics, english and information communications technology, if they are needed Apprenticeship learning can take place in your working environment with minimal disruption and normally takes between 12 and 15 months.

What are the benefits of hiring an apprentice?  47%* of apprenticeship employers have recommended apprenticeships to other employers  Apprenticeships are a tried and tested way of recruiting new staff, retraining or upskilling your existing workforce that are returning from a break in their career  An apprenticeship improves individuals effectiveness as well as that of the organisation  They are an effective way of bringing new ideas into your business  An apprentice will provide you with a skilled work force in the future

Can anyone be an apprentice and how much will this cost my business? Yes. However, this depends on the individual apprentice and the cost will depend on:  The age of the apprentice  Their current qualification level  If the apprentice is studying  Residential status

We can advise you as further rules apply.

Can I receive financial assistance? The government are currently offering two incentives**, these are:  Apprenticeship Grant for Employers for those learners aged between 16–24  Department for Work and Pensions Wage incentive scheme for those learners aged between18–24 While we cannot influence if and when these funds will be paid, we can support you in making an application.

What do we provide? We can work with you to:  Advertise, interview and recruit apprentices  Deliver an individually tailored apprenticeship programme for the learner  Provide a network of specialist assessors to work with your apprentice, offering them support and mentoring throughout their apprenticeship

In addition we will provide your apprentice with:  A safe learning environment to build their knowledge and succeed in their apprenticeship  Trial student membership of the CIPP including all the benefits that this provides

An employer's journey

For more information and to discuss recruiting an apprentice please email us or phone 0121 712 1040.

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Apprenticeship funding reforms October webinars 27 September 2016

The Department for Education has organised regular webinars for stakeholders, who have an employer focus, to learn about the latest information on the apprenticeship funding reforms. These webinars are largely focused at those employers who have not yet been involved in a webinar or stakeholder event and aim to be a mechanism to capture those that might just be new in coming to the information. The webinars will be working alongside other events and updates to tell the same narrative rather than providing any extra insight.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 16 of 314 After registering, you will receive a confirmation email containing information about joining the webinar. Apprenticeship Funding Reforms - Latest updates will occur several times. Please register for the date and time that works best for you:  7th October  28th October  18th November

Dates will be extended if there is sufficient demand with the aim to have further sessions in December and going on into 2017. The webinars will always reflect the latest information and so will obviously be updated once the further guidance is published. Apprenticeship funding will change from April 2017, with the introduction of the Apprenticeship Levy and new funding rules. This webinar with the Department for Education will be an opportunity for our sector to hear an update on the funding changes and to put your questions to the team developing the policy. In advance of the webinar, you can see the proposals at GOV.UK.

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Apprenticeship Levy Technical Consultation on the draft regulations 28 September 2016

The technical consultation on the draft regulations for the calculation, payment and recovery of Apprenticeship Levy continues and will close on the 14 November 2016.

The draft regulations make clear that only where an employer has or expects to have a levy liability will they have to engage in the reporting of the Apprenticeship Levey to HMRC.

Employers with a paybill of £2.8 million or less in the previous tax year and who believe that their pay bill will be less than £3 million in the current year (2017 – 2018) will not have to engage with the Apprenticeship Levy. In brief the draft regulations:

 Set out that an employer is required to assess their annual pay bill amount for the previous and current tax year to decide if they are liable for the levy (as above).  Make provision for the due date of the Apprenticeship Levy to be by the 19th (or 22nd if you pay by an approved method electronic communications) following the tax month was calculated.  Place a requirement on employers to notify HMRC of the levy which is to be paid and make provision for the information which should be included in this return - the employer will use the Employers Payment Summary (EPS) to report their Apprenticeship Levy liability due to date and also the amount of annual levy allowance the employer may allocate to multiple PAYE references.  Set out how to calculate the monthly levy allowance on a cumulative basis, in order to calculate levy liability - they also set out how to calculate levy liability both in the first month of the tax year, and in subsequent months.  Allow both single and employers who are part of a group (Company unit or Charity unit, which has apportioned the £15,000 annual levy allowance across the unit) to apportion the annual levy allowance between multiple PAYE schemes.  Make provision for recovery of overpaid levy by the employer – which will require the employer to first offset apprenticeship levy overpaid against any amount of which the employer is liable to pay under the Income Tax (Pay As You Earn) (Amendment) Regulations 2017 before making a claim to HMRC for a refund of any balance owing.

As you would expect in a technical consultation on Draft Regulations there are two consultation questions broached which are: 1. Do the regulations as drafted achieve their objectives as set out ? 2. Do these draft regulations produce any unintended consequences?

Any comments to the draft regulations should be sent by no later than 14 November 2016 [email protected].

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Apprenticeship Levy guidance for software deveolpers - correction 4 October 2016

Further to our news item on 19 September 2016 regarding the developer brief version 1.6 for the Apprenticeship Levy, the SDS Team has corrected one of the examples.

Unfortunately there were a few rounding discrepancies in month 12 of example 5. These have now been corrected by HMRC’s SDS Team and a revised version is accessible below.

To help with development additional entries have been added in the calculation for months 3 and 4 to show how the levy paid value varies from month to month.

Apprenticeship Levy SD guidance - correction to v1.6 – 4 October 2016

Apprenticeship levy SD Guidance v1.6 - 19 September 2016

Apprenticeship levy SD guidance v1.5 - 4 July 2016

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 18 of 314 Attachment of Earnings

Direct Earnings Attachments: employer guidance 4 April 2016

The Department for Work and Pensions (DWP) has published guidance for employers and software developers on how a DWP Debt Management Direct Earnings Attachment (DEA) should be operated.

Two sets of guidance have been published:

 Direct Earnings Attachment – A Guide for Employers - This guide explains what an employer needs to do if DWP Debt Management asks them to implement a Direct Earnings Attachment (DEA).

 A More Detailed Guide has also been developed to complement the publication Direct Earnings Attachment – A Guide for Employers. It is intended to provide employers and payroll software developers with more detail and worked examples on how a DWP Debt Management DEA should be operated.

Find out more about DEAs in the guide Make benefit debt deductions from an employee’s pay.

CIPP related News

 Higher Rate Direct Earnings Attachments (DEAs) - 10 August 2015

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 19 of 314 CIPP Policy & Research

General News

CIPP webcasts – have you listened in yet? 13 October 2016

The CIPP Policy team short webcasts are an easy way to update you and your team on aspects of payroll legislation.

Topics over the last few months include:

 Holiday pay and leave – October 2016  Gender Pay Gap reporting - September 2016  Apprenticeship Levy - July 2016  Payroll legislation update - June 2016  Student Loans - May 2016  Expenses and benefits changes - April 2016

Visit My CIPP on our website to access the webcasts.

If you cannot open the My CIPP link, then paste the URL (https://www.cipp.org.uk/my-cipp/webinars.html) into your browser.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 20 of 314 Informal consultation

CIPP Survey – Supervision under Money Laundering Regulations 20 June 2016

There are twenty-two statutory supervisors who have been granted authority by Parliament to provide supervision under the Money Laundering Regulations 2007.

If you are an Accountancy Service Provider (ASP) you have to be supervised. An ASP can provide, bookkeeping services, payroll services, accounting, auditing or tax adviser service.

An ASP has to register with one of the twenty two statutory supervisory authorities and normally their choice would be their professional body, however in the absence of their professional body being one of the twenty two statutory supervisors the default supervisor would be HMRC.

The CIPP are currently running a short survey to establish how CIPP members, who are in business in their own right currently fulfil this legal requirement.

Full guidance on complying with the Money Laundering Regulations can be accessed on GOV.UK.

The survey will close on the 29 July and should take no more than five minutes to complete.

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CIPP Annual Payslip Statistics Survey 5 July 2016

The CIPP Policy team has been running an annual payslip statistics survey since 2008. The information you provide helps the team and the CIPP understand the latest trends in respect of pay frequencies, payment methods and payslip distribution. This year the survey also includes questions on Payroll Giving, salary sacrifice and automatic enrolment.

The survey closes on 5 August 2016, and whilst we appreciate this is a busy time of year for all payroll professionals we are grateful for your time and would welcome your support if you could spare around 15 minutes to answer the questions in this survey.

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Policy Think Tank: Employee self serve 16 August 2016

The CIPP Policy and Research team would like to extend an invitation to full and fellow members only, to join us in London on 31 August 2016 when we will be holding a Think Tank, hosted by Bacs Payments Schemes Ltd.

The Policy and Research team believes that no knowledge is ever wasted and the CIPP Think Tanks look to take steps to ensure that the wealth of knowledge and experience that is held by full and fellow members can be harnessed to the full.

Aim of the event The need for accurate information regarding our employees personal data is not a new requirement – however over the last year it has come to our attention that the impact of employees updating or inputting their information either by way of HR/manager self-serve functionality in software or directly through a Government facility e.g. Personal Tax Account has taken on greater importance in a couple of areas.

The aim of this event is to bring together subject matter experts and CIPP members – to share experiences of challenges, pinch points and positives that will provide the opportunity for a wider understanding, which in turn should lead to less disruption (which can occur when processes aren’t clearly understood) and an ultimate aspiration would be for us to identify where improvements could be made that will improve the experiences of employees, employers, software developers and HMRC (and through HMRC other government departments and agencies). The Chartered Institute of Payroll Professionals Policy News Journal

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The focus will be on two main areas of importance:

Bank Account details The Current Account Switch Service (CASS) may be used by individuals to move their bank account from one provider to another. As part of CASS, advices are provided electronically to Service Users so that they can update their customers’ records with the new bank account details. Bacs is aware that the use of HR ‘self service’ systems means that some Service Users that generate payroll payments expect their employees to maintain their own bank account details. These beneficiaries have in some instances received conflicting messages which have caused confusion and, in some cases, lead to payments being missed or other problems. Bacs is keen to engage with CIPP members to consider how this issue might be addressed and to explore any mutually beneficial solutions that might be identified.

Main residence address There has always been a clear message that the employee is responsible for ensuring that HMRC (and other Government departments and agencies) are provided with up to date personal details where they may change, for the purposes of this forum we are focussing on the main residence address. The introduction of the Scottish Rate of Income Tax has caused a greater need for accuracy of main residence address which has resulted in the employer submissions being acknowledged as a source of up to date data – which in turn has brought in to question long standing beliefs. This meeting aims to provide clarity and understating on the processes involved when dealing with the employee address.

If you are a full or fellow member and would like to participate at our Think Tank in London on 31 August 2016, please email us no later than 24 August 2016 to secure your place.

Your host for the event is CIPP Senior Policy and Research officer, Samantha Mann and representatives from BACS Payments Services Ltd and HMRC will also be in attendance. If you have any questions before the event Sam is contactable at [email protected] or 0115 922 6423.

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Payroll bureaux and agents -pinpointing the pinch-points of GNS and employer prompts 19 August 2016

We recently published a survey on behalf of HMRC to gather your views on the Automated Penalty Appeal Service and your experience of receiving messages via the Generic Notification Service.

One very popular comment from payroll bureaux – which has been said many times since the introduction of Generic Notifications and Employer Prompts, is:

“It would be exceedingly useful if the Employer's reference was quoted on the emails so that employers with multiple references didn't have to try every reference to discover which one the GNS referred to…”

“Please add in the PAYE reference - with 800 individual in-house companies using the same e-mail address - an e- mail asking me to check for a GNS message is ignored as I do not have the time to check 800 individual online accounts.”

“I am an agent with multiple PAYE clients; the lack of any indication, in the emails received, to which client the notice relates is a major flaw. It would be extremely helpful to include the employer's name in the email notification in future.”

Thank you to everyone who responded to this survey and thank you for all your observations.

Looking specifically at the comments noted above we have been asked if we could provide some screen shots or descriptions of the agent's process in order to establish the point at which the problem occurs and where an enhancement would help for both GNS or e-mail alerts.

Please send any examples you have to policy by Friday 2 September 2016, marked for the attention of Samantha Mann (CIPP Senior Policy & Research Officer). Thank you in advance for taking the time to assist.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 22 of 314 What is your experience of Beneficial Loans? Policy Think Tank – Solihull 12 September 2016

CIPP Policy and Research team believe that no knowledge is ever wasted and a Policy Think Tank looks to ensure that the wealth of knowledge and experience that is held by CIPP full and fellow members can be harnessed to the full and for the benefit of the wider payroll community. The Subject of discussion and debate for the next Think Tank is Beneficial Loans and Voluntary Payrolling.

The CIPP Policy team along with HMRC would like to invite you to join us in Solihull on 23rd September 2016 when we will be holding a Think Tank which offers members an opportunity to discuss the subject of beneficial loans and voluntary payrolling.

Background The government is currently considering extending voluntarily payrolling of benefits-in-kind to include employer- provided loans or “beneficial loans”.

As you may know, beneficial loans can only be reported using the P11D process following the end of the assessment year, with tax collected during the following assessment year in arrears. Due to the difficulties of payrolling loans, they were not included in the wider introduction of voluntary payrolling from April 2016.

HMRC are now considering the options available to include loans in payrolling and would like to ask if you could help us explore this further. Two particular areas they would like to discuss with members are:

 Do you currently operate informal payrolling on beneficial loans? If not, why?  Would HMRC need to change the current valuation method to make payrolling more administratively simple?

Ideally, HMRC would like to speak to members who informally payroll beneficial loans already or at least offer beneficial loans to their employees. Members who want to offer loans, but don't because of the current system are also welcome.

It would also be valuable to speak to payroll providers who have been asked to provide software to payroll beneficial loans, or have experience of developing such software.

To encourage debate and participation, this CIPP Think Tank will take the form of a round-table forum, so numbers are strictly limited and places will be allocated on a first come, first served basis.

Date and time: 11am – 1pm Friday 23rd September 2016 (Registration from 10.30)

Host: HMRC Offices, Solihull

Open to: CIPP full and fellow members from industry sectors which may be particularly affected by this legislation

Timetable: 10.30 Registration 11.00 Open with introductions 11.15 Background and opening to discussion from HMRC 11.30 Roundtable discussion and debate 12.45 Conclusion and next steps 13.00 Close

If you would like to attend please email Policy by no later than 20 September. Alternatively email Policy and send any comments, view or experiences that you would like to feed in to this discussion, please mark your email for the attention of Samantha Mann, Senior Policy & Research Officer and Policy lead for this roundtable.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 23 of 314 Payroll bureaux and agents - pinpointing the pinch-points of GNS and employer prompts 29 September 2016

During the summer the CIPP Policy team published a survey on behalf of HMRC to gather your views on the Automated Penalty Appeal Service and your experience of receiving messages via the Generic Notification Service.

One very popular comment from payroll bureaux – which has been said many times since the introduction of Generic Notifications and Employer Prompts and that is:

The Policy team would like to say a huge thank you to everyone who responded to this survey and thank you also for all comments. Looking at the comments noted above (and similar that have been received anecdotally) we have been asked if we could provide some screen shots or descriptions of the agent's process so as to establish the point at which the problem occurs and where an enhancement would help for both GNS or e-mail alerts.

Thank you for examples already provided and in advance for any and all further examples you can send marked for the attention of Samantha Mann, CIPP Senior Policy & Research Officer to [email protected].

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 24 of 314 Quick Polls

CIPP poll on off-payroll working in the public sector 11 April 2016

From April 2017 responsibility for deciding whether intermediaries legislation will apply, will move from Personal Service Companies (PSCs) to Public sector employers and their agencies/third parties. The latest CIPP poll asks how this will impact you.

The Government announced at Budget 2016 that from April 2017, individuals working through their own company in the public sector will no longer be responsible for deciding whether the intermediaries legislation will apply. This responsibility will instead move to the public sector employer, agency, or third party that pays the worker’s intermediary. In the event that the employer, agency or third party decides that the rules apply to a contract they will be required to account for and pay the liabilities through the Real Time Information (RTI) system and deduct the relevant tax and NICs.

Further to this announcement a technical note was published which provides further details on the changes that are being proposed. The note gives not only an overview of the changes but also further technical details and the next steps.

It is the intention of HMRC to provide help for public sector employers and agencies with their new responsibilities by introducing clear, objective tests for employers to use to decide at the point of hire whether or not they will need to consider the new rules and to clearly identify engagements that are caught by the rules. For cases that are less clear cut, HMRC aim to develop a digital tool to provide employers who are engaging an incorporated worker with a real-time HMRC view on whether or not the intermediaries rules need to be applied.

HMRC will be designing these new tools and tests in consultation with stakeholders. Legislation will be introduced in Finance Bill 2017 and will also be subject to full consultation.

Please take a moment to complete our CIPP Poll on our home page (bottom right) which asks:

From April 2017 responsibility for deciding whether intermediaries legislation will apply, will move from PSC to Public sector employers and their agencies/third parties. How will this impact you?

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CIPP quick poll on Gender Pay Gap reporting 11 May 2016

Regulations are due to come into force in October 2016 which will require private and voluntary sector employers in England, Scotland and Wales with at least 250 employees, to submit gender pay gap reports annually.

To help us understand awareness and readiness, please take a moment to complete our CIPP Poll on our home page (bottom right) which asks:

“If gender pay gap reporting applies to you (250+ employees) will you be ready for reporting requirements from October 2016?”

Background

Draft regulations were published for consultation in February 2016. Responses are currently being analysed by the Government Equalities Office (GEO).

Commencement and scope Subject to the approval of Parliament, the regulations will come into force on the earliest relevant common commencement date (1 October 2016), although employers will not be expected to publish the required information immediately. Employers with 250 or more relevant employees will fall within scope of the regulations. A relevant employee means someone who ordinarily works in Great Britain and whose contract is governed by UK legislation.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 25 of 314 Defining Pay To ensure comparability with national gender pay gap figures, GEO has been consistent with the definition of pay used by the Office of National Statistics (ONS) for the Annual Survey of Hours and Earnings (ASHE). As such “pay” includes basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and other pay (including car allowances paid through the payroll, on call and standby allowances, clothing, first aider or fire warden allowances). It does not include overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay and tax credits.

Publication timetable Employers may need to introduce new systems or processes to analyse their gender pay gaps. To ensure that employers have sufficient lead in time, they will have about 18 months after commencement to publish the required information for the first time and must then publish annually thereafter.

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CIPP quick poll on Apprenticeship Levy 15 June 2016

Do you have employees in more than one UK nation? If so, this will mean the requirement to use more than one apprenticeship body when the Apprenticeship Levy is introduced.

To help us understand awareness and readiness, please take a moment to complete our CIPP Poll on our home page (bottom right) which asks:

England, Scotland, Wales and Northern Ireland have individual apprenticeship authorities affecting the introduction of the Apprenticeship Levy in 2017; do you have employees in more than one nation?

Background to the Apprenticeship Levy

The levy will apply to all UK employers in both the private and public sectors.

The levy will be charged at a rate of 0.5% of an employer’s pay bill. Levy payments will be collected monthly by HMRC through Pay as You Earn (PAYE), payable alongside tax and National Insurance. Pay bill will be based on total employee earnings subject to Class 1 secondary National Insurance contributions (NICs).

Individual employers’ funding for apprenticeship training in England will be made available to them via a new Digital Apprenticeship Service (DAS) account. Employers will be able to use this to pay for training for apprentices. The service will also support employers to identify a training provider, choose an apprenticeship training course and find a candidate.

Employers will be able to use their funding (up to a cap which will depend upon the standard or framework that is being trained against) to cover the cost of an apprentice’s training, assessment and certification.

Operational guidance for employers

Information on the operating model of the apprenticeship levy has been published which will help employers understand how the levy will operate from April 2017 and how funding for apprenticeship training in England will be accessed by all employers, whether they pay the levy or not. The Chartered Institute of Payroll Professionals Policy News Journal

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Key areas of the guidance are:

Accessing money paid under the apprenticeship levy

Once you have paid the levy to HMRC you will be able to access funding for apprenticeships through a new digital apprenticeship service account. You will be able to use this to pay for training and assessment for apprentices in England. The service will also help you find training providers to help you develop and deliver your apprenticeship programme. Separate arrangements will be in place in Scotland, Wales and Northern Ireland.

Employers who operate in England and other parts of the UK

The levy will apply to all UK employers in both the private and public sectors.

The amount entering your digital apprenticeship service account will be how much you have available to spend on apprenticeship training in England.

Apprenticeships are a devolved policy, which means that authorities in each of the UK nations manage their own apprenticeship programmes, including how funding is spent on apprenticeship training.

The digital apprenticeship service will support the English apprenticeship system. Scotland, Wales and Northern Ireland have their own arrangements for supporting employers to access apprenticeships.

If you’re an employer with operations in Scotland, Wales or Northern Ireland, you may also want to contact their apprenticeship authority:

 Scotland  Wales  Northern Ireland

To calculate how much you will have to spend through the English system, HMRC plan to use data that they already hold about the home address of your employees. They will use this data to work out what proportion of your pay bill is paid to employees living in England. This assessment will take place in early 2017; HMRC will announce the exact date in advance.

Employers can update their employees address as part of their Real Time Information returns. HMRC is testing the accuracy and suitability of this approach and will provide more details in October 2016.

CIPP comment There are still many details being worked through with the Apprenticeship Levy. The CIPP Policy Team continues to be involved in consultation and will update members and the profession as soon as we have further information.

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CIPP Poll on flexible working 20 July 2016

Approximately what percentage of your workforce has applied for flexible working within the last 2 years?

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 27 of 314 Just over two years ago, the government extended the right to apply for flexible working to all employees, as long as they have at least 26 weeks’ service with their current employer.

Before 30 June 2014, the right only applied to parents of children under the age of 17 years (or 18 years if the child was disabled) and certain carers.

There are many types of flexible working, such as job sharing, working from home, working full-time but over fewer days, flexitime and part-time working.

Requests must be considered and decided upon by employers within 3 months of the receipt of the request and employers must have a sound business reason for rejecting any request.

To help us understand in part how much flexible working has become part of our culture, please take a moment to complete our CIPP Poll on our home page (bottom right) which asks:

Approximately what percentage of your workforce has applied for flexible working within the last 2 years?

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A third of respondents plan on payrolling in 2017-18 27 September 2016

The CIPP Policy team have been running a poll on the new website asking if you are planning to take up voluntary payrolling of benefits for the 2017-18 tax year.

We received 573 responses throughout September and 33% of respondents said yes, they would be taking up voluntary payrolling of benefits next year, but what of the remaining 67%? What is stopping the 35% who said ‘no’ they would not be, and the 32% who are still undecided?

Register for Payrolling BiKs in 2017 If you are planning to take up voluntary payrolling of BiKs you can register now or anytime up to 5 April 2017, however HMRC advises employers to register before the annual tax coding process begins, which is usually around 21 December to avoid being sent multiple tax codes for employees with payrolled benefits.

Go to GOV.UK for full guidance and the link to register.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 28 of 314 Construction Industry

Posted Workers Enforcement Directive: Impact on construction industry 4 February 2016

The Government’s response to the consultation on implementing the Posted Workers Enforcement Directive confirms that new regulations will be introduced so that a posted worker in the construction sector can bring an individual claim for unpaid wages for the national minimum wage against a contractor in an employment tribunal.

Background In July 2015 the Department for Business, Innovation & Skills published a consultation ‘Implementing the Posted Workers Enforcement Directive’.

Posted workers are individuals who are employed in one European Member State but sent by their employer to work temporarily in another Member State before returning home.

The 1996 Posted Workers Directive (96/71/EC) provides a framework so that both businesses and workers can take full advantage of the opportunities offered by the single market. The Directive supports the freedom to provide services across the EU and provides both fair competition for businesses and respect for the rights of the workers.

It entitles posted workers to statutory employment rights in the country they are posted to. These are:

 maximum work periods and minimum rest periods;  minimum paid annual holidays;  minimum rates of pay, including overtime rates;  the conditions for hiring out workers, in particular the supply of workers by temporary employment firms;  health, safety and hygiene at work;  protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth;  children and young people; and  equality of treatment between men and women and other non-discrimination provisions.

The 2014 Enforcement Directive (2014/67/EU) builds on mutual co-operation information and enforcement requirements in the 1996 Directive and must be transposed by 18 June 2016. It also introduces a requirement for subcontracting liability in the construction sector.

Government response The Government’s response to the consultation states that the UK will meet its obligations under the Enforcement Directive by taking a light touch approach that does not go beyond the EU requirements and balances the rights of both workers and the burdens on the businesses that employ them.

Regulations will be introduced to bring in some new measures to implement the requirements of the Posted Workers Enforcement Directive. These measures will introduce limited subcontracting liability in the construction sector. This means that a posted worker in the sector can bring an individual claim for unpaid wages for the national minimum wage against a contractor in an employment tribunal. A due diligence defence will be available to the contractor.

Subcontracting liability will be limited to the construction sector and to the contractor one up the supply chain from the posted worker’s direct employer.

Guidance will be issued in due course to ensure that employers and employees in the UK are aware of the minimum rights for workers and how they can be enforced. Going forward, the Government will enforce the Enforcement Directive, making sure that UK competent authorities cooperate and collaborate on cross-border issues.

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CIS System improvements 27 April 2016

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 29 of 314 The CIPP Policy Team represents members through the Construction Industry Scheme (CIS) Operational Forum and has recently been provided with an update on the Generic Notification Service and improvements to online verifications.

The GNS messages are due to start on 30 May 2016. Those contractors who have registered an email address will get an email alert telling them that they have messages.

The information below gives guidance on how to access these messages for both HMRC software users and those who use 3rd party software. Also detailed are all the messages and scenarios for the system to issue them.

Although online verifications are not being mandated until April 2017, the improvements backend have already been made. Anybody using the online system now will still be using the existing screens, but the functionality behind these screens has been greatly improved. Screen changes to the HMRC online service are due to come in on 30 May 2016.

Generic Notification Service (GNS) Messages

Contractors will be able to view messages sent to them by HMRC by logging into Online Services and selecting the generic notification notices from within the Notice summary section.

Contractors can also view their notifications in their commercial payroll software, as long as it is compatible with viewing generic notifications. Contractors must contact their software provider to check if it is compatible.

The GNS message itself is not sent through email to an ‘Inbox’; instead, they are sent to an electronic ‘holding area’. The electronic message can then be viewed by the contractor and / or their agent either using their third-party software or their Online Services account. The Online Services application has functionality to allow the contractor or their agent to mark their electronic messages as ‘Complete’.

On receipt of a contractor’s monthly return, the following GNS messages may be generated for the contractors’ information.

 CIS Return Inactivity Confirmation – Confirmation of the start and end dates for Periods of Inactivity.  Period of Inactivity about to end – Notification of when a Period of Inactivity will end.  Submission of a return reporting payment and deduction information for a Period of Inactivity – Notification that the Period of Inactivity has been ended following receipt of a return which reports payment and deduction information during a Period of Inactivity.  Submission of a ‘nil return’ in a Period of Inactivity - Notification that the Period of Inactivity will continue despite receipt of a ‘nil return’ during a Period of Inactivity.  Return amendment where the number of subcontractors has changed – We are seeking confirmation from the contractor that this is correct. If not, we are asking the contractor to amend the return to reflect the correct number of subcontractors.  Cost of Materials Enquiry – There is an entry on a return where the cost of materials is equal to, or exceeds, the total payments made to the subcontractor(s) shown. We are asking the contractor to confirm this is correct. If not, we are asking the contractor to amend the return or to call the CIS Helpline to tell us why this has happened.  Inactivity Request for a wrong period – A request for a Period of Inactivity has been made for an inappropriate period or we already hold a request for that same period. We are asking the contractor to confirm the position.  Return Not Filed Yet – Notification that the return for the current month has not been received and requesting that the return is submitted immediately, otherwise there may be late filing penalty charges.  Subcontractor Tax Treatment Enquiry – According to our records an incorrect deduction rate has been applied to one, or more, subcontractors’ payments on the return. We are asking the contractor to check their records and, if an error has been made, to amend the return. Alternatively, if the contractor believes they have given us the correct information, they will need to call the CIS Helpline for further advice.  Return Submission, Unmatched Subcontractor – A return has been received with payment and/or deduction information that we cannot assign to a subcontractor’s record. We are asking the contractor to check their records and, if they have given us incorrect information to make an amendment. If the contractor believes the information to be correct, they are asked to call the CIS Helpline for further advice.

Verifications

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 30 of 314  From 6 April 2017, it will be mandatory to undertake all verifications online. Until that date, however, the CIS Helpline will still accept verification requests by telephone.  In the meantime, the online verification process has been improved to give contractors better results when they attempt to verify subcontractors online and the information they have used is not entirely correct. For example, where a contractor is trying to verify a subcontractor with a spelling error in the subcontractor’s name, CISR will be able to recognise this and return the correct subcontractor details.  New CISR verification functionality will include searches against the subcontractor’s UTR, Name, NINO or CRN in order to match the subcontractor’s record. Where the UTR, NINO or CRN are provided, this will return an exact match during the verification.  Users of the HMRC online filing application will now see a “Tax Treatment” column on their list of subcontractors, showing the subcontractor’s tax treatment from the most recent verification undertaken online. If a subcontractor’s tax treatment is changed internally by HMRC staff, using CISR, the “Tax Treatment” column in the HMRC online filing application will not be updated on the online record. In these circumstances, the contractor will be advised on the CIS316 ‘Change of Tax Treatment’ letter to re-verify the subcontractor to ensure their online records are up to date.  It will be possible for a contractor to submit a verification request and/or a monthly return without a particular subcontractor’s UTR but the contractor will be advised that, in such circumstances, the subcontractor’s verification will be ‘unmatched’.  It will now be possible to verify a subcontractor where their UTR matches a known subcontractor on CISR, as long as the NINO or CRN also matches what is on the subcontractor’s record, even if the subcontractor’s name has failed to match the CIS Record.  The facility within the HMRC online filing application that allows contractors to input directly a subcontractor’s tax treatment status have been withdrawn and only the tax treatment information generated by HMRC will be displayed.

The Construction Industry Scheme Operational Forum (CISOF) is an HMRC forum that provides feedback from the construction industry on the day-to-day performance of the Construction Industry Scheme. CIPP’s Samantha Mann attends thig forum so if you have any comments or issues that you would like raised, please send them to policy with CISOF as the subject title.

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Improving the operation of the Construction Industry Scheme 9 May 2016

Estimated examples have been published detailing the admin burden impact of the improvements to the operation of the Construction Industry Scheme (CIS).

From 6 April 2016 legislation has been introduced to improve the administration of CIS. The changes include:

 a simpler process for sub-contractors to achieve gross payment status  mandatory online filing of monthly returns and subsequent amendments for contractors  an improved online verification service for contractors to verify the status of sub-contractors, but this will not be mandatory until April 2017.

The overall impact is that there will be a negligible one-off implementation cost for these measures mostly due to subcontractors opting to apply for gross payment status. The estimated average administrative savings in the first 5 years is £400,000 per annum.

The document below contains detailed estimates of the administrative burden impact of the CIS reform.

Administrative burden impact of the Construction Industry Scheme (CIS) reform - estimates

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 31 of 314 HMRC survey on CIS deductions 7 June 2016

HMRC are looking at Construction Industry Scheme (CIS) deductions with a view to improving the repayment process.

HMRC has have prepared a short survey to help them to understand what is causing customers to mis-report CIS on EPSs so they can then publish guidance which may help prevent the most common problems occurring.

If you operate CIS we would be grateful if you could spare five minutes to complete this short survey and the results will be fed back to HMRC. Thank you.

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Construction Industry Scheme (CIS) 21 June 2016

Two updates have been made to guidance relating to the Construction Industry Scheme (CIS).

Commercial software suppliers HMRC accepts forms and returns filed using any of the products listed in the commercial software suppliers document. This is a list of recognised suppliers that provide software for the Construction Industry Scheme online.

Details for Thesaurus Software Ltd have been updated.

Repayment claims for limited company subcontractors If you are a limited company acting as a subcontractor and have had deductions taken from your Construction Industry Scheme (CIS) payments and want to reclaim them, this guidance explains the process you need to follow.

The repayment claims postal address within the guidance has been updated.

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Construction Industry Scheme: businesses based outside UK 7 July 2016

HMRC have updated their guidance for construction business based outside of the UK.

Construction Industry Scheme (CIS) covers construction work done in the UK and applies whether you’re based in the UK or abroad. There are different registration processes for sole traders, partnerships and companies.

The update affects information and guidance on CIS registrations.

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CIS online service verification issues 14 July 2016

Five issues are currently affecting subcontractor verification through the HMRC Construction Industry Scheme (CIS) online service.

The message below has been posted on the CIS service availability and issues web page and sets out what these issues are, and what to do if you encounter them.

Issue 1: verifications done previously online The Chartered Institute of Payroll Professionals Policy News Journal

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If subcontractors’ verification details were obtained online, the HMRC CIS online service is removing those details when they become 2 years old. Therefore, when you look at those subcontractors’ records on the subcontractor list screen you will see ‘Unknown’ against the subcontractor’s verification number and tax treatment and the service is telling you that verification is required.

Issue 2: verifications done by telephone, where the data is then manually input into the HMRC CIS online service

If you previously verified any subcontractors by calling the CIS Helpline and then manually input the information into the HMRC CIS online service, these details will no longer be available for viewing. When you look at the subcontractor’s record on the subcontractor list screen you will see ‘Unknown’ against the subcontractor’s verification number and tax treatment and the service is telling you that verification is required. The option to input verification details manually has been removed to prevent contractors entering the wrong information for their subcontractors.

Action to take: issues 1 and 2 Where you use the HMRC CIS online service for verifications and for sending in your monthly returns, you will need to verify again the subcontractors you still use. If you no longer use the affected subcontractors, then you don’t need to verify them again and you can delete them from the HMRC CIS online service. You should verify all your subcontractors online using the HMRC CIS online service where possible. This will update the information held on the subcontractors’ records within the service. In certain cases, you might need to verify one or more subcontractors by telephone through the CIS Helpline. You can verify up to 10 subcontractors on each call. Where you have verified subcontractors by telephone, you will later need to verify them again online so that their records are updated. This doesn’t happen automatically when you verify by telephone, and you can no longer input this information manually. You can still send in your return, even if you haven’t verified one or more subcontractors.

Issue 3: adding new subcontractors to the HMRC CIS online service

When you add a subcontractor to the HMRC CIS online service, you need to choose the right category of subcontractor from the 4 options available. These are:  Individual  sole-trader  limited company  Partnership firm or trust.

If you choose the wrong option you may not be able to verify the subcontractor later on.

Action to take Where this happens, simply delete the subcontractor’s record and set them up again, choosing the right option.

Issue 4: using the HMRC CIS online service to send your return to HMRC

If you’re ready to send your monthly return to HMRC using the HMRC CIS online service and you have selected one or more subcontractors that need to be verified, you will get a message warning you about this.

Action to take You can verify the subcontractors using the ‘Verify subcontractor’ link or, you can continue to send your return and re- verify the subcontractors at a later time, before your next return is due.

Issue 5: ‘Timeout’ error messages

The HMRC CIS online service was designed to handle a small number of subcontractors, and was provided for the benefit of contractors who were unable to purchase third-party commercial software. We have recently become aware that a few contractors have set up more subcontractors on the service than it was designed for. Where this happens, a ‘timeout’ error message may be displayed or the system will not work at all.

Action to take There is no short-term fix for this issue. If you’re seeing a ‘timeout’ error message, you should reduce the size of your subcontractor list by deleting all those subcontractors you no longer use. Alternatively, you may wish to think about purchasing a suitable third-party commercial software package that can handle verifications and contractor monthly returns.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 33 of 314 Webinars for the Construction Industry Scheme (CIS) 17 August 2016

Live and recorded webinars are available from HMRC for CIS contractors and subcontractors detailing how the scheme works, how to meet tax obligations, payments, deductions and keeping records.

CIS for contractors The next live webinar for contractors is on 30 August 2016, 5pm to 6pm .This session details how the scheme works, taking on and paying subcontractors, and how to meet your tax obligations.

CIS for subcontractors The next live webinar for subcontractors is on 31 August 2016, 6pm to 7pm. This session details how to join the scheme, what deductions will be made from your payments and what records you need to keep.

You can ask questions during the presentation and get answers from the HMRC host. Register and log in at least 5 minutes before a live webinar is due to start.

For further information see webinars, emails and videos for CIS on GOV.UK.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 34 of 314 Employment News

Citizen News

Immigration Bill receives Royal Assent 26 May 2016

The Immigration Act 2016 will introduce new sanctions on illegal working, prevent illegal migrants accessing services and introduce new measures to enforce immigration laws.

On Thursday 12 May 2016, the Immigration Bill received Royal Assent and is now known as the Immigration Act 2016. The Act will:  introduce new sanctions on illegal workers and rogue employers  provide better co-ordination of regulators that enforce workers’ rights  prevent illegal migrants in the UK from accessing housing, driving licences and bank accounts  introduce new measures to make it easier to enforce immigration laws and remove illegal migrants.

Full details of all the measures in the Immigration Act 2016, including the various amendments to the original bill, will be updated on GOV.UK shortly.

Measures in the act will be implemented over the coming months so it is the ideal time for employers to ensure they have good processes in place for right to work checks.

It is important to ensure the rules on preventing illegal working are adhered to as the consequences for non- compliance can be serious. Employers can face criminal prosecution and hefty fines; the maximum civil penalty for illegally employing an immigrant increased from £10,000 to £20,000 in May 2014.

On GOV.UK the UK Visas and Immigration and Immigration Enforcement have An employer’s guide to right to work checks which details:

 what a right to work check is  why you need to do right to work checks  whose documents you should check  how to carry out checks  when to carry out initial checks, follow-up checks and what happens under TUPE  what documents are acceptable.

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Over £21m in penalties issued for employing illegal workers 9 June 2016

In the second half of 2015 over £21 million in penalties were issued to employers in the UK for hiring illegal workers.

UK Visas and Immigration and Immigration Enforcement publish a quarterly report showing the total number of fines (civil penalties) for illegal working given to employers in each region of the UK.

The total number of illegal workers identified in the second half of 2015 was 1820, the highest number of which were in the London & South East England region. 1217 penalties in total were issued to employers.

On GOV.UK the UK Visas and Immigration and Immigration Enforcement have An employer’s guide to right to work checks which details:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 35 of 314  what a right to work check is  why you need to do right to work checks  whose documents you should check  how to carry out checks  when to carry out initial checks, follow-up checks and what happens under TUPE  what documents are acceptable.

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New illegal working offences come into force under Immigration Act 12 July 2016

The Immigration Act 2016 will today bring into force new sanctions on illegal working, prevent illegal migrants accessing services and introduce new measures to enforce immigration laws.

Full details of all the measures in the Immigration Act 2016, including the various amendments to the original bill, will be updated on GOV.UK shortly.

In the second half of 2015 over £21 million in penalties were issued to employers in the UK for hiring illegal workers. UK Visas and Immigration and Immigration Enforcement publish a quarterly report showing the total number of fines (civil penalties) for illegal working given to employers in each region of the UK.

See the UK Visas and Immigration and Immigration Enforcement’s employer’s guide to right to work checks for useful reminders of how to comply.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 36 of 314 Employment Law & Guidance

Scotland Bill 2016 becomes an Act of Parliament 31 March 2016

Following much debate in the Houses of Parliament, the Scotland Bill has received Royal Assent and is now an Act of Parliament (law).

Following agreement by both Houses on the text of the Bill it received Royal Assent on 23 March. The Scotland Act 2016 fulfils the commitments made by the UK Government to devolve substantial powers to the Scottish Parliament.

These will include the ability to set income tax rates and thresholds, control over a significant part of the welfare system and a wide range of other measures which will transform the Parliament at Holyrood into one of the most powerful devolved administrations in the world.

Recent CIPP news

 Income tax rates to be frozen in Scotland - 22 March 2016

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Non-compete clauses in employment contracts under review 5 May 2016

The government is to investigate non-compete clauses which can be written into employment contracts and can prevent individuals from competing against their former employer or working for a competitor for a set period of time.

Business Secretary Sajid Javid has announced plans to look into employment rules that could be stifling British entrepreneurship by preventing employees from starting up their own business after leaving a job.

In a move designed to back even more small businesses and entrepreneurs across the country, the government is launching a call for evidence asking for views on what are known as ‘non-compete clauses’ – which can be written into employment contracts and can prevent individuals from competing against their former employer or working for a competitor for a set period of time, sometimes up to 9 months after leaving a firm.

The clauses are only enforceable in a court of law if it protects a legitimate interest and is reasonable. However, there have been suggestions that they can hinder start-ups from hiring the best and brightest talent, so the government is asking for views from individuals and employers on whether this type of practice is acting as a barrier to innovation and employment.

The move is the latest by the government to deliver on its pledge to make Britain the best place in Europe to innovate and start up a new business, with an Innovation Plan, setting out how the government can help make the UK a better place to turn ideas into new products and technologies, due to be published later this year.

The plan will look at a range of key areas, including how better regulation can drive innovation and opportunities to use the millions of pounds spent on public procurement every year to support new and exciting businesses.

UK businesses are being asked to give their ideas to feed into the new government Innovation Plan.

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Acas guide on sex discrimination in the workplace 5 May 2016

Workplace experts, Acas, have published a new guide to help employers and managers identify, tackle and prevent sex discrimination in the workplace.

The Chartered Institute of Payroll Professionals Policy News Journal

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From 1 April 2015 to 31 March 2016, the Acas helpline dealt with 7,175 calls related to sex discrimination in the workplace. 91% of these calls were from employees and 8.3% of these calls were from employers. Of the employee calls, 78.7% were from women and 21.2% were from men.

The new guidance will help employers and managers get to grips with the laws around equality and to be aware of any behaviour that could be considered as sex discrimination.

The new Acas guide Sex discrimination: key points for the workplace covers the basics of sex discrimination as defined within the Equality Act.

Sex discrimination can apply to men or women. It can happen between members of the opposite sex but it is also just as unlawful for a man to discriminate against another man as it is for a woman to discriminate against another woman due to their sex.

The guidance includes best practice advice around how to deal with the six common workplace areas where sex discrimination can occur.

 Recruitment.  Pay, terms and conditions of employment.  Promotion opportunities.  Training opportunities.  Dismissals.  Redundancies.

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Enterprise Bill becomes law 6 May 2016

The Enterprise Bill has now received parliamentary approval (Royal Assent) and becomes the Enterprise Act.

The package of measures in the Act will help the government deliver on many of its commitments, from cutting red tape and tackling late payment to boosting the quality and quantity of apprenticeships.

The Enterprise Act includes measures to:

 establish a Small Business Commissioner to help small firms resolve issues such as late payment  include the actions of regulators in the government’s £10 billion deregulation target and increase transparency through annual reporting requirements  extend the successful Primary Authority scheme to make it easier for businesses to access consistent, tailored and assured advice from local authorities, giving them greater confidence to invest and grow  protect and strengthen the apprenticeship brand, introduce targets for apprenticeships in public sector bodies in England, and establish an Institute for Apprenticeships – an independent, employer-led body that will make sure apprenticeships meet the needs of business  create a legal obligation for insurers to pay claims to businesses within a reasonable time.

Additional measures under the Enterprise Act will:

 reform the business rates appeals system  enhance shop workers’ rights to opt out of working on Sundays  pave the way for bringing private capital in to the Green Investment Bank  amend the Small Business Enterprise and Employment Act relating to the Pubs Code and adjudicator  put a cap of £95,000 on exit payments in the public sector  allow the government to fund UK Government Investments Limited  update the Industrial Development Act to help support the roll-out of telecommunications and broadband.

Some provisions of the Enterprise Act will commence automatically, whereas other provisions will require regulations. Under the Act, secondary legislation will be required in a number of areas as part of wider implementation. The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 38 of 314

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Trade Union Bill becomes law 6 May 2016

The Trade Union Bill has received parliamentary approval (Royal Assent) and becomes the Trade Union Act 2016.

The government announced a series of modernising reforms in 2015 to ensure strikes can only go ahead as a result of a clear and positive democratic mandate from union members: upholding the ability to strike while reducing disruption to millions of people. The Trade Union Act will ensure industrial action only ever goes ahead when there has been a ballot turnout of at least 50%.

In important public services, including in the health, education, transport, border security and fire sectors, an additional threshold of 40% of support to take industrial action from all eligible members must be met for action to be legal. During the Parliamentary process, the government agreed to commission an independent review into electronic balloting within 6 months.

Employment Minister Nick Boles said:

“These changes will ensure people are only ever disrupted by industrial action when it is supported by a reasonable proportion of union members. The Trade Union Act means the rights of the public to go about their lives are fairly balanced with members’ ability to strike.”

The Trade Union Act will also improve union practices and increase transparency by:

 setting a 6 month time limit (which can be increased to 9 months if the union and employer agree) for industrial action so that mandates are always recent  requiring a clearer description of the trade dispute and the planned industrial action on the ballot paper, so that all union members are clear what they are voting for  creating a transparent process for trade union subscriptions that allows new members to make an active choice of paying into political funds  giving more powers to the Certification Officer to ensure new and existing rules are always followed by unions  reducing the burden on taxpayers by ensuring that payroll deductions for trade union subscriptions are only administered where the cost is not funded by the public and ensuring transparency and greater accountability relating to the use of public money for facility time (check off U-turn).

The implementation date of the Act has not been specified however October 2016 is anticipated.

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Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2016 10 May 2016

On 8 May 2016 amendments to the Conduct Regulations came into force which reduce certain regulatory burdens on employment agencies and employment businesses.

The Statutory Instrument (The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2016) amends the Conduct Regulations 2003’ to reduce certain regulatory burdens on employment agencies and employment businesses by omitting some of the regulations while continuing to protect work-seekers.

Regulation 27A is also amended to bring generic recruitment advertising, as well as advertising to fill specific posts, within the prohibition there related to advertising elsewhere in the EEA.

The recruitment sector is regulated by the Employment Agencies Act 1973 and the Conduct Regulations 2003. The sector has two legally defined types of service:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 39 of 314  employment agencies which introduce people to be employed by the hirer directly;  and employment businesses which employ or engage people to work under the supervision of another person.

The legislation covers all employment agencies and employment businesses in England, Scotland and Wales and provides a framework for contracts between employment agencies/employment businesses, hirers and work-seekers. It also covers principles such as restrictions on fee-charging and ensuring that temporary workers are paid for the work they have done.

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Non-compete clauses: call for evidence 1 June 2016

The government previously announced plans to investigate non-compete clauses which can be written into employment contracts and can prevent individuals from competing against their former employer or working for a competitor for a set period of time. A call for evidence has now been published.

The Non-compete clause: call for evidence is seeking views on whether non-compete clauses stifle entrepreneurship and innovation by preventing people from:

 moving between employers  developing innovative ideas  creating a start-up  growing a business.

The Department for Business, Innovation & Skills (BIS) would like to hear your views, experience, and evidence of non-compete clauses so that they can understand:

 when and why they are used  their prevalence  the benefits or disadvantages associated with them.

This call for evidence will run until 19 July 2016.

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Ethnicity Pay Gap Bill 13 June 2016

A Bill has begun its passage through the Houses of Parliament which will require employers with 250 or more employees to report on the remuneration of employees for the purpose of showing whether there are pay differences for those from different ethnic groups.

Further details will be available as the Bill progresses through parliament but what we know at the moment is that the Ethnicity Pay Gap Bill may not require an employer with fewer than 250 employees to report information, nor any organisation specified in Schedule 19 to the Equality Act 2010; public authorities, government departments or part of the armed forces.

Regulations may specify what information about employers must be included in the report; what information about employees must be included in the report; the way in which an employer must calculate the number of its employees; when and how frequently employers must report and the form and manner in which employers must report.

Regulations may not require an employer to report more frequently than once in every 12 month period, subsequent to the first report.

When the Bill becomes an Act of law it will extend to England and Wales.

The Chartered Institute of Payroll Professionals Policy News Journal

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What does Brexit mean for UK employment law? 17 August 2016

Read an informative article from law firm Lewis Silkin which considers the implications for employment law in the UK following the vote on 23 June to leave the EU.

James Davies from law firm Lewis Silkin has written an informative article which considers some of the potential implications of the UK leaving the EU for employers and employees.

On 23 June 2016, the UK voted to leave the European Union. The implications for the workplace could be huge, as a significant proportion of our employment law comes from Brussels. Once out of the EU, the UK government could in theory repeal discrimination laws, collective consultation obligations, transfer of undertakings regulations, family leave, working time rules and duties to agency workers among other laws. But would the government really do that?

Possible implications of a Brexit Many EU employment protections, such as equal pay, race and disability discrimination laws, and the right of return from maternity leave existed in some form in the UK before being imposed by Europe. It seems unlikely that a UK government would rescind rights that predate European laws. Another reason that the government might be reluctant to repeal employment law protection is that much of it is regarded, by employers, employees and even by politicians, as a good thing. Employment rights such as family leave, discrimination law and the right to paid holiday are now widely accepted; indeed, family leave rights in this country go further than required by EU directives. One very pragmatic reason for the UK to continue to follow European employment law is that, it will wish to stay in some sort of trading relationship with the EU, its biggest export partner, albeit not full EU membership. The arrangements that Switzerland and countries in the European Economic Area, such as Norway, have with the EU involve adherence to a significant amount of EU employment law. Any trade agreement between the UK and the EU is likely to require something similar.

It will take some time for the UK to extricate itself from the EU. Once the UK has given the EU formal notification of its withdrawal, there will be a two year period in which the parties will negotiate the terms of departure and possibly put in place new trading arrangements. Some commentators believe it will take considerably longer than that to agree exit terms but, unless both the UK and the European Council agree to extend negotiations the UK will simply cease to be a member of the EU at this point.

Even after the process has been completed and the UK has left the EU (and assuming no other restrictions imposed by another free trade agreement), European law might continue to apply in one way or another because disentangling it from UK law will take some time. Some EU-derived laws are contained in secondary legislation made under powers given by the European Communities Act 1972 (ECA), the law that implements EU law in the UK. If the ECA is repealed, all the secondary legislation made under it - such as the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) - will fall away unless preserved by another piece of legislation. The repeal of the ECA would not, however, affect EU law implemented through primary legislation, such as the Equality Act 2010 (EqA). Primary legislation would remain in force until repealed piece by piece.

It is therefore unlikely that all EU law will be removed at once. The approach is more likely to be gradual, with legislation being repealed – or merely modified – over time. So, if freed from European constraints, what is it likely that the government would actually change?

Agency Workers The most likely contender for complete revocation is the Agency Workers Regulations 2010. These are unwieldy, unpopular with business and not noticeably popular with workers either.

Discrimination and family leave For the reasons already mentioned, any wholesale repeal of equality protection or family leave seems improbable. Although the government could repeal the EqA after exiting the EU, it would be a controversial move. It is difficult to imagine many employers arguing that they should be free to discriminate and any change to the existing regime of direct discrimination, indirect discrimination and harassment seems unlikely. There may, however, be some small modifications. It is possible that, following a Brexit, a cap could be imposed on compensation for unlawful discrimination. Another possibility is that the government could change the law to allow positive discrimination in favour of under-represented groups in a way that is currently impermissible under EU law.

Rights to parental and family leave in the UK are a mixture of rights deriving from the EU and rights originating in the UK. UK maternity leave and pay preceded the EU rights and are more generous in some respects. The new right to The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 41 of 314 shared parental leave and the right to request flexible working are both purely domestic in origin. Accordingly, although some critics consider these rights to be a burden on business, there seems little political appetite for their repeal or even for watering them down.

Transfer of Undertakings TUPE can attract a bad press, but the principle that employees should transfer when a business changes hands or is contracted out is often useful for business and is incorporated and priced into many commercial outsourcing agreements. For this reason, although there may be some businesses that would like to get rid of TUPE, it seems more likely that the government would make some small changes to make it more business friendly, such as permitting the harmonisation of terms following a TUPE transfer.

Holidays and working time The right to statutory paid holiday under the Working Time Regulations 1998 (WTR) is also now broadly accepted. However, there are aspects of this right, and of other rights under the WTR, that the government might want to amend if not prevented from doing so by membership of the EU. Various European Court of Justice (ECJ) decisions on holiday pay are unpopular with UK businesses - for example, the right to keep accruing holiday while on sick leave and the fact that holiday pay should be based on all aspects of remuneration, not just basic pay. The government might choose to tweak these laws to make them more commercially acceptable, such as by retaining a right to paid holiday based on basic pay whilst limiting rights to accrue and carry over holiday pay. The UK may also wish to remove the cap on weekly working hours under the WTR. It is less clear that there is a demand to limit the WTR rights to other rest breaks or the protections for night workers.

Collective redundancy consultation Collective redundancy consultation obligations were reduced by the last government. The requirement is now not particularly onerous and it is not clear what might happen to it following a Brexit. Trade unions are likely to fight against any proposal to remove it altogether but employees arguably do not feel strongly about this right (and many do not know about it). On the other hand, it is not obvious that businesses regard it as a burden that should be removed. Similarly, other collective consultation rights such as national and transnational works councils are possible candidates for repeal but the obligations imposed by them on UK businesses are relatively light.

Legal precedent If we retain some EU law following Brexit, the UK courts are likely to continue to regard judgments of the ECJ on those laws as persuasive, even if not binding. In any event, pre-Brexit UK court decisions incorporating ECJ reasoning would remain binding on lower courts and tribunals. It is not clear how far UK courts would be able to treat exit from the EU as a material circumstance that would allow them to depart from precedent. They might do so, but could feel obliged to follow precedent in order to preserve legal certainty.

In conclusion, it seems unlikely that UK employment law will be transformed in significant ways, particularly in the short term.

Lewis Silkin has produced a series of articles on the implications of Brexit which can be accessed here.

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Brexit: Employment Law 17 October 2016

The House of Commons Library has published an interesting briefing paper which explains how UK employment law works in relation to EU employment law and what the effects of Brexit are likely to be.

A substantial component of UK employment law is grounded in EU law. EU employment law where it exists provides a minimum standard below which domestic employment law must not fall.

In some cases EU law has entrenched, at an international level, provisions that already existed in domestic law; for example, race discrimination and certain maternity rights. In other cases, new categories of employment rights have been transposed into domestic law to comply with emerging EU obligations. These new rights were often resisted by the UK government during EU negotiations; for example, agency workers’ rights and limitations on working time.

Subject to the provisions of the EU withdrawal arrangements or a subsequent trade agreement, withdrawal from the EU would mean that UK employment rights currently guaranteed by EU law would no longer be so guaranteed. In consequence, a post-Brexit government could seek to amend or remove any of these.

The precise mechanism by which this could be achieved would vary depending on the right in question: The Chartered Institute of Payroll Professionals Policy News Journal

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 some rights are enshrined in primary legislation: these are alterable only by primary legislation (e.g. equality rights under the Equality Act 2010);  some EU-derived rights are located in secondary legislation, and are therefore susceptible to revocation by secondary legislation (e.g. agency worker and working time rights);  some EU rights have direct effect, meaning that individuals can rely directly on EU law (for example the right to equal pay contained in the Treaty2) – these rights would automatically cease to apply upon exit from the EU, absent any domestic legislation saving them, or new international obligation to maintain them.

The main point to note is that EU-derived employment rights featuring in primary legislation would be relatively insulated from the effects of leaving the EU, although would be newly susceptible to the possibility of change. Greater uncertainty surrounds the implications of Brexit for secondary legislation, in which much employment law is contained.

There is a useful table at the end of the briefing paper which lists EU employment rights together with their domestic implementing legislation.

PM guarantees current workers’ legal rights

In her speech to the Conservative Party conference during October 2016, the Prime Minister committed the Government to preserving EU-derived employment rights:

“The final thing I want to say about the process of withdrawal is the most important. And that is that we will soon put before Parliament a Great Repeal Bill, which will remove from the statute book – once and for all – the European Communities Act.

This historic Bill – which will be included in the next Queen’s Speech – will mean that the 1972 Act, the legislation that gives direct effect to all EU law in Britain, will no longer apply from the date upon which we formally leave the European Union. And its effect will be clear. Our laws will be made not in Brussels but in Westminster. The judges interpreting those laws will sit not in Luxembourg but in courts in this country. The authority of EU law in Britain will end.

As we repeal the European Communities Act, we will convert the ‘acquis’ – that is, the body of existing EU law – into British law. When the Great Repeal Bill is given Royal Assent, Parliament will be free – subject to international agreements and treaties with other countries and the EU on matters such as trade – to amend, repeal and improve any law it chooses. But by converting the acquis into British law, we will give businesses and workers maximum certainty as we leave the European Union. The same rules and laws will apply to them after Brexit as they did before. Any changes in the law will have to be subject to full scrutiny and proper Parliamentary debate.

And let me be absolutely clear: existing workers’ legal rights will continue to be guaranteed in law – and they will be guaranteed as long as I am Prime Minister.”

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 43 of 314 Employment Tribunals

Childcare vouchers and maternity leave 5 February 2016

The Employment Appeal Tribunal (EAT) has heard an appeal on the previously untested issue of whether or not an employer can make it a requirement of joining its childcare vouchers scheme that employees agree to suspend their membership while on maternity leave

In June 2015 the Employment Tribunal found in the case of Donaldson v Peninsula Business Services that it was discriminatory for the employer to make it a requirement to join its childcare vouchers scheme that employees agree to cease to be a member of the scheme while on maternity leave.

On 22 January 2016, the Employment Appeal Tribunal (EAT) heard the appeal against the employment tribunal, the outcome of which we are waiting to hear.

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Employers must include commission in holiday pay calculation 23 February 2016

In the long running British Gas v Lock case, the Employment Appeal Tribunal has dismissed the appeal from British Gas, however we must await the outcome of further cases before we know exactly how to include commission when calculating holiday pay.

The Employment Appeal Tribunal (EAT) dismissed the appeal made by British Gas against Lock and held that there is no difference in principle between payment for non-guaranteed overtime and payment in respect of commission so far as annual leave pay is concerned.

The non-guaranteed overtime relates to the case of Bear Scotland v Fulton where in October 2014 the EAT ruled that EU law can be read across into the Employment Rights Act 1996 so as to require employers to take into account non- guaranteed overtime payments when calculating pay for the basic four week holiday entitlement under regulation 13 of the Working Time Regulations 1998.

Background Mr Lock was at the material time employed by British Gas as a salesman. His remuneration package included a basic salary plus commission which was based on the number and type of contracts he persuaded customers to enter into; in other words it was results-based commission and did not depend on how much work was done.

Mr Lock took a number of days’ holiday to which he was entitled, however, the remuneration paid to him during holidays consisted only of basic salary and any commission which had been earned earlier but happened to be paid at that time. Since he was not working he could not earn any commission while he was on holiday.

He complained to the Employment Tribunal that that method of calculating his holiday pay was contrary to the requirements of section 221 of the Employment Rights Act 1996 and regulation 16 of the Working Time Regulations 1998, as amended. He submitted that the domestic legislation could be, and therefore had to be, interpreted in a way which conforms to the requirements of Article 7 of the European Union’s Working Time Directive.

There had previously been a reference made by the Employment Tribunal to the Court of Justice of the European Union, which held that Article 7 of the Directive requires results-based commission to be taken into account when calculating an employee’s holiday pay. In March 2015 the Employment Tribunal then held that it was possible to interpret the domestic legislation in a way which conforms to the requirements of the Directive by reading words into regulation 16.

British Gas subsequently appealed.

CIPP comment Although the Employment Appeal Tribunal (EAT) has at last handed down its decision in this case, employers are still left with uncertainty as the reference period to be used to calculate holiday pay still needs clarification. The CJEU did say in the Bear Scotland case that it is for the national court to assess the link between the various components which The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 44 of 314 make up the total remuneration of the worker and that assessment must be carried out on the basis of an average over a reference period which is judged to be representative - leaving it somewhat open to interpretation. We remain hopeful that The Department for Business, Innovation & Skills (BIS) will be in a position to develop long awaited guidance once the outcome of further cases are decided later in the year.

The CIPP run a practical half day course which includes an overview of the legal framework that governs holiday pay and entitlement, as well as worked exercises to explore the calculations thoroughly. This course will always include the most up to date information to account for ongoing case law. Visit the training area of our website for full details.

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Acas Early Conciliation: what is a 'month'? 15 April 2016

When the time limit for an employment tribunal claim is extended by a month (under s207B ERA 1996) after Acas Early Conciliation, does the extension run following the 'corresponding date' rule (e.g. from 30th June to 30th July)?

Yes, held the EAT in Tanveer v East London Bus and Coach Company Limited, dismissing the Claimant's appeal against a decision barring his unfair dismissal claim as out of time.

The Claimant was dismissed on 20th March 2015, he went to ACAS on 18th June 2015 and an Early Conciliation 'EC' Certificate was issued on 30th June 2015 ('Day B' in Section 207B ERA). The Claimant's solicitors presented the Claim Form on 31st July 2015, and the unfair dismissal claim was dismissed by the employment tribunal as one day late, but time was extended for a discrimination claim.

The appeal turned on the application of the 'corresponding date' rule to Section 207B, which extends time for a claim by one month after Day B. The rule meant that time runs from the date in question (the issue of the EC certificate) to the corresponding date in the following month (i.e. 30th June to 30th July), or the last day in a shorter month, e.g. 31st May to 30th June. The EAT followed as binding the House of Lords decision in Dodds v Walker, a tenancy case, but also noted that this interpretation made for clarity and simplicity. 'One month after Day B' did not mean one month from "in this case" 1st July. As Lord Diplock said in Dodds "all that the calculator has to do is mark in his diary the corresponding date in the appropriate subsequent month"•

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Taxpayer pays £1.5m in Protective Awards case 25 April 2016

The BBC has reported that 374 employees, who were made redundant with just one day’s notice when the company went into administration, have each been given the equivalent of eight weeks' wages in compensation.

Tullis Russell Papermakers, based at Markinch in Fife, went into administration in April 2015. Lawyers said that despite the company directors being under an obligation to provide employees with at least 45 days' notice - as more than 100 workers were losing their jobs - this was ignored, meaning each employee was entitled to sue for compensation.

However, acting alone would have meant each affected worker lodging "an extremely complex" and expensive employment tribunal claim, so they made a joint bid.

David Martyn, a senior employment lawyer at Thompsons, the firm that represented the workers, said:

"The more notice the workforce have to prepare for these devastating changes, the better they can organise their financial responsibilities to soften the blow. This award of compensation will be paid by UK administration service.

That means that the taxpayer has picked up the tab because company directors have played fast and loose with the rules. This has to stop and I believe we need to see more criminal prosecutions of companies that behave this way."

The Chartered Institute of Payroll Professionals Policy News Journal

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When staff handbook absence policy is contractual 25 April 2016

Is an absence management policy in a Staff Handbook 'apt for incorporation' into employee contracts?

Yes, held the Court of Appeal, on the facts in Department for Transport v Sparks, dismissing the Department's appeal against a finding that an absence management policy had contractual effect.

The case arose from a dispute as to whether certain parts of the Department's staff handbook were incorporated into employees' contracts. The Claimants (7 in all) had obtained a declaration in the High Court that certain clauses in the Department's Staff Handbook had contractual effect. The appeal focused on a short-term absence management policy, which, if contractual, restricted managers' scope for taking disciplinary action until specific trigger points had been exceeded, 21 days of short-term absence in any 12-month period.

The Court reviewed the tests for the incorporation of handbook policies into employment contracts. Viewing the employment documents as a whole, the relevant introductory wording of the handbook pointed to a 'distinct flavour of contractual incorporation'. The fact that it might generally be a desirable feature of industrial management to handle absence matters through non-contractual policy would not prevent a particular provision from being 'apt for incorporation'. In contrast, a policy that was stated as forming a 'framework within which to approach such matters' would not be contractually binding.

Practitioners may wish to note that the Court stated that with the handbook existing only in electronic form, it was far from satisfactory that various versions of it had been irretrievably deleted on updating without retaining previous versions.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Subject access requests: shorter timeframe under General Data Protection Regulation 26 April 2016

Employers may need to rethink the way they handle subject access requests (SARs) from staff to ensure they comply with new EU data protection laws that have been finalised.

The General Data Protection Regulation (GDPR) will require employers to respond to SARs in a shorter timeframe than that which applies under existing UK data protection laws when it comes into force in the middle of 2018.

The new timeframe will pose a challenge for employers that do not have a defined process for handling SARs. A failure to meet the deadline or provide employees with access to all the data they request could expose employers to a significant fine under the new Regulation.

If this change could affect you or your business, you can read the full details from Pinsent Masons on Outlaw.com.

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Regular voluntary overtime to be included in holiday pay 27 April 2016

An employment tribunal ruling adds another layer of complexity to the already onerous holiday pay calculations.

The Midlands West Employment Tribunal have just ruled that in calculating the amount of holiday pay that an employer pays to its workers, it has to include payments for voluntary overtime, voluntary standby and voluntary call out The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 46 of 314 payments, providing that work has been undertaken with sufficient regularity to have become part of the worker’s normal pay.

With thanks to St Philips Barristers for providing not only the details of this latest case, but a comprehensive summary of related cases and regulations:

The case ‘White & Others v Dudley Metropolitan Borough Council’, concerned 56 workers who were employed by Dudley MBC as specific and multi-skilled tradesman, who were engaged in the repair and maintenance of the Council’s housing stock. All of the employees worked a standard 37 hour contract, with some also working 2 or 4 hours additional contractual overtime.

The Council calculated their holiday pay based on those core contractual hours (ie basic pay) only. In addition to those hours the employees worked additional voluntary overtime (often at weekends) and, again on a purely voluntary basis, joined a one in four or five week rota in which, when their rota week came round, they remained on standby for out of hours emergency work and if necessary call out if emergency work was required during those hours. The workers would then be paid an additional payment for all voluntary work, standby out of hours and call outs that they undertook.

In addition, some were paid a mileage allowance for trips between jobs. Those payments consisted of the cost of the trip plus an additional sum which was taxed as a benefit in kind. The Council excluded all of the additional payments from their calculation of holiday pay, on the grounds that it was not contractual pay. They argued that there was no contractual obligation to do the extra work and as the work was voluntary, it could not be said to have derived from their contracts.

There are three types of holiday leave:

 The first type is holiday leave under regulation 13 of the Working Time Regulations, which implements Article 7 of the Working Time Directive. It relates to the first 20 days of annual leave that a worker has in any leave year.  The second type of holiday leave is under regulation 13A of the Regulations. This covers 8 additional days, essentially the bank holidays.  The last type relates to any extra days that a worker may have under their contract. Both regulation 13A and purely contractual days are to be determined by s221-224 of the Employment Rights Act 1996 and relate to work done under the contract of employment.

Purely voluntary work cannot be said to be under the contract of employment, so this case concerned the first 20 days’ leave only, under regulation 13 of the Working Time Regulations.

The starting point is that workers must be paid their normal levels of remuneration during their rest periods or annual leave. Article 7 of Working Time Directive 2003/88/EC states:

Annual leave . Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.

The Working Time Regulations 1998 (SI 1998/1833), as amended, state:

13 Entitlement to annual leave … a worker is entitled to four weeks’ annual leave in each leave year… 13A Entitlement to additional annual leave … a worker is entitled in each leave year to a period of additional leave determined in accordance with paragraph (2) The period of additional leave to which a worker is entitled under paragraph (1) is… (e) in any leave year beginning on or after 1st April 2009, 1.6 weeks… 16 Payment in respect of periods of leave A worker is entitled to be paid in respect of any period of annual leave to which he is entitled under regular 13 and regulation 13A, at the rate of a week’s pay in respect of each week of leave. Sections 221 to 224 of the 1996 Act shall apply for the purpose of determining the amount of a week’s pay for the purposes of this regulation…

Section 13 of the Employment Rights Act 1996 (‘ERA’) gives workers the right not to suffer unauthorised deductions from wages. Section 23 ERA gives workers the right to present a complaint about such a deduction to a tribunal (now to be read as giving workers the right to notify ACAS of a dispute) within three months of the deduction or of the last deduction or payment in a series.

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In British Airways plc v Williams[1] the Supreme Court determined, following a referral to the CJEU that, for the duration of annual leave remuneration must be maintained and that workers must receive their normal remuneration for that period of rest. The purpose of the requirement of payment for that leave is to put the worker, during such leave, in a position which is, as regards remuneration, comparable to periods of work. The Supreme Court quoted the CJEU (at paras 23 and 24) ‘although the structure of the ordinary remuneration of a worker is determined, as such, by the provisions and practice governed by the law of the Member States, that structure cannot affect the worker’s right … to enjoy, during his period of rest and relaxation, economic conditions which are comparable to those relating to the exercise of his employment. …. Accordingly, any inconvenient aspect which is linked intrinsically to the performance of the tasks which the worker is required to carry out under his contract of employment and in respect of which a monetary amount is provided which is included in the calculation of the worker’s total remuneration, … must necessarily be taken into account for the purposes of the amount to which the worker is entitled during his annual leave’ and ‘the concept of normal remuneration as a temporal component. Accordingly to the natural meaning of the word, ‘normal’ can only refer to something which has existed as a point of reference for comparison … the expression essentially implies that remuneration which in itself fluctuates at regular intervals is levelled out to an amount representing average earnings’.

In Lock v British Gas[2], the Employment Tribunal held (after a referral to the CJEU) that the commission earned by Mr Lock must be taken into account when calculating his holiday pay. In Bear Scotland Ltd & Ors v Fulton & Ors[3], the EAT held that non-guaranteed overtime must be taken into account when calculating the pay to which a worker in entitled during a period of paid annual leave. Langstaff P defined ‘non-guaranteed overtime’ as the situation where there is no obligation on an employer to provide overtime, but if that work is available then the employee is obliged to perform it. He continued: ‘voluntary overtime’ is work which the employer asks an employee to do but which the employee is free of any contractual obligation to perform unless he agrees at the time to do so’.[4]

Thus, it has been known for some time now that the first 20 days of annual leave (or regulation 13 leave under the Working Time Regulations) must contain all elements of contractual pay including non-guaranteed overtime. It was not at all clear whether it should also include all elements of non-contractual voluntary pay. In a possible landmark decision of the Birmingham West Employment Tribunal, Employment Judge Warren (Birmingham’s designated Holiday Pay Judge) accepted that for regulation 13 pay, the question was not whether the work was ‘intrinsically linked to the contract’ but whether it had become ‘normal pay’, ie that which is normally received. The Judge referred to the judgment of Langstaff P. (as he then was) in the EAT decision of Bear Scotland in which the Judge said in paragraph 29 ‘The purpose of the requirement for that leave is to put the worker during such leave, in a position which is, as regards remuneration, comparable to periods of work’ at paragraph 34 ‘what was inconvenient in Williams related to what an employee could be required to carry out. The question was not that, but what ‘normal remuneration’ actually was’ and finally in paragraph 44 ‘despite the subtlety of many of the arguments, the essential point seem relatively simple to me. Normal pay is that which is normally received’. Employment Judge Warren went on to find that for the test Claimants in the case the voluntary overtime, standby, call out work and mileage that they had done, had been done for such period and such regularity to become part of their normal work and accordingly part of their normal pay. In the circumstances the Judge ruled that the payment for that work had to be included in the calculation of holiday pay for the first 20 days of annual leave, under regulation 13 of the Working Time Regulations. The 8 additional days’ holiday (essentially the bank holidays) under regulation 13A and any extra purely contractual holiday were based on the contractual work undertaken and thus excluded purely voluntary work, so holiday leave for those remaining days will continue to be calculated as before.

Two recent cases were put before the Employment Judge, although neither were binding on her, as the first was from the Northern Ireland Court of Appeal and the other was a first instance decision of the Employment Judge Camp, then sitting in the Leicester Employment Tribunal. In Patterson v Castlereagh Borough Council[5], the NICA had to determine the status of purely voluntary overtime. In that case the Employer’s QC conceded that voluntary overtime should be included for the purposes of regulation 13 leave. The NICA it reviewed Williams, Lock and Bear Scotland paragraphs 14 to 18 of the judgment before concluding paragraphs 21 and 22 that the concession had been well made stating ‘there is no reason why voluntary overtime should not be included as a part of a determination of entitlement to paid annual leave. It will be a question of fact for each Tribunal to determine whether or not that voluntary overtime was normally carried out by the worker and carried with it the appropriately permanent feature of the remuneration to trigger its inclusion in the calculation’ and ‘Unravelling the threads of the decision we have come to the conclusion that the Tribunal erroneously determined that voluntary overtime could not as a matter of principle be included in the calculation of holiday pay for the purposes of the WTR’.

In Whitehead & Ors v EMH Housing & Regeneration Limited[6] EJ Camp awarded the Claimants sums in respect of unauthorised deductions from wages in respect of the Respondent’s failure to calculate their holiday pay to take account of the payments they received for standby allowances and call-out payments. EJ Camp found that the standby and call-out payments were not directly linked to tasks any of the claimants was contractually required to carry out, and held that that was not the relevant question[7]. He held that the “real issue in dispute is: are standby and call-out payments parts of remuneration that must be reflected in holiday pay under the Directive?”[8] relying on paragraphs 19 and 20 of Williams which state ‘for the duration of ‘annual leave’ within the meaning of [the Directive], remuneration must be maintained… in other words, workers must receive their normal remuneration for that period of rest’. The

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 48 of 314 purpose of paid leave is to put the worker, during such leave, in a position comparable to the one he is when he is working; and a reduction in holiday pay may deter him from taking holiday, contrary to the purpose of Article 7.[9]

CIPP comment We don't know if there will be an appeal submitted on this latest case ‘White & Others v Dudley Metropolitan Borough Council’. It is also likely that there are other cases still waiting to be heard that may also have an impact in this area. We have contacted BIS for advice about the effect of this judgement on payroll and we will publish their response when we receive it.

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Right to privacy not engaged by employer investigating emails 5 May 2016

When an employer investigated an employee's emails to a work colleague, was Article 8 of the European Convention on Human Rights (right to privacy) engaged?

No, held the EAT in Garamukanwa v Solent NHS Trust, on the facts of that case.

With thanks to Daniel Barnett’s employment law bulletin which summarises the case:

The Claimant was a clinical manager for the Trust. He formed a personal relationship with a staff nurse, Ms MacLean. The Claimant then suspected that Ms McLean had formed a relationship with a female colleague, Ms Smith. He resented this. Anonymous malicious emails were sent from various fictional email addresses to management. Ms Maclean also became concerned that the Claimant was now harassing and stalking her. The employer investigated, and concluded there were items on the Claimant's iPhone which implicated him and linked him to the anonymous emails. He was dismissed for gross misconduct. His claim for unfair dismissal failed.

In the course of the employment tribunal proceedings he unsuccessfully argued that the employer had acted in breach of Article 8 by examining matters related purely or essentially to his private life. The employment tribunal rejected this. It considered that Article 8 was not engaged on account that the emails had a potential impact on work, and dealt, at least in part, with work related matters.

The EAT agreed. It relied on the guidance of Mummery LJ in X v Y on the impact of Convention rights in unfair dismissal cases. The first question always to be asked is whether the circumstances of the dismissal fall within the ambit of one or more articles of the Convention. Unless they do, the rights are not engaged and need not be considered further.

Article 8 does extend to protect private correspondence and communications and, potentially, emails sent at work where there is reasonable expectation of privacy. However, here, the emails had impacted on work related matters and the emails were sent to work addresses of the recipients. They distressed colleagues, potentially affecting their work, and the Claimant's judgement, as a manager, was rightly to be examined.

These were all features that entitled the employment tribunal to conclude that Article 8 was not engaged and therefore not relevant because the Claimant had no reasonable expectation of privacy in respect of such communications.

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Claim for payment of notice 10 May 2016

Does an employee's willingness to negotiate a termination package prevent a claim of constructive dismissal?

No, held the High Court in Gibbs v Leeds United Football Club.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 49 of 314 The Claimant was the assistant manager at Leeds United. The manager he worked with was sacked. The Claimant was asked if he was interested in becoming head coach but he declined. He expected to be dismissed although he was asked to continue in his role whilst discussions were held about a consensual departure.

The Claimant was not expected to work with the new manager. He was excluded from any meaningful part in the training of the first team, which was part of his normal duties, and he was not invited to pre-season training. Instead, he was told by email that he was to have no contact with the first team and he would work with the youth academy. He resigned in response.

The High Court held that it was not a breach of contract on his part to initiate a discussion about consensual termination. The fact that he had said that he was prepared to leave if suitable terms were agreed was beside the point. He had remained ready and willing to fulfil his duties. The email was repudiatory, since it led to a plain loss of status, and he had resigned in response to that and was therefore entitled to succeed in his claim for notice pay.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Definition of Employee 16 May 2016

Can an employment tribunal take account of the absence of mutuality of obligation when deciding whether an individual is an employee for the purpose of the Equality Act 2010?

Yes, held the Court of Appeal in Secretary of State for Justice v Windle and Arada.

The Claimants were professional interpreters who provided work for HMCTS on a case-by-case basis. They were self- employed for tax purposes and did not receive holiday or sick pay.

Proceedings were brought against the MoJ for racial discrimination. The employment tribunal dismissed the claims on the basis that the Claimants were not employees for the purposes of the Equality Act 2010. Citing Quashie v Stringfellows, the employment tribunal considered that it was relevant that there was no obligation on the Claimants to accept any assignment, and thus there was no mutuality of obligation.

The EAT disagreed, finding that the absence of mutuality of obligation was only relevant in considering whether a contract of employment existed, and was irrelevant to whether there was a “contract personally to do work” as specified by the Act.

Restoring the employment tribunal’s decision, the Court of Appeal found that, despite the fact that demonstrating mutuality of obligation between parties was not a pre-condition for the definition of 'employment' under the Equality Act, it was a factor capable of shedding light on the nature of the relationship.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Indirect religious discrimination 18 May 2016

Was it indirect religious discrimination to dismiss a teacher for refusing to leave her husband after his conviction for sex offences?

Yes, held the Employment Appeal Tribunal (EAT) on the facts in Pendleton v Derbyshire County Council, upholding the Claimant’s appeal against the dismissal of a claim of indirect religious discrimination.

The Claimant was a teacher of many years unblemished service. Her husband, a Headteacher, was convicted of making indecent images of children and voyeurism. The School dismissed the Claimant for failing to end her relationship with her husband. The Claimant won an unfair dismissal claim as the School failed to show that the dismissal was for gross misconduct or SOSR.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 50 of 314 As the dismissal was based on a ‘practice’ of dismissing someone who had chosen not to end a relationship with a convicted sex offender, the Claimant alleged indirect religious discrimination; her Christian faith meant that she regarded her marriage vows as sacrosanct. The employment tribunal rejected that claim, but the EAT overturned the decision and substituted a finding of indirect religious discrimination.

The EAT held that on the facts, it was inevitable that the Claimant would be in a group (those holding a belief in the sanctity of marriage vows) that was put at a particular disadvantage by the School’s ‘practice’ of dismissing those in her situation, and there was no justification for the dismissal. The EAT noted that on these highly unusual facts, a ‘practice’ was established, and in the crisis of conscience that faced the Claimant (and others of similar beliefs) there was a ‘particular disadvantage’ and so unlawful discrimination.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Injury to feelings under Working Time Regulations for no rest breaks? 24 May 2016

Can a worker claim compensation for injury to feelings if not allowed rest breaks under the Working Time Regulations (WTR)?

No, held the Employment Appeal Tribunal (EAT) in Santos Gomes v Higher Level Care Ltd, dismissing the Claimant’s appeal.

The Claimant won compensation from an employment tribunal after her employer had failed to provide her with 20- minute rest breaks in shifts over 6 hours, breaching Regulation 12 (1) of the WTR 1998. The Employment Judge refused to award compensation for injury to feelings.

The EAT rejected a series of arguments to the effect that either UK or EU law required compensation to be paid for injury to feelings, noting that compensation to a worker for a breach of the entitlement to rest breaks was akin to a claim for breach of contract, although an award takes into account any loss sustained by the worker and the default of the employer in not allowing rest breaks.

The EAT noted that a claim for compensation for damage to health might be made, e.g. if a worker were made ill by a lack of rest breaks. Nothing in the Directive or EU law provides for compensation for injury to feelings for this right, nor does UK law.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Unfair Dismissal: Procedure and Polkey 15 June 2016

Can a dismissal be found to be procedurally unfair without specifying the breach of procedure?

No, held the EAT in Express Medicals v O'Donnell.

The Claimant was the minority shareholder in a company. There were discussions with the majority shareholder to negotiate an exit, after a falling out between them, but he was dismissed while the process was still continuing. The employment tribunal noted that there was an "ongoing discussion and dialogue" but found the dismissal unfair because "no particular procedure" had been followed.

The Respondent argued that this was a dismissal for some other substantial reason but neither party addressed the issue of whether the ACAS Code of Practice would apply, and nor did the employment tribunal make a finding on the point. In circumstances where there had already been some dialogue between the parties, it also failed to specify what further steps the Respondent ought to have taken.

It was a further error not to make a Polkey deduction where there had been a finding of fact that the relationship had "seriously deteriorated and could not necessarily be considered to remain tenable". The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 51 of 314

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

If an award to a claimant is made in an unfair dismissal case, it usually consists of two elements: a basic award and a compensatory award. The basic award is based on pay, age and years of service, and the compensatory award covers the financial loss relating to the dismissal. Both are subject to limits and potential deductions. One of the most common deductions to compensatory awards is called the Polkey deduction (or reduction) and it can occur when an employer has been found to have acted unfairly in dismissing an employee by failing to follow correct procedure.

Read more from Acas on understanding the Polkey deduction.

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Reinstatement after Unfair Dismissal 21 June 2016

Before making an order for reinstatement, does an employment tribunal have to be satisfied that reinstatement would be acceptable to both parties?

No, held the Supreme Court in McBride v Scottish Police Authority.

The Claimant was a fingerprint officer who had been involved in a notorious Scottish Criminal case which had led to a Detective, Shirley McKie, being charged and then acquitted of perjury concerning a contested fingerprint at a murder scene. The case had generated intense media and political criticism in Scotland.

The Claimant was subsequently unfairly dismissed following a reorganisation. The employment tribunal ordered her reinstatement under s114 Employment Rights Act, but impliedly accepted that she would be employed in a non- court going role. The employer appealed on the basis that the Claimant would not accept such a restriction.

The Supreme Court held that the only obligation under s114 was that a Claimant be restored to their contractual employment. On the facts it would be practicable to restrict the Claimant to non- court employment and there was no evidence such a restriction would be in breach of contract

A decision on very specific facts, but the judgment is a useful analysis of the principles of reinstatement and redeployment.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Acas Code does not apply to Ill Health Dismissals 23 June 2016

The Employment Appeal Tribunal has held that the Acas Code of Practice on Disciplinary and Grievance Procedures does not apply to ill health dismissals.

In the case Holmes v QinetiQ the Claimant was dismissed on the grounds of ill health. It was conceded that the dismissal was unfair because of the failure to obtain an up to date occupational health report. At the remedy hearing, the Claimant contended that the Acas Code applied and that due to the unreasonable failure to follow the code he was entitled to an uplift under s.207A (Effect of failure to comply with Code: adjustment of awards) of the Trade Union and Labour Relations (Consolidation) Act 1992.

The EAT agreed with the employment tribunal that the Acas Code did not apply. Rather, the Acas Code applies to all cases where an employee's alleged act or omissions involve culpable conduct or performance on their part that requires correction or punishment e.g. misconduct and poor performance. It was difficult to see how ill health fell into this category.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 52 of 314 The position would be different where the ill health leads to a disciplinary issue such as a failure to comply with sickness absence procedures. In that situation the disciplinary procedure is invoked to address alleged culpable conduct.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Report on courts and tribunal fees 23 June 2016

The House of Commons Justice Committee has published a report on courts and tribunal fees which considers changes introduced in recent years as well as proposals for future changes.

Much of the Report deals with the impact of fees introduced in July 2013 for bringing cases before employment tribunals, which have been particularly controversial. For claims such as unfair dismissal, discrimination, whistleblowing and equal pay, fees of up to £1,200 are charged to those seeking to challenge their employers.

The introduction of these fees led to an undisputed and precipitate drop in the number of cases brought, approaching 70%. According to the report, the startling drop was not predicted by the government.

In oral evidence to the Commission considerable emphasis was placed on the fact that in the year beginning in April 2014, Acas had dealt with 83,000 early conciliation cases.

However the Commission state in their report that they heard a considerable amount of evidence that, far from encouraging early conciliation and resolution of disputes, employment tribunal fees were having precisely the opposite effect, because there was no incentive for an employer to settle in cases where the claimant might have difficulty raising the fee.

The report concludes that a contribution by users of the courts to the costs of operating those courts is not objectionable in principle, but questions what is an acceptable amount to charge taking into account the need to preserve access to justice.

This report is not to be confused with the post-implementation review of fees, which the government had originally intended to complete by the end of 2015. The Committee describe this delay as unacceptable and detrimental to their work, and have called for the review to be published immediately. The review was announced as starting mid-2015 and to consider how effective the introduction of fees has been at meeting the original objectives, while maintaining access to justice. The original objectives were:

 to transfer some of the cost from the taxpayer to those who use the service, where they can afford to do so  to encourage the use of alternative dispute resolution services, for example, ACAS conciliation  to improve the efficiency and effectiveness of the tribunal.

The Commission’s report recommends that the overall quantum of fees charged for bringing cases to employment tribunals should be substantially reduced; fee remission thresholds should be increased; and further special consideration should be given to the position of women alleging maternity or pregnancy discrimination.

The report also recommends the introduction of a system for regular rerating of remission thresholds to take account of inflation, and that it should conduct a further review of the affordability of civil court fees and the remission system, considering means of simplification, for example through automatic remission for all basic rate taxpayers.

Read the full report here.

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Asda Equal Pay Claims 24 June 2016

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 53 of 314 There are currently over 7,000 equal pay claims against Asda. The claims allege the work the Claimants do is of equal value to their comparators, and yet their comparators are being paid substantially more than they are. The claims are being defended.

Should the Asda equal pay claims in the employment tribunal be stayed, in effect compelling the Claimants to pursue High Court proceedings?

No, held the Court of Appeal in Asda Stores v Brierley.

Asda made an application, in effect, to stop the claims proceeding in the employment tribunal. It was accepted that the employment tribunal had no power directly to transfer the claim to the High Court. But Asda contended that the employment tribunal had the power to stay proceedings indefinitely and, if it exercised that power, the Claimants would be compelled to go to the High Court if they wanted to pursue their claims.

The employment tribunal rejected the application, concluding that it had no power to impose a stay for the purpose sought and even if it did, it would not be appropriate to exercise that power in the present case. Asda's appeal to the EAT was rejected.

Asda appealed to the Court of Appeal. Asda's case was that, although, in most cases, the employment tribunal is well suited to hear an equal value claim, the present litigation was exceptional. It said that this was the most important, complex and financially significant equal pay claim ever pursued in the private sector with ramifications, not only for Asda, but the retail trade generally. It also submitted that there were very complex points of law which would need to be resolved, and a High Court Judge would be better suited to decide them than an Employment Judge.

The Court of Appeal rejected the appeal. It was true there was power to stay proceedings, even indefinitely; but this should not happen in the present case. It would be prejudicial to employees. They would have to start proceedings again with additional stress, court fees, limitation issues and the risk of costs if they lost.

Finally the Employment Judge had exercised his discretion properly, and had considered all the issues. He was entitled to take the view that an employment tribunal was perfectly capable of handling the claims and it would not be appropriate to "transfer" them.

Elias LJ expressed the view that the assumption that Employment Judges would not be up to the task did less than justice to the quality of some outstanding judges who sit in the employment tribunals.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Abuse of Migrant Workers not Unlawful Discrimination 28 June 2016

Does abuse of migrant domestic workers, on grounds of their status as vulnerable migrants, amount to unlawful discrimination?

No, held the Supreme Court in this recent judgment.

Two Nigerian nationals, both in the UK under domestic migrant visas, were mistreated and abused by their employers (see paras 3, 4 and 8 of the judgment for the description of how they were treated). After escaping, they brought successful claims under the minimum wage (and other similar) legislation. They also sought compensation under the Equality Act, asserting they had been directly or indirectly discriminated against on grounds of their nationality.

The Supreme Court disagreed. It was not direct discrimination because the mistreatment was due to their vulnerable migrant status, not because of their nationality. Nor was it indirect discrimination, because there was no ‘provision, criterion or practice’ applied by the employers to their employees.

Baroness Hale suggested, in a concluding paragraph, that Parliament might consider whether employment tribunals ought to be given jurisdiction to award compensation under section 8 of the Modern Slavery Act to grant recompense for ill-treatment meted out to vulnerable migrant workers.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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cipp.org.uk Page 54 of 314

Court upholds decision to deny same-sex survivor's pension 14 July 2016

The Human Rights court has upheld the ruling against a retired worker in his bid to see his husband receive the same pay out from his pension scheme in the event of his death as a spouse of the opposite sex would be entitled to.

Aldeguer Tomás v Spain (ECHR) The European Court of Human Rights (ECHR) has backed the Spanish government against a man who was denied a survivor's pension on the death of his same-sex partner. The death occurred in 2002, three years before same-sex marriage was introduced in Spain. The ECHR reached a similar conclusion from the UK Court of Appeal in Innospec v Walker case – that the change in the consensus about sexual orientation did not require the retrospective rewriting of rules to put right past unequal treatment.

Aldeguer Tomás argued that his circumstances were analagous to the surviving partner of a heterosexual cohabiting couple prevented from marrying before Spain changed the law to permit divorce in 1981. The ECHR rejected this, ruling that Tomás' situation was different in nature and context. It said changes to help heterosexual couples had been introduced against a background of pension rights being built up unequally between the sexes, because women were underrepresented in the work force.

With thanks to Pinsent Masons for providing this summary.

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Carrying over Paid Annual Leave when Sick 15 July 2016

Another case confirms that if sickness prevents a worker from taking annual leave, it can be carried forward.

If sickness prevents a worker from taking annual leave, can the leave be carried forward?

Yes, reaffirmed the European Court of Justice in Sobczyszyn v Skola Podstawowa w Rzeplinie.

Ms Sobczyszyn, a teacher, took convalescence leave provided by a Teachers' Charter and was unable to use her annual leave. The school said that leave had been used during convalescence. A reference was made to the ECJ on the compatibility of the domestic Polish Teachers' Charter with the Working Time Directive 2003/88/EC.

Article 7(1) provides four weeks' annual leave for every worker which is a fundamental tenet of EU social law. Only on termination can payment be made in lieu. Annual leave accrues during sick leave, Stringer. If scheduled leave coincides with sickness, a worker can designate a different time to take leave, Pereda. The purpose of paid leave is rest and relaxation. Sick leave is for recovery from illness, it is not rest; annual leave can be rescheduled on recovery, ANGED.

Whether leave has been scheduled or booked makes no difference: if sickness prevents annual leave, workers must be able to use annual leave at a later date.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Daily penalties: HMRC victory in Court of Appeal 1 August 2016

The Court of Appeal has confirmed that HMRC had correctly imposed daily late filing penalties under Schedule 55 Finance Act 2009. This decision is important as there have been a number of cases put on hold awaiting its outcome.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 55 of 314 The case Donaldson v HMRC [2016] EWCA Civ 761 concerned whether the daily penalties issued by HMRC in respect of the taxpayer’s 2010/11 self-assessment return were valid.  The taxpayer failed to file a paper return by 31 October 2011.  In December 2011 he was sent a computer generated reminder stating he was too late to file a paper return without paying a penalty, and that daily penalties would apply if he failed to file by 31 January.  He still did not file his return, and received a further reminder on 6 January, again stating that daily penalties would apply if the return was over 3 months late.  The taxpayer finally filed his return on 1 May 2012 and received an assessment for fixed and daily penalties.

The First Tier Tribunal (FTT) previously found that, as HMRC had not given a notice to the taxpayer specifying the date from which the daily penalties applied, those penalties were not valid.

The Upper Tribunal (UT) however subsequently overturned that decision and found that the daily penalties had been correctly imposed.

The Court of Appeal has now upheld the decision of the UT, finding that:  A generic policy decision taken by HMRC was sufficient to satisfy the requirement of para 4(1)(b) that HMRC must ‘decide’ that a penalty is payable: the decision does not have to be made on a taxpayer by taxpayer basis.  The notices given by HMRC to the taxpayer were sufficient: all they had to do was inform the taxpayer that, if his return was 3 months late, daily penalties would be charged for up to 90 days.

The UT had observed that HMRC had probably not satisfied its obligations under para 18 when issuing the penalty assessment, but it did not consider this in detail the issue was not under appeal. The Court of Appeal did go onto consider this point, again finding in favour of HMRC:  The penalty assessment, in not stating the period in which the daily penalties applied, did not satisfy the requirements of para 18(1)(c).  However, the taxpayer could not have been in doubt as to the period over which he incurred a liability based on the reminders received.  The omission from the assessment was therefore one of form and not substance and the taxpayer was not misled or confused by it.  This meant that, per the override in s114(1) TMA 1970, the omission did not affect the validity of the assessment.

The taxpayer’s appeal was therefore rejected.

With thanks to Ross Martin's SME tax news for providing this summary. They also commented on the case:

“This decision is of interest as many taxpayers had appealed daily penalties based on the FTT decision and further appeals on behalf of the taxpayer. As a result a large number of appeals were stayed behind this case. HMRC’s success at the Court of Appeal may prove to be the final nail in the coffin for these appeals. The taxpayer has been represented pro bono with minimal personal involvement to date, so it is highly doubtful that a further appeal will be made.”

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Islamic headscarf ban is direct discrimination 2 August 2016

The CJEU's Advocate General has advised that it is unlawful to ban a Muslim employee from wearing her Islamic headscarf (hijab) when in contact with clients.

In the French case of Bougnaoui v Micropole SA, Ms Bougnaoui was employed by Micropole SA as a design engineer. She was a practising Muslim and wore an Islamic headscarf (hijab) at work and when she visited clients. The headscarf covered her head but left her face exposed. Following a complaint from a client, who requested that there should be "no veil next time"•, Ms Bougnaoui was asked not to wear her headscarf when visiting clients. She refused to do so and was subsequently dismissed.

The French Labour Tribunal dismissed Ms Bougnaoui's claim for discrimination based on her religious beliefs and held that the dismissal was well founded on the basis of a "genuine and serious reason"•. This decision was upheld on appeal.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 56 of 314 The matter was then referred to the Court of Justice of the European Union (CJEU) for a preliminary ruling on whether Micropole's policy requiring an employee to remove her hijab when in contact with clients was a "genuine and determining occupational requirement"• under Article 4(1) of the Equal Treatment Directive (2000/78/EC).

Advocate General Sharpston concluded that Ms Bougnaoui's dismissal for wearing a hijab when in contact with customers of the employer's business, in contravention of a direct instruction and a client's religious neutrality principle constituted unlawful direct discrimination on the grounds of religion or belief. Further, the Advocate General stated that the prohibition on direct discrimination extends to manifestations of religion or belief (that is to say, the fact that Ms Bougnaoui wore a headscarf) and it was clear that she had been treated less favourably on the ground of her religion than a comparator would have been treated in a comparable situation.

The Advocate General added that discrimination would only be lawful if based on an "occupational requirement"•, which must be "genuine"• and limited to matters which are absolutely necessary in order to undertake the professional activity in question. For example, it would be proportionate to exclude, for health and safety reasons, a Sikh employee who insisted on wearing a turban for religious reasons from working in a post that required the wearing of protective headgear.

The decision is in sharp contrast to the opinion of Advocate General Kokott in Achbita v G4S Secure Solutions NV [2016] (Case C-157/15), which concluded that prohibiting the wearing of a headscarf can be justified by an employer's general policy of neutrality and where the ban applied consistently to all visible signs of religious or philosophical beliefs.

Readers will be aware that the Advocate General's opinion is merely an opinion and is not binding on the CJEU, which could reach a different conclusion.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Indirect Sex Discrimination 8 August 2016

The Employment Appeal Tribunal has held that the PCP (provision criterion or practice) of requiring a workforce to work over 50% of rosters and on Saturdays amounted to indirect sex discrimination on the basis it disadvantaged women.

Does the employment tribunal have to weigh the legitimate business aims of the employer against the provision criterion or practice (PCP) when determining justification for the discriminatory effect?

Yes, held the EAT XC Trains Ltd v CD and Aslef & Others.

The employee is a single mother who had three children under the age of five. She had great difficulties meeting her child care requirements and fulfilling her obligations under her full-time contract of employment.

The EAT held the PCP of requiring a workforce to work over 50% of rosters and on Saturdays amounted to indirect sex discrimination under s19 Equality Act 2010 on the basis it disadvantaged women.

The EAT considered whether the PCP was a proportionate means of achieving a legitimate aim. In this case the PCP applied to those making flexible working requests to allow for child care.

The EAT applied the Supreme Court's decision in Homer which emphasised the need for employment tribunals to take a structured approach to the question of justifying the PCP with a legitimate aim.

It held that the employment tribunal erred in law by failing to weight the legitimate aims of the employer against the discriminatory effect of the PCP. Further the employment tribunal erred in law in positing means of removing the discriminatory effect of the PCP without considering whether there was a factual basis for their suggestions and their effect on other employees.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 57 of 314 Territorial Jurisdiction 5 September 2016

The Employment Appeal Tribunal heard a case where an employee of the British Council, managing a teaching centre in Bangladesh, tried to bring a claim under the Employment Rights Act and the Equality Act but was rejected by the Employment Tribunal as being outside of its jurisdiction.

Was an employee who worked abroad for a British company, under a contract of employment governed by English law, which required a notional deduction for UK tax and eligible to a Civil Service Pension able to show an overwhelmingly strong connection with Great Britain and thus entitled to bring claims under the Employment Rights Act 1996 and the Equality Act 2010?

Yes, held the EAT in Jeffery v The British Council. The Claimant was an employee of the British Council managing a teaching centre in Bangladesh. He resigned and sought to bring claims against his employer which were rejected by the Employment Tribunal as being outside of its jurisdiction. The Claimant appealed.

At the EAT, HHJ Richardson allowed the appeal. The following factors were all relevant to finding "an exceptional degree of connection with Great Britain and British employment law":

1. He was a UK citizen, recruited in the UK to work for a UK organisation 2. The employment contract was subject to English law 3. Entitlement to a Civil Service Pension - which creates a strong link to UK employment law 4. Salary subject to notional deduction for UK income tax 5. The employer was a public body playing an important role for the UK.

A series of cases well known to employment lawyers (including Lawson v Serco Ltd, Bates van Winkelhof v Clyde & Co LLP and Dhunna v CreditSights Ltd) were applied.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Reasonable adjustments may extend to protection of pay 6 September 2016

Can the duty to make reasonable adjustments for a disabled employee extend to continuing to pay a higher salary when an employee is moved to a lesser role?

Yes, holds the EAT in G4S Cash Solutions (UK) Ltd v Powell

Due to disability, the Claimant had been moved from an engineering role maintaining cash machines to a less skilled 'key runner' role. After initially having his pay protected, the Respondent proposed reducing the Claimant's pay by around 10%, dismissing the Claimant when he refused the pay cut. The Employment Tribunal found the dismissal to be discriminatory and unfair, and that the reasonable adjustments required extended to maintaining the Claimant's former pay in his new role.

The EAT found no reason in principle why the duty to make reasonable adjustments would not extend to protecting an employee's pay (along with other measures) to counter a disabled employee's disadvantage. The objectives of the legislation plainly envisage an element of cost to the employer, and 'pay protection' was but one form of cost to an employer. The question will always be whether it is reasonable for an employer to have to take that step to avert a disabled employee's disadvantage.

However, the EAT did not expect that requiring employers to make up pay would be an 'everyday event' for tribunals, and in changed circumstances such an adjustment may cease to a reasonable one an employer has to make.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 58 of 314 What Uber's employment tribunal could mean for employers 8 September 2016

Uber is currently embroiled in employment tribunal proceedings which are considering the employment status of 19 of its drivers in the UK.

An article from Financial Director highlights the impact that this case could have on employers even though it only involves 19 drivers; any judgment will impact all other drivers.

Uber is arguing that its drivers, or ‘partners’ as it calls them, are self-employed, while GMB (the union representing professional drivers, and bringing the claim) is arguing that they are in fact workers and should be entitled to additional employment rights as a result.

National Living Wage A finding that the drivers are workers would undoubtedly have a huge impact. One of the areas of concern for employers is that many Uber drivers claim to earn well below the National Living Wage (NLW) and some may earn as much as £3 per hour less than the NLW (currently £7.20 per hour). If that is the case, the worker will be entitled to reclaim the backdated additional payments they should have received in the two years prior to the ruling. Uber is estimated to have 30,000 Uber drivers in London alone, so backdated payments of up to an additional £3 for every hour worked over two years to 30,000 drivers will have a substantial cost.

Why are Uber so concerned? Working individuals in the UK are categorised into three main, distinct groups all of which are entitled to different rights, and subject to different obligations:

Self-Employed Those who are genuinely self-employed (i.e. in business for themselves) do not enjoy any significant statutory employment rights.

Workers Workers are a category who are entitled to certain rights, but do not have the status of ‘employees’. Workers have the right to be paid the National Minimum Wage, holiday pay and pension contributions (subject to meeting eligibility criteria), as well as sometimes having TUPE rights and the right to claim sick pay. Additionally, they have the right not to be discriminated against.

Employees Employees have additional rights on top of those of workers, including the right to maternity/paternity pay and shared parental leave, statutory notice on dismissal, redundancy payments and a right not to be dismissed unfairly (after 2 years continuous service).

The impact and cost to Uber increases with each batch of additional rights their ‘partners’ accrue depending on if they are deemed workers or employees. GMB are focusing their energy into obtaining a judgment that ‘partners’ are workers, as opposed to employees.

Read the full article from Financial Director

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Employment Tribunal claims continue to fall 21 September 2016

Tribunal fees were introduced in July 2013 and the latest statistics from the Ministry of Justice shows that the number of employment tribunal claims continues to fall but not as dramatically as they did post implementation.

The latest quarterly Statistics Bulletin from the Ministry of Justice shows that in April to June 2016 a total of 4,200 single claims were received in this quarter, down 3% on April to June 2015. In this quarter, 11,600 multiple claims were received, up 38% on last year, however the number of multiple claims cases they relate to has decreased by 32% to 295.

Employment tribunal fees review

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 59 of 314 In July 2014 when fees were introduced in the Employment Tribunals, the Government made a commitment to review their impact. In June 2015 they announced the start of that review to consider how effective the introduction of fees has been at meeting the original objectives:

 transferring some of the cost away from the taxpayer and towards those who can afford to pay;  encouraging parties to seek alternative methods of dispute resolution; and  maintaining access to justice. while maintaining access to justice.

There has been a lengthy delay in the publication of the post-implementation review.

Major changes are urgently needed to restore an acceptable level of access to the employment tribunals system, says the Justice Committee in its report on recent and proposed changes to fees for court users in the civil and family courts and tribunals.

Statistics provided by the TUC and Unison comparing cases brought in the first three months of 2013 and 2015 showed the following reductions in the number of cases for the most common types of claims:

 Working Time Directive, down 78%;  Unauthorised deductions from wages, down 56%;  Unfair dismissal, down 72%; equal pay, down 58%;  Breach of contract, down 75%, and  Sex discrimination, down 68%.

The Discrimination Law Association argued that reduced access to tribunals had fallen disproportionately on women and those from traditionally disadvantaged groups. Rosalind Bragg of Maternity Action said that since fees had been introduced there had been a 40% drop in claims for pregnancy-related detriment or dismissal.

In addition the Government has said that fees are likely to discourage weak and vexatious claims, and this aim received support in evidence to the Committee from the Federation of Small Businesses and Peninsula Business Services. The Committee says that this is a reasonable objective, but notes the comments of the Senior President of Tribunals that it is too soon to say whether this has happened.

The Committee finds it unacceptable that the Government has not reported the results of its review one year after it began and six months after it said it would be completed.

Committee recommendations The Committee recommends that the Government should publish immediately the factual information which they have collated as part of their post implementation review of employment tribunal fees. The Committee says that without this information having been made available to it, its recommendations in relation to employment tribunal fees should be taken as indicating options for achieving the overall magnitude of change necessary to restore an acceptable level of access to justice to the employment tribunals system.

These recommendations include:

 a substantial reduction in the overall quantum of fees;  replacement of the binary Type A/Type B categorisation of claims according to complexity;  an increase in disposable capital and monthly income thresholds for fee remission; and  further special consideration of the position of women alleging maternity or pregnancy discrimination, for whom, at the least, the time limit of three months for bringing a claim should be reviewed.

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Holiday Pay and Commission - British Gas v Lock 10 October 2016

Daniel Barnett’s employment law bulletin sums up very well the outcome of the appeal in the British Gas v Lock case, “the decision is very technical, dull, and says nothing new.”

The Court of Appeal has handed down its decision in British Gas v Lock. It is an important case on the calculation of holiday pay, not that it says anything new.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 60 of 314 Mr Lock was a salesman on a basic salary with variable commission paid in arrears. Mr Lock's commission depended not on the time worked, but the outcome of that work, i.e. sales achieved. Mr Lock could not earn commission whilst on leave, and therefore would lose income by taking it. He brought a claim for his 'lost' holiday pay after taking leave in December 2011 to January 2012.

In 2014, the European Court of Justice held that, when calculating holiday pay, Member States must ensure that a worker taking leave is paid by reference to commission payments that the worker would have earned if at work. But the ECJ left the mechanics of working out 'how much should that be?' to the member states.

The decision is very technical, dull, and says nothing new. The issue for the Court of Appeal was whether the UK Working Time Regulations 1998 can be interpreted as including holiday pay in respect of commission, as the wording of the Employment Rights Act 1996 suggests not. And that's right - the natural wording of the legislation says it can't.

But the Court of Appeal (as with the EAT and employment tribunal before it) got around that problem by adding a new subsection to the Working Time Regulations 1998, under the guise of statutory interpretation. There's no doubt it achieves what the ECJ wants. But it leaves us groaning under the weight of the intellectual sophistry needed to get there.

Conclusion - when calculating holiday pay, workers are entitled to be paid an amount which reflects the commission they would have earned if not on holiday. Which we all knew two years ago.

And what about the other question, of 'how do we actually calculate it?' Well, the Court decided not to answer that - at paragraphs 114 and 115 it refers to the questions arising from calculating how to factor in bonuses and commissions, and says "nothing in this judgment is intended to answer them."

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

CIPP comment Yet another appeal and employers are still left with the same uncertainty as to the reference period to be used to calculate holiday pay. The CJEU did say in the Bear Scotland case that it is for the national court to assess the link between the various components which make up the total remuneration of the worker and that assessment must be carried out on the basis of an average over a reference period which is judged to be representative, which leaves it somewhat open to interpretation.

However there is clarity on the horizon – the Department for Business, Energy & Industrial Strategy (BEIS) has advised that once the outcome of further cases have been heard they will be in a position to develop some long awaited guidance. And when this happens, hopefully later this year, the CIPP policy team and some CIPP members are going to be helping BIS with the guidance. We will keep you updated.

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Unequal pay during shared parental leave 11 October 2016

In the first employment tribunal case of shared parental leave discrimination, a father is awarded £30,000. With thanks to the CIPD for their article which explains how in the first employment tribunal case to address a discrimination complaint over shared parental leave (SPL), a father has been awarded almost £30,000 after his employer refused to pay his shared parental leave at the same rate as his wife who was employed by the same company.

Under the shared parental leave rules (available to parents of children born on or after 5 April 2015) parents can share up to 50 weeks’ leave and 37 weeks’ statutory pay in the first year of their child’s life. In order to take SPL, the mother must bring her maternity leave to an end and convert it to SPL, which can then be taken by either parent. Employers can pay statutory shared parental pay or choose to enhance their scheme with more generous payments.

Under the Equality Act 2010, it is direct discrimination for an employer to discriminate against an employee because of his or her gender. It is also unlawful for an employer to apply a ‘provision, criterion or practice’ (PCP) which appears to be neutral, but which actually puts those that share a characteristic protected by the Act (such as gender) at a particular disadvantage. This is ‘indirect discrimination’. Unlike direct discrimination, indirect discrimination can potentially be objectively justified by an employer.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 61 of 314 In the case, Snell v Network Rail, both the claimant and his wife were employed by Network Rail. The company’s family friendly policy provided for mothers to be paid at an enhanced rate during SPL but restricted pay for partners taking SPL to the statutory rate.

Snell and his wife planned to share their early childcare responsibilities and both applied for SPL. Snell’s wife intended to take 27 weeks’ leave and he initially intended to take 12 weeks’ leave (which he planned to extend later). When he applied for the leave, he discovered that while his wife would receive full pay during SPL, as her partner, he would be paid at the statutory rate only. He raised a grievance on the basis the policy discriminated against him because of his gender.

The employer rejected his grievance on the basis that it was not discriminating against him because of his sex as it would apply the policy in exactly the same way to the female partner of a mother. The employer also said the policy was intended to support the recruitment and retention of female staff and was therefore objectively justifiable. Snell claimed direct and indirect discrimination.

Tribunal By the time the case got to an employment tribunal hearing, Snell had abandoned his direct discrimination claim and the company had conceded the claim of indirect discrimination, so the tribunal only had to decide the level of compensation. The tribunal agreed that a SPL policy that disadvantages partners (who are more likely than not to be men) by paying them at a less favourable rate than the mother of a child is indirectly discriminatory.

Snell was awarded substantial damages for injury to feelings arising from discrimination and future financial loss

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Communicating a Dismissal 13 October 2016

Can a dismissal be implied by the inaction of an agency employer to find work for its employee?

No, held the EAT in Sandle v Adecco.

The employee was an agency worker employed by the agency but working on assignment at another company. When her assignment ended, the agency failed to take any steps to find her other work and assumed that she was not interested in further agency work.

The employee made no attempt to contact the agency, but subsequently brought a claim of unfair dismissal. On appeal, the EAT held that in the absence of any communication of dismissal by the employer and no resignation by the employee, there was no dismissal, nor could one be implied by the inaction of the employer. The employment relationship was, therefore, still continuing when the employee brought her claim, she could not prove she had been dismissed, and her claim failed.

To prove dismissal, the employer's unequivocal intention to dismiss must be communicated to the employee.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Misuse of personal data 18 October 2016

Is there a minimum level of compensation for workplace privacy claims following the misuse and disclosure of an individual's personal data?

No, held the Central London County Court in Brown v Commissioner of Police for the Metropolis.

The Claimant was a former police officer who brought claims under the Data Protection Act 1998, and the Human Rights Act 1998.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 62 of 314 As part of a disciplinary investigation her employer, the Metropolitan Police, had made enquiries of another police force to find evidence that she had taken an unauthorised holiday while off sick. This involved the unlawful use and disclosure of the Claimant's personal data.

Both police forces accepted there had been breaches of the right to privacy. The judge distinguished workplace privacy claims from hacking claims, and held that damages based on the facts of this case should be substantial, but less than the minimum £10,000 threshold adopted in hacking cases. Awarding a figure of £9,000 the judge found that, although the breach was serious, this was not a hacking case involving the disclosure of highly personal material for gain, wide distribution, or with the intent to injure or embarrass.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 63 of 314 Gender Pay Gap

Gender Pay Gap report calls for more effective policy on shared parental leave 1 April 2016

The Women and Equalities Committee report on the Gender Pay Gap includes recommendations to increase shared parental leave to three months for second parents and to bring payments into line with statutory maternity pay.

The Women and Equalities Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Government Equalities Office (GEO).

The Gender Pay Gap report highlights the lack of effective policy in many of the areas that contribute to the gender pay gap. It finds that the key causes of pay differentials are:

 the part-time pay penalty  women’s disproportionate responsibility for childcare and other forms of unpaid caring  the concentration of women in highly feminised, low paid sectors like care, retail and cleaning.

The report states that although the Government has committed to eliminating the 19.2% pay gap within a generation, it has remained at around the same level for the past four years. Women aged over 40 are most affected by the gender pay gap, with women aged 50-59 facing a 27% differential. Evidence suggests that the barriers to well-paid work currently experienced by women over 40 will continue unless action is taken to address the root causes of the gender pay gap.

The report concludes that if Government is to achieve its objective of reducing the gender pay gap it needs a more effective policy on shared parental leave (SPL). The report recommends that current weaknesses can be addressed by:

 introducing three months paid paternal leave for second parents, only be taken when the mother returns to work and would be in addition to current parental leave benefits  increasing payment of paternity leave to 90% of salary (the same as maternity pay), capped for higher earners  paying the three months non-transferrable paternal leave at 90% of salary (capped) for four weeks and then at the same level as SPL.

The report also recommends that the Government should:

 investigate the benefits of offering all forms of parental leave on a part-time basis  immediately move to bring in Carers’ Leave of six weeks to allow employees facing short-term care issues to take time out of work without losing their jobs  commission research to examine how decisions about taking time out of work for caring are shared between men and women and use this evidence to support parents in considering the long-term implications of their decisions around the time they take parental leave.

CIPP comment

There would naturally be formal consultation if the government were to approve any of these recommendations. As members of the Statutory Payment Consultation Group (SPCG) the Policy Team will be involved in any consultation and will keep the payroll profession updated accordingly.

if you have any agenda items, or any issues you would like raised within the SPCG, please email policy with the details.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 64 of 314 CIPP quick poll on Gender Pay Gap reporting 11 May 2016

To help us understand awareness and readiness, please take a moment to complete our CIPP Poll on our home page (bottom right) which asks:

“If gender pay gap reporting applies to you (250+ employees) will you be ready for reporting requirements from October 2016?”

Background

Draft regulations were published for consultation in February 2016. Responses are currently being analysed by the Government Equalities Office (GEO).

Defining Pay To ensure comparability with national gender pay gap figures, GEO has been consistent with the definition of pay used by the Office of National Statistics (ONS) for the Annual Survey of Hours and Earnings (ASHE). As such “pay” includes basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and other pay (including car allowances paid through the payroll, on call and standby allowances, clothing, first aider or fire warden allowances). It does not include overtime pay, expenses, the value of salary sacrifice schemes, benefits in kind, redundancy pay, arrears of pay and tax credits.

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Mandatory Gender Pay Gap Reporting for public sector employers 19 August 2016

The Government Equalities Office (GEO) has published a consultation which seeks views on introducing mandatory gender pay gap reporting for large public sector employers in England.

Mandatory gender pay gap reporting for larger private and voluntary sector organisations in England, Scotland and Wales is already being introduced and subject to the approval of Parliament, the regulations will come into force on 1 October 2016, although employers will not be expected to publish the required information until 18 months after commencement and then annually thereafter.

The government are now delivering their commitment to extend the same mandatory reporting regime for large public sector employers during 2016-17. This consultation sets out the current context for public sector organisations in England and what changes are intended.

Geographical extent – this consultation applies to public sector organisations in England with 250 employees or more. The GEO are also consulting the Equality and Human Rights Commission and Ministers in the Devolved Administrations, in line with the requirements in section 149 of the Equality Act 2010 (the public sector equality duty).

The consultation does not seek detailed comments on each individual measure as the government wish to work as closely as possible to the model that has already been developed for the private and voluntary sectors. Comments are asked for on the overall approach and whether there are particular issues which affect public sector employers. The Chartered Institute of Payroll Professionals Policy News Journal

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The GEO has published an online survey which will run until 30 Sep 2016.

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CIPP webcast on Gender Pay Gap reporting 26 September 2016

The CIPP Policy team has produced a short webcast which gives an overview of what the gender pay gap is, who it applies to, what has to be reported and some other considerations for payroll and employers ahead of April 2017 when the reporting period begins.

The Policy team have been involved in the gender pay gap consultation work from the beginning and back in June 2016 we were keen to get an insight into how aware and ready employers are. We ran a poll for three weeks asking:

“If gender pay gap reporting applies to you (250+ employees) will you be ready for reporting requirements from October 2016?”

Of the 101 responses we received, 52% said that they will be ready, which is great however 31% said they were not aware of requirements and 17% said they would not be ready. If you fall into the last two categories and are a private or voluntary sector employer in England, Scotland and Wales with at least 250 employees, then listen in to hear what your mandatory reporting requirements will be.

A note for public sector employers is that the government has just closed a consultation for the same mandatory reporting regime to apply for large public sector employers during 2016-17. Further details are covered in the webcast.

Expect more publications on the topic of gender pay gap reporting as the details are worked through and finalised.

View the gender pay gap webcast below and visit My CIPP on our website for other topical webcasts - an easy way to update your team on aspects of payroll legislation.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 66 of 314 General Employment News

BIS publishes response to consultation on labour market exploitation 19 January 2016

The Department for Business, Innovation & Skills has published its response to the consultation on labour market exploitation and outlines its next steps.

This consultation asked for views on a range of proposals to improve the effectiveness of the enforcement of employment rights to protect workers from exploitation. To follow are the proposals and the next steps that the Government plan to take:

Establishing a statutory Director of Labour Market Enforcement who will set priorities across enforcement bodies (HMRC National Minimum Wage team, Employment Agency Standards (EAS) Inspectorate and the Gangmasters Licensing Authority (GLA)) dealing with everything from criminal activity to payroll errors.

 The Government included legislation to create the role of a new Director of Labour Market Enforcement in the Immigration Bill, introduced into Parliament in September 2015. Amendments will be made to the Bill to ensure the function of the role is clear.

Creating a new offence of an aggravated breach of labour market legislation which will target those employers who deliberately, persistently and brazenly commit breaches of labour law, and fail to take remedial action. Being found guilty could lead to a custodial sentence.

 A new type of enforcement order supported by a criminal offence for non-compliance is to be introduced. Under the proposals, the existing enforcement bodies would have the power to request a business, where there is reasonable belief that a labour market offence has been committed, to enter into an undertaking to take steps to prevent further offending. An order would also be available as a sentencing option where a labour market offence had been committed. Breach of the order would be an offence, punishable by imprisonment for up to 12 months. This will be taken forward through the current Immigration Bill.

Increasing intelligence and data sharing between the existing enforcement bodies and also other bodies such as the National Crime Agency, police forces and local authorities to increase the targeting of enforcement.

 Data sharing between the three enforcement bodies (EAS, HMRC’s NMW team and the GLA) will continue and existing gateways will be retained. A new Intelligence Hub will be created to give the new Director and the enforcement bodies the powers to routinely share data and intelligence on a more formal basis to improve current information sharing practice.

Widening the remit, increasing the powers and changing the name of the Gangmasters Licensing Authority (GLA) to enable it to deal with serious exploitation whether employed through an agency, gangmaster or direct employer. Trained staff will be able to use police-style powers so they can seek and use search warrants to secure crucial evidence.

 The Government intend to reform the GLA’s mission, functions and powers to ensure that they can prevent, detect and investigate worker exploitation across all labour sectors, not only those in which it operates currently. The GLA will be renamed as the Gangmasters and Labour Abuse Authority.

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Simplifying tax for small companies 7 March 2016

The Office of Tax Simplification (OTS) has unveiled a package of recommendations aimed at making the tax system simpler and easier to use for small companies.

The OTS agreed to carry out a review of small company taxation in 2015 to build on their earlier work on simplifying the system for unincorporated businesses. They have now published their initial report ahead of Budget 2016 as agreed. The Chartered Institute of Payroll Professionals Policy News Journal

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The report Small company taxation review contains a mix of long range structural change ideas and simpler short term administrative improvements. The recommended administrative changes include:

 aligning filing and payment dates eg VAT and PAYE, and annual returns and corporation tax  HM Revenue and Customs providing extra support at weekends and evenings when more small company owners deal with their tax affairs  stopping companies providing the same information to various government departments who instead should share the information  looking at the feasibility of having advance clearances for VAT.

The report sets out three main areas for further work:

1. testing whether taxing the profits from the smallest companies on the shareholders rather than the company (‘look-through’) could be simpler for some companies as well as addressing distortions in the system 2. developing an outline for an new ‘sole enterprise protected asset’ (SEPA) vehicle which will give some limited liability protection without the need to formally incorporate 3. simplifying the corporation tax computation, eliminating many sundry tax allowances and potentially calculating corporation tax on a cash basis for the smallest companies.

The OTS envisages taking forward the first and second of these longer range ideas and calls on the government to initiate the third.

The OTS looks forward to receiving input on these ideas and can be reached at [email protected]. A range of other recommendations for simplifying the taxation of small companies and streamlining the administration aspects are included in the report and the OTS expects a response from the government in due course

Detailed terms of reference for the review are available.

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Dividend tax rise impacts business 8 April 2016

There are many single employee Personal Service Companies (PSCs) who pay themselves a low salary topped up by dividend income who will be feeling the impact of the reforms to dividend tax and also the possible loss of the Employment Allowance.

The dividend tax credit, which reduces the amount of tax paid on income from shares, has been replaced by a new £5,000 tax-free dividend allowance for all taxpayers from 6 April 2016. This simpler system will mean that only those with dividend income over £5000 per year, or those who are able to pay themselves dividends in place of wages, will pay more tax.

Under previous rules a 10% tax credit was applied to dividend income and businesses did not have to pay National Insurance Contributions (NICs). The new system abolishes this and now all payments above £5,000 will be subject to a new basic rate of 7.5%, in addition to the £11,000 personal allowance. Higher rate taxpayers will pay tax of 32.5% above earnings of £31,786, compared to 25% previously. Those above the additional rate threshold of £150,000 will see an increase from 31.6% to 38.1%.

The dividend allowance will apply to dividends received from UK resident and non-UK resident companies. For further information see Dividend allowance factsheet and Income Tax: changes to dividend taxation.

The changes to the Employment Allowance may also impact the same businesses. From 6 April 2016, limited companies where the director is the only employee paid earnings above the Secondary Threshold for Class 1 NICs will no longer be able to claim Employment Allowance. The guidance for single directors clarifies what action a company or their payroll providers should take where they may have lost eligibility.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 68 of 314 Is family time through flexible working the future for men? 11 April 2016

UKCES's Working Futures report predicts a dramatic rise in the number of men working part-time in the next ten years.

The report, Working Futures, published by the UK Commission for Employment and Skills (UKCES), projects that the number of part-time male workers is set to increase by 20% by 2024 - nearly three times more than the projected growth in part-time female workers of 7%.

This growth is particularly significant for men in professional or management roles, where an increase of 25% is projected, marking a substantial change in the working patterns of men in highly paid, highly skilled roles.

Simon Allport, North West Senior Partner at EY, who himself chooses to work flexibly, said:

“It’s not hard to understand the reasons behind this trend. We need to recognise that the world of work is changing and that a mature, modern workforce is flexible. Quite simply, flexible working is a source of competitive advantage to employers. It helps companies to attract and retain talented individuals.”

Lesley Giles, deputy director at UKCES said:

“While part-time work is most common in low paid professions and is largely dominated by women, this report shows the first signs of that trend changing. The increase in men working flexible hours has been catalysed by the right to shared parental leave, but seems to be gaining traction. Coupled with other changes, like the growth in jobs in sectors traditionally dominated by women, this could represent a real change in the way people work and the way we understand gender roles in the labour market.”

Read the full press release on GOV.UK.

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McDonald’s staff offered move from zero-hours contracts to fixed hours 20 April 2016

McDonald’s is offering staff in its UK restaurants zero-hours contracts and the option of moving to fixed hours, in a movement towards a major development in the debate about employee rights.

HR Review reports:

The well-known fast food chain is one of the biggest users of the contracts in the country, with an estimated 80,000 employees on zero hour contracts.

Paul Pomroy, the head of McDonald’s UK, said the company was re-evaluating its employment policy after staff told him they were struggling to acquire loans, mortgages and mobile phone contracts because they are not guaranteed employment each week.

As a result, the company has started offering staff the option of moving to contracts guaranteeing a minimum of four hours a week, leading to 16 hours or 30 hours.

A trial of the new system has taken place in St Helens, Merseyside, which Pomroy said had been very successful, and McDonald’s is now looking to roll it out across the country.

About 80 percent of workers in the trial elected to stay on zero hours; of those who took up the fixed-hours option, three of five went for the maximum of 30 hours.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 69 of 314 Employment rate remains at record 74.1% while wages continue to rise 21 April 2016

Recent analysis from the Office for National Statistics shows that there are now 31.4 million people in work, up 20,000 over the past quarter and 360,000 in the past year.

The latest labour market statistical bulletin from the Office for National Statistics shows that this growth is being driven by full-time employment, which made up 80% of the annual rise, and there are a near record 751,000 vacancies available in the jobs market.

The figures show that average wages before bonuses grew 2.2% over the last year. The private sector in particular continues to perform strongly with average wage growth before bonuses of 2.5% over the same period.

Work and Pensions Secretary of State Stephen Crabb said:

“We remain in a position of strength, with a record employment rate, wages continuing to grow steadily and three- quarters of a million vacancies available in the labour market.

Work is essential in transforming the lives of the most disadvantaged people in society and is at the heart of our welfare reforms. We are committed to ensuring that everyone across the country benefits from our strong economy and the opportunities this brings.”

The latest labour market statistics also show:

 the female employment rate remains at a record high of 69.1%, with nearly a million more women in work since 2010  long-term unemployment has fallen to 467,000 – the lowest level since early 2009  the inactivity rate — the number of people not in employment and not looking or not available to work — has fallen to its joint lowest rate on record of 21.7%.

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Employers have fears around social media use in the workplace 11 May 2016

New Acas research reveals that many employers are wary of using social media to communicate in the workplace because they are afraid it will be misused by their employees.

The study shows that many employers are keen to exploit social media to promote their business but far fewer use it to engage with their staff.

Employers' fears include:

 online conversations getting out of hand  having to act on employee suggestions  employees not using social media for work purposes.

Acas Chair, Sir Brendan Barber, said:

"Social media is now being used everywhere in the UK and it has changed the way we communicate in our private lives. But only one in four people utilise social media for work compared to three in four using it in their private life.

Bosses should take advantage of the benefits social media can bring in giving employees a voice, which also contributes towards a good working relationship within the workplace.

Using social media more widely as a communication channel in the workplace can help staff work more effectively together and it offers opportunities to get colleagues talking and sharing ideas in real-time and in any location."

Acas has some tips on using social media within the workplace. Employers should:

The Chartered Institute of Payroll Professionals Policy News Journal

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 develop a supportive culture of employee voice  trust staff and accept that they cannot control everything  ensure that senior leaders champion the positive use of social media  have a robust social media policy outlining acceptable and unacceptable behaviour.

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Work related stress causing one in four to be absent 10 May 2016

The report ‘Britain at Work 2016’ by reputation management consultancy Lansons and insight agency Opinium reveals that around a quarter of UK employees, equivalent to 6 million people, have taken time off work in the last 12 months due to stress brought about as a consequence of doing their job. In addition 21% of employees receive no health or wellbeing benefits at work.

Major organisational change is affecting a large proportion of employees (just over three quarters of employees have experienced it in the last two years) and people don’t always get the support they need. Just over half (56%) think that organisational changes have been well communicated.

People want to see their senior leaders face-to face, yet nearly three in ten employees don’t feel they hear from their senior leaders regularly.

Whilst 92% of those in management roles said they have the necessary skills and knowledge to manage people effectively, 39% of the group say they haven’t received any form of management training, and only half (53%) were assessed on their people management skills before being appointed to their role. Against this, 34% of employees say they need more support from their manager. The gap in managers’ perception of their own ability and the reality goes some way to explaining why only half (49%) say they trust what senior leaders in their company say

On a positive note the report did find that there is a substantial increase on last year relating to fair pay (last year 44%, this year 52%), and there has also been a significant increase in job satisfaction (54% last year, 61% this year).

Access to the full report is available on Lanson’s website which also explores issues including pay and reward, career progression, and pride in company and industry, to draw a complete picture of what motivates (and de-motivates) UK workers today.

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Consultation on simplifying tax for the future 13 May 2016

The Finance Bill 2016 will place the Office for Tax Simplification (OTS) on a statutory footing and it is therefore developing its new and broader remit and looking ahead at what its future strategy should be.

The OTS was established in 2010 to be an independent office of HM Treasury to make recommendations on how to simplify tax in the UK. The 2016 Finance Bill will place the OTS on a permanent statutory basis and it has now published a strategy consultation document which sets out, and seeks views on, how the OTS thinks they should develop and operate as they embark on this new chapter as a statutory body.

To deliver their strategy the OTS plan to:

The Chartered Institute of Payroll Professionals Policy News Journal

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 set out how new trends and changes in business and employment (such as the sharing economy) will impact on tax  consider how to make tax simpler given these changes to how we work  reviews areas integral to these trends and identify difficult issues where an informed discussion is required  take the issues and options out for wide discussion and evidence gathering  encourage simplification to be built into tax policy making and implementation early on in the process  engage closely with HMRC on its important digital agenda.

The OTS is seeking engagement and representations from all interested parties. They have set out a number of questions in the strategy document. Responses should be sent to [email protected]

The OTS is also planning a stakeholder event on this subject, on 18 July; details to follow.

CIPP comment The Policy Team will continue to be involved in all OTS consultation and urge the profession to respond to the questions set out in this document, either directly or through policy and we will submit on your behalf.

The OTS are speaking at all of this year’s CIPP National Forums so if you haven’t yet signed up, visit the events area on our website to book your place – these events are free to members and there are limited spaces.

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Mental health awareness week 12 May 2016

Mental ill-health in the workplace is costing UK employers £30 billion through lost production, recruitment and lost working days and is thought to be behind about half of all long term absences.

Mental health awareness week runs from 16 to 22 May 2016 and many organisations such as the Mental Health Foundation, work to raise awareness both personally and professionally.

According to research by Acas mental health issues are thought to be responsible for 91 million lost working days each year, more than for any other illness and yet it still remains a taboo area for discussion with many people. Tackling these issues is vital in improving working lives for employees and a major factor in addressing productivity and business outcomes.

Not listening could prove very costly - to the individual and to your business. The Centre for Mental Health charity estimate that employers should be able to cut the cost of mental health - in lost production and replacing staff - by about a third by improving their management of mental health at work.

Acas has an advisory booklet Promoting positive mental health at work which is designed to help employers to:

 Tackle the stigma around mental health - Mental health rarely conforms to stereotypes. For example, you can be diagnosed with a mental health condition, such as bipolar disorder, but have a very positive state of mental health.  Focus on the practical things you can do to help - Some of the factors that influence an individual's mental health, like childhood experiences or family relationships, are out of your control. But you can help by monitoring workloads, employee involvement, the physical environment and the nature of relationships at work.  Develop solutions by listening - Sometimes all you need to do is help employees to help themselves. An employee may already have coping strategies or medical advice that they can follow, but showing empathy always helps.

The Mental Health Foundation also has a variety of resources for employers.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 72 of 314 Tax credits: help your employees renew without delay 13 May 2016

HMRC is urging employers to encourage their staff to renew their tax credits claim accurately, and online, as soon as possible. Tax credits helplines get very busy in June and July, the lead up to the 31 July deadline. Failure to renew before the deadline will mean payments are stopped.

Renewing online is quick, convenient and easier than ever before. Anyone can do it once they receive their renewals pack, regardless of what changes they have to make.

When customers renew their claim, they must tell HMRC about any changes to their circumstances that they haven’t already reported, including changes to working hours, childcare costs or income. Once people receive their renewal pack, these changes can be reported through GOV.UK.

The online service proved very popular in 2015, with more than 750,000 people renewing online and around 90% of people using it saying they were happy with the service. It only takes around six minutes to renew online, depending on circumstances.

There is also a special team to support the most vulnerable customers who cannot go online. People who we know need special support will be proactively contacted by our customer support teams.

Online help and information on renewing tax credits is available on GOV.UK and via HMRC’s customer service Twitter feed @HMRCcustomers. Support is also available through the tax credits helpline.

This year, customers renewing online will also be able to access a growing range of other services, including viewing their next payment, through their own online Personal Tax Account. This is a new and innovative service that puts everything in one place for customers, allowing them to manage their tax affairs at a time that suits them and without the need to pick up a phone or pen. By logging in, customers can already see how their tax is calculated, make changes to circumstances that affect tax or Child Benefit and claim back any overpaid money.

Every UK citizen can now access their own account and more than a million already have.

HMRC has begun sending tax credits renewal packs to approximately 5.9 million households around the country. The packs are sent out from April to June.

How can you help?

If you want to help make sure your employees renew early and receive the correct tax credits, there are some simple things you can do:

Encourage your employees to check the details on their renewals pack are correct, then beat the rush by renewing online.

The tax credits your employees receive are based on the earnings you tell HMRC about through Real Time Information so you help by keeping information accurate and up-to-date.

Adding messages to payslips from April to July, such as:

 Check your details are correct, then renew your tax credits online before the 31 July deadline.  Beat the rush, renew your tax credits online

If your company produces a newsletter for employees, you could include the messages below to remind them to renew their tax credits claim.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 73 of 314  If you’re a tax credits customer, make sure you renew your tax credits claim before the 31 July 2015 deadline or your payments could stop.  Tax credits helplines get very busy in June and July, the lead up to the deadline, so beat the rush by renewing online, securely, at any time of day.  Read your renewals pack carefully when you receive it. It’s important you make sure the details on your claim are right, so that you receive the right amount of tax credits. HMRC make checks, so they could contact us as your employer and ask us to provide details of your hours and earnings.  If you need to complete your renewal, do it without delay to make sure you receive the right amount of tax credits.

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Pay growth for most employees likely to remain stuck in the slow lane 17 May 2016

Many employees are unlikely to see much of a boost to the real value of their pay until at least the end of this decade, according to results of the latest CIPD Labour Market Outlook survey.

The latest quarterly survey finds that employers expecting to make a pay award during the 12 months between March this year and March 2017 plan to award a median pay increase of 1.7%.

The survey of more than 1,000 employers identifies a number of factors that are combining to keep pay growth low, even though hiring intentions remain strong. In response, the CIPD is calling on the Government to be more interventionist in its support and work in partnership with business to help improve organisations’ productivity so they can improve salaries.

This is the second quarter in a row when the CIPD’s survey of employers has anticipated a figure below the Government’s official inflation target of 2%. It highlights how low inflation, expanding labour supply and the lack of productivity growth are working in combination to reduce the economic pressure for employers to pay their staff more. In addition, the report finds that government-imposed increases in labour costs – such as the Apprenticeship Levy and increases to the National Living Wage will continue to reduce the scope for employers to raise pay for other workers, while the public sector continues to see wage rises kept to 1% or less.

Key findings from the survey results include:

 Median basic pay expectations in the 12 months to March 2017 are 1.7%. Expectations are higher among SMEs (2%) than larger organisations (1%) – large employers are feeling the pinch of additional labour costs  Median basic pay expectations are higher in the private sector (2%) than in the public sector (1%) and voluntary sector (1%)  This quarter’s net employment balance – which measures the difference between the proportion of employers who expect to increase and those that intend to decrease staff levels – has increased to +28, up from the +21 since the previous report  Almost half (49%) of employers say they have vacancies that are hard-to-fill. Among these organisations, the average proportion of all vacancies proving hard-to-fill is 23%.

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Petition against high heels dress policy receives over 100,000 signatures 16 May 2016

A firm that sent home a temp without pay for refusing to wear high heels has changed its policy.

The BBC reports that London receptionist Nicola Thorp, 27, says she was told to wear shoes with a "2in to 4in heel" when she arrived at finance company PwC in December 2015.

When she refused and was sent home she set up a petition calling for the law on dress code to be changed.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 74 of 314 The petition was set up on the government’s own portal and has now received well over 100,000 signatures (currently £134,779), the point at which Parliament is expected to debate the subject.

Outsourcing firm Portico said "with immediate effect all our female colleagues can wear plain flat shoes".

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Home is where the stress is for one in five workers 20 May 2016

Around one in five employees find home life more stressful than their work life, highlighting the need for employers to take account of the impact of domestic issues on work performance, new research from MetLife Employee Benefits shows.

MetLife’s study of the impact of rising levels on stress on employees shows that 19% of employees are more stressed at home than at work with both male and female employees suffering. Around 21% of women say their home life is more stressful than work compared with 15% of men.

The research found that 67% of employees say domestic issues - including childcare, looking after elderly parents and financial pressures - are having an impact on their work performance.

MetLife Employee Benefits believes the research highlights the benefits for employers in focusing on building wellness programmes for employees and, as part of this, putting strategies in place to increase organisational resilience.

One practical step identified in the report is enabling employees to feel comfortable about discussing home life stress with managers and colleagues – more than half (52%) of employees who say their home life has an impact on their work performance believe it would be beneficial to be able to discuss it with managers and colleagues.

However, despite the need, just 46% of employees say they feel able to discuss home stress with their managers although a higher number (61%) say they feel able to talk to colleagues.

Tom Gaynor, Employee Benefits Director of MetLife UK, said: “Everyone experiences challenge and stress in life, but our study confirms that not everything is restricted to the workplace. When thinking about work/life balance, it’s important to factor in the need for employees not just to spend time away from work, but also to potentially discuss home and family problems with supportive colleagues and managers without fear of being seen as unable to cope.

Managers have a crucial role to play in helping employees to manage their own stress and we know from our Employee Benefit Trends Study that a supportive manager is a significant driver of employee engagement. Creating a supportive leadership culture helps managers tune into employees’ emotional ups and downs.”

MetLife’s report also suggests other practical steps businesses can take include conducting a stress audit as part of an organisational health survey as well as making sure effective internal communications are in place both to keep employees informed about business developments as well as to give them a way to feed back any concerns.

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Survey shows more awareness of epilepsy is needed in the workplace 26 May 2016

A new survey on adults in Great Britain has suggested that over a quarter of people would be concerned about working with a co-worker with epilepsy.

A new survey on adults (18 years +) in Great Britain has suggested that over a quarter of people (26%) would be concerned about working with a co-worker with epilepsy. The majority of those people (63%) said the reason is because they have no idea how to help if a co-worker had a seizure.

The survey was carried out online by YouGov on over 2,000 adults, aiming to represent the whole of Great Britain. Other responses in the survey showed that over three-quarters of people had not been offered training on dealing with seizures at work. Meanwhile, only about one in six people said they would definitely know what to do if they saw someone have a seizure. The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 75 of 314

Dr Dominic Heaney, consultant neurologist at University College London, said:

“I speak to patients with epilepsy every day. Apart from the challenges of finding the right anti-epileptic treatment, another important task is to preserve, as far as possible, the normality of their lives after the epilepsy diagnosis. That means maintaining relationships with family and friends, but also their jobs and importantly, income.

These survey results reinforce what I have heard from patients: discrimination in the workplace is common and often unwitting. There is a lack of knowledge about epilepsy among the general public and about what epilepsy means and doesn’t mean. People are unaware of the right actions if somebody has a seizure, or even what a seizure may look like. “Much could be done. Seizures can present in many different ways, so it is important that people know how to recognise them and what to do to give the best help possible.”

There is more information on employment and epilepsy on the Epilepsy Action website.

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Second Incomes Campaign: your guide to making a disclosure 26 May 2016

HMRC’s Second Incomes Campaign provides an opportunity for individuals in employment to bring their tax affairs up to date if they have undeclared additional income.

If you owe tax on your income you must tell HMRC about any unpaid tax now. You will then have 4 months to calculate and pay what you owe. The guide to making a disclosure explains how you can do that.

The Second Incomes Campaign is an opportunity open to individuals in employment who have an additional untaxed source of income. Examples of where a second income could come from are:

 fees from consultancy or other services such as public speaking or providing training  payment for organising parties and events or providing entertainment  income from activities such as taxi driving, hairdressing, providing fitness training or landscape gardening  profits from spare time activities such as making and selling craft items  profits from buying and selling goods, for example regular market stalls, boot sales etc.

Watch ‘Do you have a second income?’ to understand what it means to be employed but also work for yourself.

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Phased returns to work webinars 27 May 2016

Fit for Work have produced some webinars explaining how a phased return to work can happen in practice and benefit both the employee and employer.

Not all organisations have their own occupational health departments for advice on employee health matters. In addition, getting advice on the effect that work might have on a person’s health and, conversely, the effect that a person’s health issues might be having on their ability to work, is particularly important when employees are returning to work after sickness absence.

Fit for Work offers free, expert and impartial work-related health advice to GPs, employers and employees to help those who are struggling in work with a health condition, or have been off work for four weeks or more due to sickness.

The phased return to work, which is included as an option on the Fit Note, offers employees the opportunity to return to work at an earlier stage of recovery from illness (they may not yet be fully fit) by allowing them to do fewer hours and/or modified duties based on a structured Return to Work Plan.

Fit for Work have put together some webinars explaining more, including FAQs.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 76 of 314 Back to Contents

9 out of 10 employers would use the ACAS conciliation service again 3 June 2016

ACAS has recently published the results of an independent study on how its conciliation service is working effectively to reduce the need for a number of employment tribunals.

Whilst it may appear to those of us working in payroll and HR that employment tribunals provide us with an ever increasing number of challenges (and we need only to mention holiday pay to demonstrate that point) it would appear that the ACAS conciliation service has reduced the need for a number of employment tribunal hearings.

Since 2014 anyone who is considering making an Employment Tribunal claim has to notify ACAS first to see whether their dispute can be resolved quickly, and without the need for legal action, through the free conciliation service.

Recently published independent research shows that:

 seven out of ten (71%) claimants avoided going to court after receiving help from ACAS  post-claim conciliation reports a highly successful eight out of ten users being satisfied with the service  over nine out of ten employers (92%) and a similar percentage of claimants (87%) said that they would use ACAS conciliation again.

ACAS Chair Sir Brendan Barber said:

"Our advice is that it is always better to try and resolve a workplace dispute at the earliest possible stage. But anybody who finds themselves in a position where they are considering legal action should definitely consider our free conciliation service first.

"New independent research published today shows that seven out of ten potential employment tribunals have been resolved or avoided thanks to our help.

"These encouraging findings, alongside the high levels of satisfaction from both employers and individuals who have used our service, are a testament to the professionalism and expertise of our conciliation staff."

The research paper Evaluation of Acas conciliation in Employment Tribunal applications 2016 can accessed at the ACAS website.

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Advice and guidance for the workplace during the European Cup 3 June 2016

In preparation for the European cup 2016 ACAS have issued some guidance for employers to highlight the main issues that are likely to impact both employees and employers during the event which will run from Friday 10th June 2016 until Sunday 10th July 2016.

ACAS highlight that during the European Cup some of the main issues that could affect both employee and employers are likely to be:

 requests for annual leave  sickness absence  internet and social media use during working hours.

and they go on to suggest that working together, during and prior to this period, as well as being open to greater flexibility is likely to return more positive and productive results within the work place. ACAS have guidance available on the following subjects that have, in the past, been known to challenge even the most dedicated workplaces.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 77 of 314  Flexible working and work-life balance  Managing attendance  Holidays and time off and time off  Discipline  Health and wellbeing  Communication and consultation  Internet and email  Alcohol and drugs policies

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Celebrating one year of the Scottish Business Pledge 3 June 2016

The Scottish Business Pledge recently celebrated its first anniversary at a business breakfast hosted by Microsoft’s Edinburgh headquarters.

Cabinet Secretary for the Economy Keith Brown “My appointment as a dedicated Cabinet Secretary for the Economy should send a clear signal of this Government’s focus on stimulating growth, protecting and creating jobs and promoting Scotland as a great place to do business. We will listen carefully to businesses and search for constructive ideas about how they can support economic growth.

“The response to the Business Pledge, Living Wage Accreditation and the work of the Fair Work Convention are proof positive that many dynamic and responsible businesses across Scotland share our ambition.

“I am happy to be here today to mark the first anniversary of the initiative and to confirm the 250th business to make a commitment to the Pledge, from URBN Fitness based here in Edinburgh.

“The Pledge remains focused on boosting business success, growth and productivity and is an important part of this government’s approach to working with business to make Scotland a more productive and fairer country. I would urge you all to revisit the website and read about what Pledge companies have already achieved.”

The Scottish Business Pledge is a voluntary code with nine components:

 paying the living wage  not using exploitative zero hours contracts  supporting progressive workforce engagement  investing in youth  making progress on diversity and gender balance  pursuing international business opportunities  playing an active role in the community  commitment to prompt payment  committing to an innovative programme.

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Cost of essential bills has risen faster than average wages 9 June 2016

Brits’ budgets continue to feel the squeeze, with regular household bills having increased by 20 per cent since 2007, according to the Bacs Bill Tracker.

The Tracker, created by Bacs Payment Schemes Limited (Bacs), the people behind Direct Debit in the UK, shows that by the end of Q1 2016 the average amount paid out by households in the UK to cover essential bills had grown to £674. This is up from £562 in March 2007 and represents an increase of 20 per cent, or £112 per month, equating to a hefty annual rise of £1340. The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 78 of 314

Unfortunately for bill payers, average wage levels have failed to keep pace with these increases. In fact, over the period between 2007 and 2015, data from the Office for National Statistics (ONS) shows that average wages grew by 12.4 per cent in comparison.

The Bacs Bill Tracker data is drawn from 100 million actual anonymised monthly transactions processed by Bacs as householders use Direct Debits to pay for their essential household bills, including energy, water, mortgages and rent, council tax, broadband and phone, TV licensing, and household insurances. It does not include elective personal bills such as gym memberships or mobile phone payments. Mike Hutchinson, from Bacs, said:

“These latest figures reflect the financial burden being faced as the cost of household bills increases steadily, while wages fail to keep pace. With 73 per cent of regular household bills paid by Direct Debit, this data gives a clear indication of the upward financial pressures across a basket of core bills. Splitting costs across the year could relieve some of the strain on hard-pressed family budgets and, with the discounts offered from many billers and service providers for paying by Direct Debit, there’s an opportunity to save some vital pounds.”

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Unpaid Work Experience (Prohibition) Bill 10 June 2016

A Bill has begun its passage through the Houses of Parliament which will ensure the prohibition of unpaid work experience for a period exceeding four weeks with the same employer.

The Unpaid Work Experience (Prohibition) Bill will amend the National Minimum Wage Act 1998 to ensure persons participating in a scheme designed to provide work experience, for a continuous or non-continuous period which exceeds four weeks, are paid beyond this point at least the relevant minimum wage rate.

The Regulations provide that a person undertaking work experience who has ceased to be of compulsory school age, but has not attained the age of 26, is eligible to receive the national minimum wage at the rate specified for workers of the person’s age.

When the Bill becomes an Act of law it will extend to the whole of the UK.

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Payroll fraud costs UK firms £12bn per year 14 June 2016

HRreview has reported that the Annual Fraud Indicator 2016 found the annual total cost of fraud in the UK stands at £193bn per year, £12bn of which is due to payroll fraud.

Businesses in the private sector are losing a total of £144bn a year through fraud, with £12bn being lost through payroll fraud alone.

The Annual Fraud Indicator 2016, conducted by the UK Fraud Costs Measurement Committee with Experian, PKF Littlejohn and the University of Portsmouth’s Centre for Counter Fraud Studies, found the annual total cost of fraud in the UK stands at £193bn per year.

Gary Webb, of the Bond Payroll Services, noted that any business can be prone to fraud. “Payroll fraud goes on quite regularly in businesses without them knowing about it. There is high and low-level fraud going on. Low level [fraud] is things like adding on a few miles onto an expenses claim. Then there are people who are genuinely out to defraud a company, such as the ghost employee level [i.e. the number of people on the payroll who don’t actually work for the company in question] – where people involved in the payroll process actively seek to defraud a company.”

Read more from The Telegraph.

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Direct Debit now and in the future 13 October 2016

Bacs has launched a public consultation into Direct Debit to understand the business challenges and customer needs today and in the future.

Bacs Payment Schemes Limited (Bacs) aim is to make sure that Direct Debit remains a safe and cost-effective method for organisations and consumers in the UK to get paid or pay for services. Use of Direct Debit is one of the key enablers of the UK economy and an essential part of the national payments infrastructure.

While Direct Debit usage has never been higher, Bacs is committed to ensuring that this trusted and market-leading product continues to meet the future needs of all consumers and thousands of businesses alike, remaining a payment method of choice.

Bacs want to understand exactly where Direct Debit is working well and where there is potential for change. Utilising a range of research and analysis techniques they aim to understand the future needs of all users while continuing to provide appropriate consumer protection.

If you would like to have your say in the future of the UK’s leading automated payment method, complete this online public questionnaire.

The consultation will close on 9 December 2016 and findings from this will be published in the first half of 2017.

Back to Contents The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 92 of 314

CIPP webcast on holiday pay and leave 19 October 2016

CIPP Policy talk about the legislation that affects holiday pay and leave, the implications of the different types of annual leave entitlement and the effects of case law.

View the holiday pay and leave webcast below and visit My CIPP on our website for other topical webcasts - an easy way to update your team on aspects of payroll legislation.

CIPP webcast on holiday pay and leave

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 93 of 314 Expenses, Benefits & Reward

Company Cars

Advisory Fuel Rates for Company Cars from 1 March 2016 26 February 2016

HMRC have issued details of the latest Advisory Fuel Rates for Company Cars.

For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.

The new rates are below (previous rate in brackets where there is a change):

Engine size Petrol LPG 1400cc or less 10p (11p) 7p 1401cc to 2000cc 12p (13p) 8p (9p) Over 2000cc 19p (20p) 13p

Engine size Diesel 1600cc or less 8p (9p) 1601cc to 2000cc 10p (11p) Over 2000cc 11p (13p) Hybrid cars are treated as either petrol or diesel cars for this purpose.

Follow this link for details on how the rates are calculated

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Company car users can update their details online 27 April 2016

Instead of phoning or writing to HMRC, your employees can update their company car details online through the check or update your company car tax online service in their Personal Tax Account.

HMRC’s latest Employer bulletin highlights that updating a company car is just one aspect of the Personal Tax Account, which individuals can use to view information about their income tax and tell HMRC online about changes that may affect the tax they pay.

If any of your employees have not yet used their account they can register in a few minutes.

There are now four YouTube videos available on GOV.UK which provide more information about each function available through the online service:

 Check the information online to see the information HMRC has about your company car and car fuel benefits;  Add a company car benefit to add company car benefit to your tax code for the first time;  Remove a company car benefit to remove company car benefit from your tax code if you no longer have access to it; or  Replace a company car benefit to update your company car benefit or car fuel benefit.

Making these changes online means that your employees don’t have to wait for HMRC to update their tax code.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 94 of 314 It also means that if your employees use the online service, as an employer you should get fewer enquiries. Your employees can see the tax code changes they make online to their company car and these are made in real time, which means they’re less likely to approach their HR or payroll departments.

Some employers are now working with HMRC to promote the company car service to their employees. You can contact HMRC by email if you are also interested in a wider promotion of Personal Tax Accounts with your employees.

The check or update your company car tax service isn’t available to employees who are part of a car averaging scheme or who have their benefits taxed through their company payroll (payrolling).

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Advisory Fuel Rates for Company Cars from 1 June 2016 27 May 2016

HMRC has issued details of the latest Advisory Fuel Rates for Company Cars.

The new rates are below (previous rate in brackets where there is a change):

Engine size Petrol LPG 1400cc or less 10p 7p 1401cc to 2000cc 13p (12p) 9p (8p) Over 2000cc 20p (19p) 13p

Engine size Diesel 1600cc or less 9p (8p) 1601cc to 2000cc 10p Over 2000cc 12p (11p) Hybrid cars are treated as either petrol or diesel cars for this purpose.

Follow this link for details on how the rates are calculated

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Advisory Fuel Rates for Company Cars from 1 September 2016 26 August 2016

HMRC has issued details of the latest Advisory Fuel Rates for Company Cars.

The new rates are below (previous rate in brackets where there is a change):

Engine size Petrol LPG 1400cc or less 11p (10p) 7p 1401cc to 2000cc 13p 9p Over 2000cc 20p 13p The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 95 of 314

Engine size Diesel 1600cc or less 9p 1601cc to 2000cc 11p (10p) Over 2000cc 13p (12p) Hybrid cars are treated as either petrol or diesel cars for this purpose.

Follow this link for details on how the rates are calculated

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Company car tax for ultra-low emission cars 30 August 2016

HM Treasury has published a consultation which seeks views on the design of bands for ultra-low emission cars from 2020-21 onwards.

Geographical extent – any regulatory changes that happen as a result of this consultation will apply to all four nations of the UK.

The consultation - Company car tax for ultra-low emission cars, seeks to explore how best to incentivise the cleanest cars into the next decade, a period during which rapid innovation will deliver significant changes in the way motor vehicles are powered.

Company car tax rates and bands, including for ultra-low emission cars (ULEVs) are already legislated for until 2019- 20. This consultation seeks views on the design of bands for ULEVs from 2020-21 onwards.

If this consultation is relevant to you or your company, you can respond directly. Please send comments by 19 October 2016 by either email to [email protected] or by post to:

Company Car Tax Consultation Transport Branch Energy and Transport Tax Team HM Treasury 1 Horse Guards Road London SW1A 2HQ

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 96 of 314 General Expenses, Benefits & Reward News

Salary Sacrifice schemes can be discontinued during maternity leave 11 March 2016

A recent Employment Appeal Tribunal has made a significant ruling in that it is not discriminatory to discontinue childcare vouchers during maternity leave.

With thanks to Daniel Barnett’s employment law bulletin for providing the details of the case Peninsula Business Services v Donaldson,

Women on maternity leave are entitled to non-pay benefits pursuant to the Maternity and Parental Leave Regulations 1999. Based on HMRC guidance that contractual non-cash benefits provided under a salary sacrifice scheme must continue to be provided during ordinary maternity leave, an employment tribunal held that it must be discriminatory for an employee to lose childcare vouchers during maternity. Peninsula Business Services appealed.

The Employment Appeal Tribunal allowed the appeal and substituted a decision that the claim should be dismissed. No legislative basis had been found to support the HMRC guidance. The key question was: did the vouchers constitute remuneration? If they did Regulation 9 of the Regulations did not require this to continue during maternity leave. Langstaff J held that the vouchers did represent part of salary since pay had been substituted with vouchers under a salary sacrifice scheme. On this basis they were to be regarded as remuneration and could be discontinued during maternity leave.

CIPP comment This is a significant change that will affect salary sacrifice arrangements when terms are renewed. Although the case was about childcare vouchers, it could be applied to other ‘benefits’ provided through a salary sacrifice arrangement. This ruling means agreements can be simplified because maternity can be treated like other longer absences; it doesn’t need to have separate terms. However salary sacrifice agreements are contractual variations, so employers cannot change the rules straight away as they are bound by their current arrangements until they are renewed (unless the terms include provisions for amendments).

This case should lead to revised HMRC guidance; the Policy Team will monitor amendments closely and advise members and the profession accordingly.

See the CIPP training area of our website for details on a half day Salary Sacrifice course which will provide delegates with up to date information.

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480(2016) Expenses and benefits tax guide 8 April 2016

An error has been identified in the 480 guide under Employer-Supported Childcare.

At Appendix 11 Employer-Supported Childcare, the basic rate of tax is still showing as the 2013-14 rate. We have informed HMRC and GOV.UK that this needs to be updated to reflect 2016-17 figures.

The 480 guide has however just been updated to reflect that the travel and subsistence rules changed from 6 April 2016 for workers providing their services through certain employment intermediaries (page 28).

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Trivial Benefits - non cash vouchers and Class 1 NICs 18 April 2016

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 97 of 314 From 6 April 2016 a new exemption removes liability to income tax for low value Benefits in Kind (‘trivial BiKs’). An article in the latest Employer Bulletin prompted us to ask HMRC how aggressively they might pursue lost class 1 NICs provided during the ‘lapse’ period.

An article on Trivial Benefits in Kind was recently published in the latest Employer Bulletin:

Trivial Benefits in Kind From 6 April 2016 a new exemption removes liability to income tax for low value Benefits in Kind (‘trivial BiKs’). This new exemption is being legislated as part of Finance Bill 2016 (FB16) and is subject to Parliamentary approval. The previous administrative practice where employers could agree with HMRC that certain BiKs could be treated as trivial and did not need to be returned to HMRC at the end of the tax year no longer applies. Draft guidance on the new exemption has been published on GOV.UK. This guidance will be incorporated in HMRC’s Employment Income Manual later in the year after FB16 receives Royal Assent.

General conditions To qualify as a ‘trivial BiK’ conditions A-D must be met:  Condition A – the BiK must not be cash or a cash-voucher;  Condition B – the BiK must cost £50 or less;  Condition C – the BiK must not be provided as part of a salary sacrifice or other contractual arrangement; and  Condition D – the BiK must not be provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services.

There is no limit to the number of trivial BiKs that can be provided to an employee in a tax year where all conditions are met, unless Condition E applies (see below).

Close companies Condition E applies an annual £300 cap where a trivial BiK (that meets conditions A to D) is provided by an employer that is a close company to an employee who is a:  director or other office-holder of the close company, or  member of the family or household of a director or other office-holder of the close company.

Former employees Subject to the parliamentary process, after FB16 receives Royal Assent changes will be made to the ‘Employer- Financed’ Retirement Benefits (Excluded Benefits for Tax Purposes) Regulations 2007’ (‘the EFRBS Regulations’). This will ensure qualifying trivial BiKs provided to former employees also benefit from the exemption and are subject to the close company cap. Once the EFRBS Regulations are amended, their application will be backdated to the start of the tax year.

Disregard from National Insurance contributions (NICs) Regulations will also be introduced after FB16 receives Royal Assent to disregard from earnings any exempt trivial BiKs that attract a Class 1 NICs liability. The NICs Regulations containing the Class 1 disregard will only apply to qualifying trivial BIKs provided after the NICs Regulations are given effect. This means there will be a short period of misalignment when Class 1 NICs will be due and payable in respect of any trivial BiKs that are, at the time of provision, still treated as earnings for tax purposes.

The Policy Team asked HMRC how aggressively they might pursue lost class 1 NICs provided during the ‘lapse’ period and their response was:

“From 6 April 2016, until the disregard for the Class 1 National Insurance contributions (NICs) comes into effect, employers who provide qualifying trivial BiKs will need to pay any Class 1 NICs that are due. As the misalignment of the tax and NICs treatment only applies to non-cash vouchers, employers may wish to provide qualifying trivial BiKs in a different form during this period to avoid the need to pay Class 1 NICs.

Any failure to operate Class 1 NICs correctly will be dealt with on a case by case basis.” (As per current process).

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490 (2016) Employee travel tax and NICs guide 19 April 2016

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 98 of 314 A PDF version of the 490: Employee travel - a tax and National Insurance contributions guide has been made available on GOV.UK. The 490 has been updated to reflect the removal of tax relief for home to work travel for those working through an employment intermediary.

From 6 April 2016 new legislation affects the application of the travel expenses and subsistence rules for workers who provide their services through an employment intermediary including those employed under overarching contracts of service. When such a worker personally provides services (other than an exception for ‘excluded services’ - those provided wholly in the client’s home) to a client through an employment intermediary, including a recruitment agency, umbrella company, personal service company (PSC) or other similar structure and their work is akin to an employee, then each assignment is considered to be a separate employment.

This will bring the rules for these workers in line with those who are engaged directly and therefore when a worker regularly commutes from home to a workplace for each assignment they will not be eligible for relief on travel and subsistence.

When the new legislation does not apply each workplace will continue to be treated as a temporary workplace with the tax and NICs treatment following the existing rules for travel to temporary workplaces.

See section 3.41 of the 490 guide for examples.

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Travel and subsistence framework discussion paper 26 April 2016

As announced at Budget 2016, the government will not be taking forward the proposed framework for consultation and the broad travel and subsistence rules will remain as they are.

HMRC has published Travel and subsistence - summary of responses which follows the publication of the discussion paper in September 2015 that outlined a proposed travel and subsistence framework for consideration.

Responses received made clear that, although complex in parts, the current travel and subsistence rules are generally well understood and work effectively for the majority of employees.

Recommendations in the OTS’s second report on the review of employee benefits and expenses led to the development of the proposed framework that was presented in the discussion paper. The OTS affirmed that their overall objectives for that stage of work had been:

 to look for ways of modernising the systems and ensuring they are in tune with the employment patterns of today; we [the OTS] have also tried to think about emerging employment trends;  to reduce administrative burdens all round: to streamline (or preferably eliminate) procedures that can be delivered more efficiently; and  to increase certainty for employers in the rules and regulations that govern the Employee Benefits and Expenses system.

Specifically on T&S, the OTS acknowledged that improvements should be made without having to go through the disruption and uncertainty of discarding the current rules and starting again.

HMRC has looked to build on the OTS’s work in order to find a framework that would deliver simplification. They are pleased that responses to the discussion paper supported the principles underpinning the taxation of T&S, but it has become clear that these principles do not easily translate into the new rules that were set out in the proposed framework.

Having considered the responses very carefully, it is clear that the large majority of employers believe that the current system works well for most employees. Responses to the discussion paper highlighted the need for certainty and stability. HMRC has borne in mind the concerns that changes introduced under the proposed framework could replace one set of complexities for another and that this may create additional compliance burdens for employers. We therefore believe that the proposed framework does not provide enough simplicity to justify the upheaval for employers or the potential cost to the Exchequer.

Instead of taking forward the proposed framework for consultation, HMRC’s next steps will be to look at other areas of T&S that are worthy of review where real progress can be achieved. HMRC will continue to work to improve the rules The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 99 of 314 and to look for simplifications to improve reporting requirements for T&S. By focusing on smaller, more achievable changes, they hope to deliver tangible improvements for employers.

CIPP response to the HMT Travel and Subsistence: discussion paper - December 2015

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CIPP webcast on expenses and benefits changes 5 May 2016

From 6 April 2016 a package of measures were introduced that aim to simplify one of the more complex areas of payroll, Benefits in Kind. Ensure you are up to date with the changes.

The CIPP Policy Team has produced a short webcast which provides an overview of the:

 abolition of £8,500 reporting threshold  statutory exemption for qualifying business expenses replacing dispensations  statutory framework for voluntary payrolling  statutory exemption for trivial benefits.

CIPP webcast on expenses and benefits changes

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480 (2016)Expenses and benefits tax guide 19 May 2016

The 480 which explains the tax law relating to expenses payments and benefits received by directors and employees has been updated to reflect changes to the information regarding zero van emissions.

Paragraph 14.4 under Chapter 14 ‘Vans available for private use’ now reads:

If the van cannot in any circumstances emit CO2 by being driven, the charge for 2010 to 2015 inclusive was nil.

From 2015 to 2016 if the van cannot emit CO2 by being driven and the tax year is any year between 2015 to 2016 and 2021 to 2022 the cash equivalent is the appropriate percentage of £3,150 as follows:

 20% for 2015 to 2016  20% for 2016 to 2017  20% for 2017 to 2018  40% for 2018 to 2019  60% for 2019 to 2020  80% for 2020 to 2021  90% for 2021 to 2022

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Industry urges radical action to tackle sickness absence 14 June 2016

Recent research shows that long term absence is continuing to increase while, at the same time, the NHS is proving unable to support the working age population by providing timely and effective rehabilitation and medical treatment.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 100 of 314 Furthermore, the survey shows a further fall in employers’ confidence in GPs to improve return to work rates with the effectiveness of the ‘fit note’ system continuing to deteriorate.

Britain’s manufacturers are urging tax breaks to tackle the UK’s chronic sickness absence problem, which would encourage more employers to pay for private treatment for employees and ease the burden on an under pressure NHS.

The research conducted by EEF and Jelf found that only 1 in 5 of manufacturers currently pays for non NHS medical treatment and that 60% of manufacturers would pay for private treatment if the cost was offset.

Two fifths of manufacturers say long term absence increased in last 2 years and that the NHS is not meeting the needs of 40% of manufacturers to get employees back to work. According to the research manufacturers pay out £0.6 billion a year in sick pay, equating to £211 per employee.

According to EEF, more fiscal incentives to encourage employers to provide private healthcare is required as part of efforts to tackle the UK’s productivity puzzle, believing that a fit and healthy workforce is an essential component of economic growth.

EEF has made the following recommendations:  Review the current levels of employer taxation for employer led health interventions where they are currently taxed as benefits in kind.  Carry out sensitivity analysis of different fiscal incentives such as changes to allowable business expenses, tax credits and tax relief.  Treat tax relief for Private Medical Insurance (PMI) in the same way as the £500 tax exemption for treatments recommended by the Fit for Work service.  Consider tax relief on Income protection insurance or group income protection (GIP) as a means of providing sick pay and rehabilitation support to employees through employers.  Provide some form of fiscal incentive to companies who fund treatments as part of rehabilitation which would otherwise have had to be provided by the NHS, or which prevented state Employment and Support Allowance (ESA) payments.

The survey covered 306 companies. The full report can be accessed here.

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Approved professional organisations and learned societies 27 June 2016

HMRC has updated the list of professional bodies and learned societies (also known as List 3) with tax-deductible fees.

List 3 is updated periodically and includes all bodies approved by the Commissioners for HMRC up to 25 May 2016.

Professional organisations can apply for approval for tax relief using form P356.

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July 6 2016 reporting deadline for expenses and benefits in kind 6 July 2016

The recent edition of the Employer Bulleting highlighted common employer queries that they receive to the employer helpline.

Can you tell me what expenses and benefits are subject to Tax and National Insurance? If you’re an employer and you provide expenses or benefits to employees or directors, you might need to tell HMRC and pay tax and NICs on them. HMRC have an A-Z on expenses and benefits to help you decide if you need to pay tax or National Insurance contributions on specific items you provide, or if you must report them on form P9D or P11D. 2015/16 marks the final year for reporting using a form P9D.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 101 of 314 How do I make a Class 1A payment and when is it due? - How to pay Class 1A National Insurance An electronic payment for Class 1A NIC declared on your P11D(b) return for the tax year ended 5 April 2016 must clear into the HMRC account by 22 July 2016. Using the correct payment reference when paying Class 1A NIC will help ensure it is correctly allocated. To allocate the payment correctly use your 13 character Accounts Office reference followed by 1613 For example if your Accounts Office reference is 123PA00123456, you would use 123PA001234561613. The reference should have no gaps between the characters. When adding 1613 the 16 tells HMRC the payment is for the tax year ended 5 April 2016, and 13 lets them know the payment is for Class 1A NIC.

Do I need to tell you I have no P11Ds or P11D(b) due? There is no longer a need to submit a declaration if your software package no longer includes the questions and declarations on the final FPS; you only need to tell HMRC you have no return to make if HMRC have sent you a P11D(b) or a P11(D)b reminder.

Which reference should I use? You should use your employer PAYE reference on forms P11D, P9D and P11D(b). The 13 character Accounts Office reference (for example 123PA00123456) should only be used for payments of Class 1A NIC.

Toolkits to reduce common errors in returns HMRC have a range of toolkits that aim to provide guidance on how to avoid making common errors that HMRC see in filed returns. The toolkits are principally aimed at tax agents and advisers but they may also be of interest to employers. The most relevant toolkits for employers on the subject of expenses and benefits in kind is Expenses and Benefits from Employment Toolkit.

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Does your benefits package meet your employees’ needs? 5 August 2016

According to a study of 1,000 UK workers in July 2016, almost half think their current employee benefits package is not tailored to their needs.

New research published by payroll lending provider SalaryFinance in line with the UK’s first Smarter Working Day initiative - has found that 38% of UK workers currently have access to flexible working benefits, however, only 26% prefer flexible working conditions to great financial and psychological wellbeing benefits.

Key findings from the survey:

 48% of people think their current employee benefits package isn’t tailored to their needs  Increase in popularity of ‘work perks’ is not keeping employees happy, as four in ten UK workers feel undervalued  Discounted cinema vouchers, nap time, massages, free fruit and coffee are overrated as people want access to more financial and emotional wellbeing benefits

Less than one in five (19%) currently have access to benefits designed to support mental wellbeing, such as counselling services, and only one in four (26%) receive financial wellbeing support from their employer. In contrast, one in three (32%) receive ad hoc incentives such as free lunches, birthday cakes and duvet days.

With 58% of people saying that their employer has never asked for feedback on their benefits programme, employers could be falling out of touch with the needs of staff.

With nearly four in ten (39%) current UK workers feeling ‘undervalued’, Asesh Sarkar, CEO of SalaryFinance says that employers must act now to meet ever increasing expectations from employees if they are to attract and retain top talent.

“Employers have increasingly realised their responsibility to support their employees in many ways, including providing access to remote working opportunities and occasional free, healthy lunches. These proactive incentives are of course to be welcomed.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 102 of 314 To make sure employees feel as supported as possible, financial wellbeing should also be factored into employers’ benefits packages. By offering financial education and their benefits this will enable employees to safeguard their financial futures and ensure they’re as happy and productive at work as they can be.”

Read more about payroll lending provider SalaryFinance.

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Payrolling non-cash vouchers and credit tokens 10 August 2016

HMRC has published draft regulations - The Income Tax (Pay As You Earn) (Amendment No. X) Regulations 2016 and a draft explanatory memorandum for a technical consultation.

The draft regulations make changes to the Income Tax (Pay As You Earn) Regulations 2003. These changes allow employers to voluntarily payroll the benefit of non-cash vouchers and credit tokens provided to employees from 6 April 2017.

Nothing in these draft regulations affects the obligation set out in section 694 and section 695 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) to operate Pay As You Earn (PAYE) on non-cash vouchers or credit tokens which are regarded as, or are exchangeable for, readily convertible assets.

The power to make the amendments to the PAYE regulations is set out in Clause 15 of the Finance Bill 2016 and is currently going through the parliamentary process. The draft regulations are drawn up on the basis that the power will receive Royal Assent in its current form. The consultation is conducted in anticipation of the powers being formally made.

Comments on the drafts should be sent by email to [email protected] by 3 October 2016.

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Consultation on salary sacrifice for the provision of benefits in kind 12 August 2016

The government is seeking views about limiting the range of benefits-in-kind that attract income tax and National Insurance contributions (NICs) advantages when they are provided as part of salary sacrifice arrangements.

As announced in Budget 2016 the government is concerned about the growth of salary sacrifice schemes and is therefore considering limiting the range of benefits that attract income tax and NICs advantages when they are provided as part of salary sacrifice schemes.

The purpose of this consultation is to explore potential impacts on employers and employees should the government decide to change the way the benefits code applies when a benefit-in-kind is provided in conjunction with a salary sacrifice or flexible benefit scheme.

Employee contributions to employer-provided pensions, employer-provided pension advice, employer-supported childcare and provision of workplace nurseries and cycles and cyclist’s safety equipment provided under the cycle to work scheme will remain unaffected by this measure.

The consultation on salary sacrifice for the provision of benefits in kind will run until 19 October 2016. Watch out for a survey from the CIPP Policy team as we will be asking for your feedback to inform our formal response.

The government will publish details of the consultation responses and expects to make an announcement at Autumn Statement 2016 on decisions made in light of those responses. Any policy changes are expected to feature as part of Finance Bill 2017.

The Chartered Institute of Payroll Professionals Policy News Journal

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Consultation on alignment of dates for making-good on benefits-in-kind 12 August 2016

A consultation has been published to explore the scope for aligning the ‘making good’ rules for benefits-in-kind with those which apply to ‘making good’ where the employer accounts for the benefit-in-kind in real time through PAYE.

It was announced at Budget 2016 that the government would consult on proposals to align the dates by which an employee has to make a payment to their employer in return for a benefit-in-kind they receive, in order to ‘make good’.

The aim is to have a simpler and clearer system that makes it easier for employers and employees to understand their obligations.

The consultation on alignment of dates for making-good on benefits-in-kind will run until 4 October 2016. Watch out for a survey from the CIPP Policy team as we will be asking for your feedback to inform our formal response.

The government will publish details of the consultation responses and expects to make an announcement at Autumn Statement 2016 on any decisions made in light of those responses.

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Consultation on simplifying the PAYE Settlement Agreement (PSA) process 12 August 2016

A consultation has been published on proposals to simplify the process used for agreeing and reporting items in a PAYE Settlement Agreement.

The government is not proposing to widen the scope of PSAs. This consultation sets out proposals to reform the PSA process, to:

 make it simpler for both employers and HMRC to administer PSAs  provide greater clarity about what can and cannot be included in a PSA.

This consultation is in response to the Office of Tax Simplification’s (OTS) second report on employee benefits and expenses published in January 2014.

The consultation on simplifying the PAYE Settlement Agreement (PSA) process will run until 18 October 2016. Watch out for a survey from the CIPP Policy team as we will be asking for your feedback to inform our formal response.

Once the consultation has closed the government will consider all responses - both written and gained through stakeholder meetings - and will publish a response document later this year which will set out the next steps.

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Company car tax for ultra-low emission cars 15 August 2016

HM Treasury has published a consultation to seek views on the design of new ultra-low emission vehicle bands in the company car tax system. The Chartered Institute of Payroll Professionals Policy News Journal

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The consultation - Company car tax for ultra-low emission cars seeks to explore how best to incentivise the cleanest cars into the next decade, a period during which rapid innovation will deliver significant changes in the way motor vehicles are powered.

Responses are welcomed from a wide range of stakeholders including individuals, companies, and representative and professional bodies. In particular, a key issue is how to incentivise the uptake and development of step-change technologies over incremental improvements in existing technologies.

This consultation closes 20 October 2016.

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Worldwide subsistence rates 19 August 2016

The benchmark scale rate expenses payments for employee travelling outside the UK are to remain the same for the year commencing October 2016.

The Worldwide subsistence rates published in October 2014 will continue to apply for the year commencing October 2016.

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Planning to payroll Benefits in Kind in 2017? 24 August 2016

If you are planning to take up voluntary payrolling of Benefits in Kind (BiKs) you can register now.

You can register anytime between now and 5 April 2017, however HMRC advises employers to register before the annual tax coding process begins, which is usually around 21 December to avoid being sent multiple tax codes for employees with payrolled benefits.

All employers who wish to use the statutory framework for payrolling benefits in real time must register with HMRC and this includes employers who currently have ad hoc payrolling arrangements with HMRC and wish to continue under the new framework.

Employers just use their Government Gateway ID to login and register their payrolling requirements. Agents cannot use PBIK registration service but HMRC does plan to develop the Agents Service later.

The benefits that the employer selects must be payrolled for all the employees that are covered by payrolling that receive the same benefit. Any benefits that the employer does not select but does provide must be reported on a P11D.

The employer’s section of benefits applies for the whole tax year although, if an employer starts providing a benefit for the first time during a tax year, this can be added.

Employers will also be able to return to the registration service to revise the selection of benefits if an error was made in the original application.

The selection of benefits can be changed before the start of the next tax year to apply to the following tax year. If the selection is not altered, it is carried forward automatically.

Go to GOV.UK for full guidance and the link to register.

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The Chartered Institute of Payroll Professionals Policy News Journal

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CIPP survey: Simplifying tax and NICs treatment of termination payments 6 September 2016

The CIPP Policy team has created a short survey on the draft legislation which makes changes to the taxation of termination payments. Please help inform our response by completing the survey; it should only take 10 minutes of your time.

In July 2015, the government published a consultation on the tax and National Insurance contributions (NICs) treatment of termination payments to which the CIPP responded on behalf of its members.

The government has several objectives for the tax and NICs rules on termination payments: the tax system should continue to provide support to those who lose their job; the rules should provide certainty for employees and employers; the rules should be simple; the complexity that the Office of Tax Simplification (OTS) highlighted in their report should be taken into consideration; and the rules should be fair and not open to abuse or manipulation.

The rules governing the taxation of termination payments are complex and can encourage manipulation by employers to take advantage of the employer NICs exemption. This is because employers can, in some circumstances, change the nature of some payments so that they become termination payments, including remuneration such as bonuses which would normally be subject to tax and NICs.

To meet these objectives, the government announced at Budget 2016 that it would make changes to the taxation of termination payments.

The draft legislation to support these changes has been published and the government is now consulting on the technical aspects of that legislation.

Based on the consultation document, the CIPP Policy team has created a short survey which closes on 26 September and should take around 10 minutes to complete.

We would be grateful if you could spare the time to complete our survey, but you may find it helpful to read the draft legislation first which can be found at Annex A of the consultation document.

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CIPP survey: Alignment of dates for ‘making good’ on benefits-in-kind 7 September 2016

The CIPP Policy team has created a short survey on proposals to align the ‘making good’ rules for BiKs with those where the employer accounts for the BiK in real time through PAYE. Please help inform our response by completing the survey; it should only take 10 minutes of your time.

The Office of Tax Simplification, employers and representative bodies have made it clear to the government that there are problems with the existing rules for employees ‘making good’ the value of the benefits-in-kind they receive from their employers. They have highlighted that for some benefits-in-kind there are a number of different dates set out in legislation and in HMRC guidance.

Additionally, for some benefits-in-kind they have highlighted the practical difficulties of complying with the dates in legislation, which has to a large part led to the inconsistencies with HMRC guidance.

The recent introduction of new dates for making good on benefits-in-kind where the employer accounts for the benefit- in-kind in real time through PAYE (payrolling) has highlighted the lack of consistency and potential for confusion. The government has now issued a consultation document exploring the scope for aligning the making good rules for benefits-in-kind with those where the employer accounts for the benefit-in-kind in real time through PAYE.

The CIPP has created a survey to collect your views to enable us to respond to this consultation document. The survey should take around 10 minutes to complete and will close on 26 September 2016.

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The Chartered Institute of Payroll Professionals Policy News Journal

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CIPP Survey: Consultation on salary sacrifice for the provision of BiKs 16 September 2016

The CIPP Policy team has produced a brief survey to gather your views, experience and evidence (where possible) of the possible impacts on your current pay and P11D processes and policies as a result of the proposals laid out in the consultation on salary sacrifice for the provision of benefits in kind.

Impact on Payroll, HR and Tax software products We would particularly like to ask members who work within the software industry or who develop software in-house to consider the timeline proposed.

 Can you detail the challenges that will arise as a result of the time line, given that there will be elements changed within the P11D (to be submitted by 6 July 2018) to accommodate change?  What impact will these changes have to the structure of Software design that will be used by employers who have elected to voluntary payroll when the change is due to become effective from 6 April 2017?  Is the timeline achievable?

HMRC is consulting on limiting the tax (and NIC) advantages to be gained via:

 Salary Sacrifice  Salary Exchange  Flex benefits packages where the employee has free choice between taking the benefit or the cash salary.

What is made clear in the consultation paper is that the following items will remain unchanged where they are provided as part of a Salary Sacrifice arrangement:

 employer pension contributions;  employer-provided pension advice based on the recommendations of the Financial Advice Market Review (FAMR);  employer-supported childcare and provision of workplace nurseries; and  cycles and cyclist’s safety equipment which meet the statutory conditions.

The survey questions look to gather your views, experience and where possible, evidence of the changes proposed.

Each question offers a comments/further details box and we encourage you to share the detail behind your response.

If you can also provide evidence of impact or of the benefits to be gained by BIKs not included in the list above please contact Samantha Mann, Senior Policy & Research Officer at policy.

The survey will close on 16 October. The consultation paper can be found at GOV.UK.

Thank you in advance for your time and input.

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CIPP response to consultation on simplification of tax and NI treatment of termination payments 4 October 2016

The CIPP has submitted its response to the consultation on draft legislation for the simplification of the tax and National Insurance treatment of termination payments.

It was announced at Budget 2016 that legislation would be included in Finance Bill 2017 to tighten and clarify the rules on which types of payments will be treated as salary and which will be subject to the termination payment rules. A consultation on the draft legislation has now been published. The Chartered Institute of Payroll Professionals Policy News Journal

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The changes which are due to come into effect in April 2018 include:

 clarifying the scope of the exemption for termination payments to prevent manipulation, by making the tax and National Insurance contributions (NICs) consequences of all post-employment payments consistent  aligning the rules for income tax and employer NICs so that employer NICs will be payable on payments above £30,000 (which are currently only subject to income tax)  removing foreign service relief  clarifying that the exemption for injury does not apply in cases of injured feelings

The government has analysed the responses to its consultation on termination payments held in summer 2015 and has set out its response and consultation on draft legislation.

The draft legislation is intended to give effect to the changes and the government invites views on whether this objective is achieved. The CIPP Policy & Research team published an electronic survey to collect views on this consultation document. There were 59 responses to the survey.

On the whole the respondents agreed with the definitions and terminology proposed in the draft legislation, although there were those who believed that it is still too complicated.

The consultation also gave respondents an opportunity to suggest other elements of termination payment legislation which could be addressed and several suggestions were received such as reviewing the £30,000 limit.

You can view the CIPP’s full consultation response below.

CIPP response to consultation on simplification of tax and NI treatment of termination payments

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Simplifying the PAYE Settlement Agreement (PSA) process 5 October 2016

Please share your thoughts on the consultation to simplify the process used for agreeing and reporting items in a PSA.

Running alongside the much discussed consultation on Salary sacrifice for the provision of benefits-in-kind is another paper that focusses on the provision of benefits in kind (BiKs) but this time under the structure of a PAYE settlement Agreement (PSA).

The process involved for both employer and HMRC in agreeing and administering a PSA is lengthy, manual, and has been identified by the Office of Tax Simplification as a perfect candidate for administrative improvement (aka simplification).

The paper details proposals that aim to simplify the process used for agreeing and reporting items in a PSA and asks how the process can be simplified and how guidance can be strengthened to provide clarity for both employers and HMRC.

There is no proposal to broaden the scope of PSAs.

Regulation 106 of The Income Tax (Pay As You Earn) Regulations 2003 require items, that are included within a PSA, to be:  Minor, with regards to the cost of the benefit provided or made available; or  Irregular, as regards the frequency in which, or the times at which, the sums are paid or the benefit is provided or made available; or  Paid in circumstances where deduction of tax by reference to the tax tables is impracticable or in the case of a benefit provided or made available, is shared between employees so that apportionment of the benefit between the employees is impracticable.

Currently employers have to apply in writing for a PSA each year, with a paper agreement that must be signed and dated (in duplicate) by both HMRC and the employer, with each retaining a copy for their records. HMRC has identified that the majority of PSA applications are identical each year and often agreed on the same terms. Items commonly seen in a PSA include Christmas parties, working lunches, team building exercises and staff incentive awards. The Chartered Institute of Payroll Professionals Policy News Journal

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At what time the PSA is agreed also impacts on whether Class 1 NIC becomes payable, in some instances, and this has been recognised as leading to practical difficulties for employees and is an area which will benefit significantly from simplification.

Calculations

Every PSA is currently checked for calculation errors and anomalies before employers pay their PSA liability. These checks ensure that the items returned in the PSA calculation match those agreed in the PSA agreement. Once the PSA calculations have been checked and the value agreed, employers have until 19 (22) October (depending on the method of payment) following the relevant tax year to settle their PSA liability, which includes paying Class 1B NICs.

A significant reduction to the administrative burden can be achieved by removing the process of checking the calculation. This in turn presents an opportunity to review the payment deadlines for PSAs, with a view to aligning the payment date of PSAs with other deadlines that exist for reporting of BiKs i.e. 6 July.

Proposals

Remove the need for upfront agreement  Removing the need for annual agreement will make the process simpler particularly for employers who apply for the same items year on year.  It will also remove the anomaly that exists where Class NICs become payable on non-cash vouchers where agreement isn’t achieved before the non-cash vouchers are provided.

Replace the paper return with a digital return - which in turn should reduce the risk of frequent errors made by employers when entering data in the PSA returns.

Handling differences of opinion - where upfront agreement is removed there is a risk of disagreement at a later date by HMRC as to its inclusion. The Government is open to hearing views during consultation but is proposing that a pragmatic approach should be adopted where the employer acts in ‘Good Faith’ with action only being taken where the employer does not act in good faith or where they continue to include items within the PSA when they have been warned by HMRC not to.

Removing the requirement for items to be ‘Minor’ – since the introduction of the Trivial Benefit exemption, many items have been removed from a PSA agreement. It is proposed that simplification and additional certainty could be achieved by removing this criteria.

‘Irregular’ should be considered in the context of a tax year and not be repeated within any pattern and additionally not be anything that an employee has a contractual right to.

The ‘Impracticable’ test cannot simply occur as result of limitations within an employer’s software or due to presentational awkwardness.

There are many questions posed within the consultation paper which is available to read on GOV.UK. The questions range widely from:

 Do you agree that removing the requirement to agree the items in a PSA will provide simplification for employers? - through to;  What other safeguards could/should be considered to guard against possible abuse of PSAs and are there any compelling reasons/scenarios which do not fit into the rules as set out above that employers feel the PSA process should be amended to include?

Responses can be submitted directly to [email protected] by 18 October 2016.

Alternatively, you may prefer to share your thoughts, experience of processing PSAs and comments with the CIPP Policy team to feed in to the written response that will be submitted. If so, please contact Samantha Mann, CIPP Senior policy & research officer via policy by 17 October 2016. In advance of your email - Thank you.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 109 of 314 CIPP response to the consultation on alignment of dates for ‘making good’ on benefits-in-kind 5 October 2016

The CIPP has submitted its response to the consultation on alignment of dates for ‘making good’ on benefits-in-kind.

The aim is to have a simpler and clearer system that makes it easier for employers and employees to understand their obligations.

The CIPP’s Policy & Research team published a survey to gather views on the proposals which would inform the CIPP’s response to this consultation. Respondents were largely in favour of the suggestions, with the key findings being:  83% of respondents agreed that the date for making good for company cars, company vans and the other benefits-in-kind set out in the consultation document should be the end of the tax year.  90% agreed with the suggested date of 1 June following the end of the tax year as the making good date for car and van fuel benefit, credit tokens and beneficial loans.  88% of respondents agreed that interest paid after the benefit-in-kind has become final and conclusive should be taken into account for employer-provided loans.

You can download the CIPP’s full consultation response below.

CIPP response to the consultation on Alignment of dates for making good on BiKs

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Expenses and benefits returns on magnetic media (EEC1) 4 October 2016

The guidance on how to submit returns to HMRC on magnetic media has been updated to apply to live filing submissions from 6 April 2017.

Employers and payroll bureaux have an option to submit expenses and benefits (P11D) on magnetic media to HMRC. Submitting returns this way means quick automatic processing and cuts out manual keying by HMRC. As a result employees’ tax code numbers are reviewed automatically and accurately updated quicker when compared with paper returns.

Expenses and Benefits Returns on Magnetic Media - submission instructions and technical specification

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Statutory Maternity Leave and Child Care Vouchers 14 October 2016

In light of the Peninsula appeal, HMRC is considering what guidance is required for employers.

Following the decision of an Employment Appeal Tribunal (Peninsula Business services v Donaldson) regarding Child Care Vouchers (CCVs), salary sacrifice and maternity leave, HMRC is considering what guidance is needed. In the interim, they have confirmed the following:

“If CCVs are provided under an employment contract, outside the scope of a salary sacrifice scheme, then the vouchers must continue to be provided during maternity leave and other periods of family leave (other than unpaid parental leave).

cipp.org.uk Page 110 of 314 the Peninsula case, the contract said that an employee on maternity leave would not continue to receive CCVs. The judgment is only of direct relevance in dealing with similar contractual exclusions.

Employers are free to continue making payments into a salary sacrifice scheme to buy CCVs on behalf of an employee on family leave if they wish.

Use of CCVs that employees already have is not affected by the judgment.”

This information was published in the Employer Bulletin: October 2016.

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Non-deductible and non-exempt expenses 18 October 2016

From 6 April 2016 any expenses you reimburse to your employees that are fully deductible from their earnings are no longer subject to tax and National Insurance contributions (NICs), provided they are not part of a relevant salary sacrifice arrangement.

There is no need for employers to include them on P11D and for the employees to submit deduction claims to HMRC. Dispensations no longer apply. Employers who wish to pay the tax and NICs on non-deductible expenses can still agree PAYE Settlement Agreements with HMRC.

For the tax year ending 5 April 2017 expenses payments that are not fully deductible should not be reported on form P11D, but instead should be treated as earnings and the full amount should be subject to tax and Class 1 NICs.

For mixed expense payments (for example, home telephone rental) if you can clearly identify the allowable expense amount at the time of payment, only the non-exempt amount will need to be treated as earnings and subject to tax and Class 1 NICs through the payroll.

If the non-exempt amount is not clearly identifiable at the time of payment you should treat the full amount as earnings and deduct tax and Class 1 NICs accordingly. Your employees can then claim tax relief for the exempt amount related to business use in the normal manner.

Where a benefit is provided that would have previously been included in a dispensation because a fully matching deduction is available, and it is not provided under a relevant salary sacrifice arrangement, the exemption applies in the same way as to paid or reimbursed expenses. If the benefit is not fully matched by a deduction, the full value of the benefit should be reported in the normal way.

For more detailed information please see our guidance – Exemption for amounts which would otherwise be deductible.

Further information relating to the end of year reporting of expenses and benefits, including how to deal with items that have not been reported via payroll during the year, will be published in the February edition of Employer Bulletin.

This information was published in the Employer Bulletin: October 2016.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 111 of 314 Tax-Free Childcare (TFC)

Childcare providers are critical to the successful roll out of Tax-Free Childcare – spread the word 3 August 2016

Tax-Free Childcare, which will launch for eligible parents from early 2017, is a new government scheme that will help working families with their childcare costs.

Childcare providers are critical to the successful launch of Tax-Free Childcare. Many parents will want to pay for their childcare through this scheme, and to receive these payments, childcare providers must have signed up in advance.

As from now HMRC will begin to increase their contact with all childcare providers to introduce Tax-Free Childcare and throughout September and October, they will then write to all childcare providers who are registered with a regulator, and invite them to sign-up to the scheme.

TFC – top things that Childcare providers should know

 Childcare providers will need to sign up to receive payments from parents - In September and October 2016, HMRC will send letters to regulated and approved childcare providers across the UK, asking you to sign up online for Tax-Free Childcare. You’ll be able to sign up online as soon as you receive your invitation.

 Only childcare providers registered with a regulator (such as Ofsted) can receive Tax-Free Childcare payments. Registration can take up to 12 weeks so, if you aren’t registered, register now so that your customers can pay you using Tax-Free Childcare. For registration timelines, please check the appropriate regulators website.

 Check that your regulator has your current address – you will only receive an invitation to sign up for Tax-Free Childcare if your regulator has your current address.

 Please also make sure your regulator has your current email address as this will help us if we need to contact you.

 Parents will be able to see if you’ve signed up for Tax-Free Childcare - once you sign up, you’ll appear on the new digital tool from HMRC which lets parents search for childcare providers signed up for Tax-Free Childcare.

 Be ready for Tax-Free Childcare - If you’re running a business, you’ll need your 10-digit Unique Tax Reference (UTR) number to sign up for Tax-Free Childcare. This is the number that HMRC gave you when you first told them that you were working for yourself. Your UTR can be found on any HMRC communications, for example, your tax return or your payment reminder. If you can’t find your UTR number, HMRC can send this number to your address. For more information call 0300 200 3410.

 If you’re a nanny, you’ll need your National Insurance number to sign up for Tax-Free Childcare. You can find this on your payslip, P60, or letters from HMRC about tax, pensions and benefits.

 When you sign-up, you’ll need to tell HMRC your bank details. Parents will then be able to send you payments directly from their Tax-Free Childcare accounts to your bank account (via BACS). Each child will have a Tax-Free Childcare reference number. Parents can let you know their reference number to help you identify their payments.

 More information about Tax-Free Childcare will be available later this year.

TFC – 10 things for parents to know

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 112 of 314 Tax-Free Childcare 9 September 2016

With the introduction of Tax- Free Childcare in early 2017, a reminder that the existing scheme, Employer-Supported Childcare will remain open to new entrants until April 2018 to support the transition between the schemes.

Geographical extent – the new Tax-Free Childcare scheme applies to all four nations of the UK.

Childcare providers are being urged to register as soon as they receive a sign-up letter from the government. Letters are being sent out to providers during September and October 2016. The registration process can take up to 12 weeks and if a provider hasn’t registered, parents will not be able to use Tax-Free Childcare to pay them.

Tax-Free Childcare will be available to around two million working households to help with their childcare costs. From early 2017, working parents with children under 12 (under 17 for disabled children) can set up an online childcare account to pay their childcare providers directly. For every £8 parents pay in, the Government will add £2, up to a maximum contribution of £2,000 per child, per year (£4,000 per year for disabled children).

To qualify, parents must be in work and each earning at least £115 a week and not more than £100,000 per year. The government’s new childcare options will include:

 More generous support for parents on Universal Credit who, since April 2016, can claim up to 85% of childcare costs, up to a monthly limit of £646 for one child or £1,108 for two or more children.  From 2017, the Government will introduce Tax-Free Childcare and an additional *15 hours of free childcare for working parents of three and four year olds. Parents will be able to apply for both schemes through a single online application.

*15 hours of free childcare applies to England only. Free education and childcare is also available for children in Scotland, Wales and Northern Ireland.

The current Employer-Supported Childcare voucher scheme, which parents can only use if their employer participates, will remain open to new entrants until April 2018 to ease the transition.

The importance of childcare providers As previously published childcare providers have a pivotal role in Tax-Free Childcare. Many parents will want to pay for their childcare through this scheme, and to receive these payments, childcare providers must have signed up in advance. If they don’t sign up, parents won’t be able to use Tax-Free Childcare to pay them.

Childcare providers who have signed up will appear on the new online service which lets parents identify childcare providers who are able to receive payments via Tax-Free Childcare, before the scheme launches.

HMRC has already begun contacting all childcare providers to introduce Tax-Free Childcare. Throughout September and October, they will then write to all childcare providers registered with a regulator, inviting them to sign-up to the scheme.

HMRC want to ensure that childcare providers have a practical understanding of what Tax-Free Childcare will mean for them before it launches for parents in early 2017.

Top five things childcare providers need to know

When can I sign-up for Tax-Free Childcare? In September and October 2016, the Government will send letters to registered childcare providers across the UK. These letters will invite you to sign-up online for Tax-Free Childcare. You’ll be able to sign-up as soon as you receive your invitation. Once you sign-up, you’ll appear on our new digital tool, which lets parents search for childcare providers signed up for Tax-Free Childcare. This tool will be available from early 2017.

What information do I need to sign-up? Your letter will include a user ID which you will need to start the online sign-up process. If you’re running a business you will also need your 10-digit Unique Tax Reference (UTR) number to sign-up for Tax-Free Childcare. This is the number that HMRC gave you when you first told HMRC that you were working for yourself. You can find your UTR on any HMRC communications, for example, your tax return or your payment reminder. If you can’t find your UTR number, HMRC can send this number to your address. For more information call 0300 200 3410.

If you’re a nanny you will also need your National Insurance number to sign-up and you will need to tell HMRC your bank details.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 113 of 314 How do parents pay for Tax-Free Childcare? Parents will be able to send payments directly from their Tax-Free Childcare account to your bank account. Each child will have a Tax-Free Childcare reference number. Parents can share their reference numbers to help you identify payments.

When can parents start using Tax-Free Childcare? Tax-Free Childcare will be rolled out gradually from early 2017, parents with the youngest children able to apply first. Parents will be able to apply for all their children at the same time when their youngest child becomes eligible. All eligible parents will be able to join Tax-Free Childcare by the end of 2017.

What happens if the details that my regulator have are not up to date? We will be sending your invitation to the postal address held by your regulator so you may not receive it if your details are out of date. Please ensure your regulator has your correct details, including your current email address.

For more information on this new offer, and HM Government’s existing childcare schemes, visit GOV.UK.

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Tax-Free Childcare: employees need to make an informed choice 21 September 2016

Research from Sodexo shows that many families may be worse off under the incoming Tax-Free Childcare scheme; highlighting just how important it is that employers communicate the differences to their employees to ensure they make an informed choice.

Almost two thirds of UK families (64%) will be worse off under the Government’s incoming Tax-Free Childcare scheme, compared to the existing employer-led Childcare Vouchers, according to research by Sodexo Benefits and Rewards Services. The research also uncovered that 82% of households paying basic rate tax with one child would lose out if they adopt the new scheme.

Tax-Free Childcare is due to roll out from early 2017, slowly phasing out Childcare Vouchers by April 2018. Those signed up for Childcare Vouchers by the cut-off date will still be able to use them once Tax-Free Childcare is live.

Childcare Vouchers have helped approximately 700,000 working families save up to £933 of tax and NI on their childcare costs per year. This can reach up to £1,866 per family if both parents receive Childcare Vouchers. This value covers an average of 54% of a family’s childcare costs for children up to the age of 15.

Tax-Free Childcare has been designed to cover up to 20% of a family’s childcare costs (up to £2,000 per child per year, until the age of 12). However, the latest figures from Sodexo suggest the new scheme will actually leave most families out of pocket and struggling to afford childcare.

Research was collected from 9,259 UK families who used Sodexo Benefits and Rewards Services’ online Childcare calculator. The online tool allows families to apply their individual circumstances to an algorithm that assesses which scheme would provide the greatest amount of saving for that family.

The research showed the percentage of households who will be worse off with Tax-Free Childcare:

 82% of basic tax rate households with one child  78% of basic tax rate households with one or more children  71% of families with one child  65% of households with two basic rate taxpayers with two or more children  63% of working couples with one or more children  62% of families with one child and one basic rate taxpayer  56% of single parent families

In order to give themselves the best option, parents are being urged to sign up for Childcare Vouchers now, before they are closed to new entrants in April 2018. In doing so, parents will give themselves the power of choice in the long term to select the scheme which leaves them financially better off.

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The Chartered Institute of Payroll Professionals Policy News Journal

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Tax-Free Childcare Implementation Advisor Forum 6 October 2016

If members have any questions they would like put forward at the Tax-Free Childcare Implementation Advisor Forum on 19 October, please email policy.

Samantha Mann, CIPP Senior Policy & Research Officer, will be attending the Tax-Free Childcare Implementation Advisor Forum on 19 October. If members do have any questions they would like put forward, please email policy by 17 October, using TFC AIF as the subject.

Read previous articles on TFC and the importance of spreading the word.

Childcare providers are critical to the successful roll out of Tax-Free Childcare - 3 August 2016

Tax-Free Childcare: ESC to remain open until April 2018 - 9 September 2016

Tax-Free Childcare: employees need to make an informed choice - 21 September 2016

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 115 of 314 Government News

CIPP summary of Budget 2016

The Chancellor spoke for just over an hour so we got off quite lightly when you compare it to the longest Budget delivery in history in 1853 at 4 hours and 45 minutes. I’m sure we have mentioned this before but worth repeating for the favourable contrast.

The Chancellor proudly told us how the British economy is resilient, and employment is at a record high, but that we face a challenge still as the outlook for global economy is weak – a dangerous cocktail of risks but this government is ready. After mentioning that the OBR has revised down the UK’s economic growth due to the somewhat fragile global situation, we particular liked the phrase “We fix our plans to fit the figures, we don’t fix the figures to fit our plans”.

Further cuts in government spending were announced, a sugar tax of sorts – called a soft drinks industry levy and over £115 million to support those who are homeless and to reduce rough sleeping. The M62 is to receive a fourth lane, the A66 and A69 are to be upgraded, fuel duty is to be frozen for a sixth year and the duty rates on beer, spirits and most ciders will also be frozen this year.

The theme to this budget was very much that it is a budget for the ‘next generation’. So did George Osborne boldly go where no man has gone before or did he play it safe with the impending EU referendum and resist the ‘final frontier’?

A Lifetime ISA is to be introduced in April 2017; a pensions dashboard was promised by 2019 - to assist those who want to ‘live long and prosper’ perhaps? And small businesses and ‘enterprise’ came out on top with further boosts announced.

This was the Chancellor’s eighth budget and it is clear that the payroll industry continues to be fundamental to delivering the successful outcome of budget promises. Of particular interest to our profession is an increase in the personal allowance to £11,500 from 2017, an increase in the higher rate threshold to £45,000 from 2017, the extension of the voluntary payrolling framework to allow employers to account for tax on non-cash vouchers and credit tokens from April 2017, a review on the impacts of proceeding with moving employee NICs to an annual, cumulative and aggregated basis, and moving employer NICs to a payroll basis, a possible limit on the rage of benefits that are provided as part of salary sacrifice schemes, consultation on the extension of shared parental leave and pay to grandparents, termination payments from 2018 will attract employer NICs ……………..

Just a few things to keep us on our toes; read on for our summary of announcements and as ever we shall be scrutinising all 148 pages of the red Budget book for any details yet to be uncovered.

CIPP Budget 2016 webcast

The CIPP policy team has also produced a Budget 2016 webcast so listen in if you want to know the key announcements from the budget or would like to share a summary with your payroll teams. The webcast is only 23 minutes long and can be a time saving medium to impart information to several people.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 116 of 314 Tax rates and thresholds

Income tax

The tax-free personal allowance will increase in April 2017 to £11,500, £300 more than was announced previously, which accelerates progression towards the £12,500 target for April 2020. It will mean 1.3 million people will have been taken out of the tax regime altogether since the start of this parliament.

To ensure the benefits of the personal allowance increase is passed on to higher rate taxpayers, and to encourage individuals to progress, the point at which higher earners start to pay 40% tax will increase to £45,000 in 2017-18. This is much higher than the £43,600 level announced in the Summer Budget 2015.

Company cars, vans and fuel

The Budget confirmed previous announcements that the appropriate percentage list price subject to tax will increase by 3% for cars with CO2 emissions greater than 75 grams per kilometre in 2019-20, with a 3% differential between the lower emissions bands. The maximum company car tax (CCT) will remain at 37% into the 2019-20 tax year and the 3% diesel supplement remains in place until April 2021.

The government also confirmed that it will continue to use CO2 emissions as the basis for the CCT from 2020-21 onwards and will consult on reform of the lower bands to refocus initiatives in the car market on the cleanest cars.

Vehicle excise duty (VED) rates and bands on cars, vans, motorcycles and motorcycle trade licences will increase by RPI from 1 April 2016. HGV VED, Road User Levy rates and other rates linked to the basic goods rate are frozen from 1 April 2016.

CIPP comment Little was said about National Insurance contributions, which may be a welcome relief after recent structural changes introduced new thresholds and rates first for under-21s, then for apprentices under 25 years old, and not forgetting the impact of the end of contracting-out. The period of calm may be short-lived, however: potential future reforms are mentioned below under tax administration and simplification.

There was mention of the Employment Allowance - those employers who hire an illegal worker face civil penalties from the Home Office and the government will build on this deterrent by removing a year’s employment allowance from those receiving civil penalties, starting in 2018.

Apprenticeships

As announced at the Autumn Statement 2015, an apprenticeship levy will be introduced in April 2017, and employers that are committed to training will be able to get out more than they put in. From April 2017, employers will receive a 10% top-up to their monthly levy contributions in England and this will be available for them to spend on apprenticeship training through their digital account. The government will set out further details on the operating model in April 2016 and draft funding rates will be published in June 2016.

Expenses and benefits

The government will introduce a package of measures to further simplify the tax administration of employee benefits and expenses by:

 extending the voluntary payrolling framework to allow employers to account for tax on non-cash vouchers and credit tokens in real time from April 2017  consulting on proposals to simplify the process for applying for and agreeing PAYE Settlement Agreements  consulting on proposals to align the dates by which an employee has to make a payment to their employer in return for a benefit-in-kind they receive to ‘make good’  legislating to ensure that if there is a specific statutory provision for calculating the tax charge on a benefit-in- kind this must be used (Finance Bill 2016 and Finance Bill 2017).

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 117 of 314 Fuel Duty

For the 6th successive year, the government will freeze the main rate of fuel duty at 57.95 pence per litre for 2016-17. This marks the longest fuel duty freeze in over 40 years. Since Budget 2011, fuel duty has been kept at this level, delivering year-on-year real cuts for motorists. The average driver will save around £75 every year in duty compared to pre-2010 fuel duty escalator plans.

Insurance premium tax

The standard rate of Insurance Premium Tax (IPT) will be increased from 9.5% to 10%. This ensures that the impact of the rate increase is spread broadly across the entire general insurance industry. IPT is a tax on insurers. However, if they do pass the cost of this rate increase on to their business and household customers, the average combined home and contents insurance would only increase by £1 and the average motor insurance premium by £2 per year.

All the revenue raised from this increase in IPT will be invested in flood defence and resilience measures.

National Minimum Wage/National Living Wage

National Minimum Wage (NMW)

The government will set the main rate of the NMW, which applies for workers aged between 21 and 24, at £6.95 from October 2016, in line with the Low Pay Commission’s recommendations. This increase means the main NMW rate will reach its highest ever level in real terms. The government has also accepted the LPC’s recommendations for the youth and apprentice rates. October 2016 will see:

 a 3.7% increase in the rate for 21 to 24 year olds (from £6.70 to £6.95 per hour)  a 4.7% increase in the rate for 18 to 20 year olds (from £5.30 to £5.55 per hour)  a 3.4% increase in the rate for 16 to 17 year olds (from £3.87 to £4.00 per hour)  a 3.0% increase in the rate for apprentices (from £3.30 to £3.40 per hour)  a 12.1% increase in the accommodation offset (from £5.35 to £6.00 a day).

Alignment

The government will align the National Minimum Wage and National Living Wage cycles so that both rates are amended in April each year. This will take effect from April 2017.

Pension reforms

Lifetime ISA for adults under 40

From April 2017 all savers will be able to put up to £20,000 a year into ISAs, up from £15,240 at the moment. But in addition, the Chancellor has announced the introduction of a Lifetime ISA from April 2017. This is available to individuals under the age of 40 and will attract a 25% bonus from the government.

Savers will be able to put in up to £4,000 a year, with the annual bonus of up to £1,000 paid until the age of 50.

Savers will be able to withdraw money from a Lifetime ISA at any time, without paying any tax on it. Those wanting to use the money to buy a home will be able to do so after just a year; those wanting to use it for retirement will have to wait until the age of 60.

Accounts are limited to one per person rather than one per home – so two first time buyers can both receive a bonus when buying together. For anyone with a Help to Buy: ISA they can transfer those savings into the Lifetime ISA in 2017, or continue saving into both – but they will only be able to use the bonus from one to buy a house.

The Lifetime ISA can also be used to save for retirement. Savings can be withdrawn tax-free after the saver’s 60th birthday. Money can be withdrawn at any time before the saver turns 60, but the government bonus (and any interest or growth on this) will be lost.

The Chartered Institute of Payroll Professionals Policy News Journal

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CIPP comment Before the Budget there was huge speculation that the Chancellor would completely reform pension saving and introduce an ISA-style pension to replace traditional pensions, however only a few days before the Budget we were told that this idea had been rejected for the time being. However, today’s announcement of a Lifetime ISA does bear some similarities to that idea.

Pensions dashboard

To help the next generation to clearly view their pensions savings, the government will ensure the industry designs, funds and launches a pensions dashboard by 2019. This will mean an individual can view all their retirement savings in one place

Financial advice

Recommendations of the Financial Advice Market Review (FAMR) which aims to support the provision of affordable and accessible advice for everyone, at all stages of their lives have been approved. The government commits to implement all of the recommendations for which it is responsible, and will:

 consult on introducing a single clear definition of financial advice to remove regulatory uncertainty and ensure that firms can offer consumers the help they need  increase the existing £150 Income Tax and National Insurance relief for employer- arranged pension advice to £500  consult on introducing a Pensions Advice Allowance. This will allow people before the age of 55 to withdraw up to £500 tax free from their defined contribution pension to redeem against the cost of financial advice. The exact age at which people can do this will be determined through consultation. This means that a basic rate taxpayer could save £100 on the cost of financial advice.

Public Sector Pension Schemes

The Chancellor also announced that employer contributions to unfunded public service pension schemes will increase the contributions employers pay to the schemes from 2019-20 onward. This will ensure that the costs of providing pension benefits in the future are fairly reflected in the contributions paid by employers, and that the pension promises made today are on a sustainable basis to ensure fairness to future tax payers.

Salary sacrifice

Salary sacrifice arrangements enable employees to give up salary in return for benefits-in-kind that are often subject to more favourable tax treatment than salary. The government wants to encourage employers to offer certain benefits but is concerned about the growth of salary sacrifice schemes: clearance requests for salary sacrifice arrangements from employers to HMRC have increased by over 30% since 2010.

The government is therefore considering limiting the range of benefits that attract income tax and NICs advantages when they are provided as part of salary sacrifice schemes. However, the government’s intention is that pension saving, childcare and health-related benefits such as Cycle to Work should continue to benefit from income tax and NICs relief when provided through salary sacrifice arrangements.

Shared Parental Leave

The government will launch a consultation in May 2016 on how to implement its commitment to extend Shared Parental Leave and Pay to working grandparents. The consultation will also cover options for streamlining the system, including simplifying the eligibility requirements and the potential to make better use of digital technology.

The government will also work with the Behavioural Insights Team to look at new ways to support parents in choosing how and when to return to work.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 119 of 314

Tax administration and simplification

The government continues its work on simplifying the administration of tax. As previously announced, the Office of Tax Simplification (OTS) will become a permanent office of HM Treasury from April 2016.

Alignment of NICs and income tax

The OTS recently produced a lengthy report on income tax and NICs alignment. While announcing that the government will respond in due course, it has nevertheless commissioned the OTS to review the impacts of proceeding with two specific proposals: moving employee NICs to an annual, cumulative and aggregated basis, and moving employer NICs to a payroll basis. Terms of reference for this review will be published shortly.

Making Tax Digital

Businesses, self-employed people and landlords who already keep digital records and provide regular digital updates to HMRC will be able to make tax payments on a pay-as-you-go basis, which will enable them to choose a payment pattern to suit them and therefore manage cash flows better. This will be consulted on during 2016 for inclusion in Finance Bill 2017, to come into effect from April 2018. Detailed proposals are also to be published for parts of the Making Tax Digital programme that have been announced previously.

HMRC’s customer service

Individuals and businesses should be able to get the help and support they need from HMRC, when they need it. By the end of this Parliament, HMRC’s digital transformation will have made it quicker and easier for customers to report and pay their taxes online. But the government recognises that more needs to be done now, and is investing £71 million to improve the service it provides taxpayers. This investment will deliver:

 a 7-day a week service by 2017, with extended hours and Sunday opening on online services and the tax and tax credits phone lines, so that people and businesses have more opportunity to contact HMRC outside of working hours  improved telephone services and reduced call waiting times by recruiting over 800 new staff into HMRC call centres  a dedicated phone line and online forum for new businesses and self-employed individuals to get help and support about filing and paying their taxes for the first time, and on the transition to using digital services.

Tax avoidance and evasion

Over successive Budgets the Chancellor has announced further ways of tackling tax avoidance. This year he announced that public sector organisations will have a responsibility to ensure that those working for them pay the correct amount of tax rather than gaining an advantage by working under a personal service company (PSC). From April 2017, individuals working through their own company in the public sector will no longer be responsible for deciding whether the intermediaries legislation applies and then paying the relevant tax and NICs. This responsibility will instead move to the public sector employer, agency, or third party that pays the worker’s intermediary.

The employer, agency or third party will have to decide if the rules apply to a contract and if so, account for and pay the liabilities through the RTI system and deduct the relevant tax and NICs.

Many public sector bodies are already required to seek assurance that some of their workers are paying the correct employment taxes under Government rules on off-payroll appointments in the public sector. This change will reinforce and extend this requirement across all public sector bodies and all workers engaged through a PSC. Where a public sector body engages a PSC through an agency, or other third party, the party closest to the worker’s limited company in the supply chain will be required to comply with the rules.

HMRC will provide help for public sector employers and agencies with their new responsibilities. In partnership with stakeholders, HMRC will introduce clear, objective tests for employers to use to decide at the point of hire whether or not they need to even consider the new rules and then to quickly and decisively identify those engagements that are clearly caught by the rules.

For cases that are less clear cut, HMRC will develop a simple and straightforward digital tool to provide employers engaging an incorporated worker with a real-time HMRC view on whether or not the intermediaries rules need to be applied. HMRC will be designing these new tools and tests in consultation with stakeholders.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 120 of 314 The existing intermediaries rules will continue as they are now for non-public sector engagements. Businesses and agencies working outside of the public sector will also be able to make use of the new digital tool.

Tax-Free Childcare

As we know the government will introduce Tax- Free Childcare in early 2017 and it will be gradually rolled out to children under 12, in a managed way. Parents of the youngest children will be able to enter the scheme first and it will be open to all eligible parents by the end of 2017. The existing scheme, Employer-Supported Childcare, will remain open to new entrants until April 2018 to support the transition between the schemes.

CIPP comment ESC remaining open is a sensible option as if an employee in an existing scheme decides to join the TFC scheme and then realises that they are subsequently worse off, under the original plans they would not have been allowed to revert back. The transition now makes that possible so individuals can choose the most financially viable scheme for them.

Termination Payments

The Chancellor has announced that the government will be legislating in Finance Bill 2017 to tighten and clarify the rules on which types of payments will be treated as salary and which will be subject to the termination payment rules. This will ensure that the rules are applied consistently and fairly. These changes include:

 clarifying that all payments in lieu of notice (regardless of whether they are contractual or not) will be subject to income tax and National Insurance Contributions (NICs) in the same way as other payments of earnings;  tightening the rules to ensure that certain contractual payments cannot be paid as damages, instead such payments will be treated as earnings and subject to tax and NICs; and  removing the exemption for foreign service.

Additionally, the government will be aligning employer NICs with the income tax treatment, so the elements of a termination payment over £30,000 will be subject to employer NICs if they are subject to income tax. These changes will come into effect from April 2018.

The government will be publishing a technical consultation setting out the detail of these changes over the summer.

CIPP comment The CIPP will be studying the consultation document once it is published and will, as usual, seek member views which will be used as a basis for our response.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 121 of 314 Other areas of interest

Addressing imbalances in the tax system

Remote gambling

The government will amend the tax treatment of freeplays in Remote Gaming Duty to bring it into line with the tax treatment of free bets in General Betting Duty.

Asset managers

The government has finalised the rules that determine when asset managers can pay capital gains tax rather than income tax on their performance related returns (‘carried interest’). These new rules ensure that carried interest will be taxed as a capital gain only when the fund undertakes long term investment activity.

Employee Shareholder Status

The government believes that Employee Shareholder Status (ESS) provides vital flexibility for early stage firms, and that it is right that employee shareholders receive tax benefits on shares awarded in exchange for relinquishing certain employment rights. However, the government wants to ensure that the benefits for individuals are proportionate and fair. Budget 2016 introduces an individual lifetime limit of £100,000 on gains eligible for Capital Gains Tax (CGT) exemption through ESS. This limit will apply to arrangements entered into on or after 17 March 2016, and will not apply to arrangements already in place. This change will enable employee shareholders to realise a significant growth in the value of their shares without paying any CGT, whilst helping to ensure that the status is not misused.

Loans to participators

The loans to participators rules aim to prevent owners of close companies avoiding Income Tax and National Insurance contributions by remunerating themselves through loans or advances that are not repaid, rather than taking dividends or salary. The government will increase the loans to participators tax rate from 25% to 32.5%, keeping it aligned with the higher rate of tax charged on dividend income. The new rate will apply to loans made or benefits conferred by close companies on or after 6 April 2016.

Alcohol and tobacco

The duty rates on beer, spirits and most ciders will be frozen this year. The duty rates on most wines and higher strength sparkling cider will increase by RPI from 21 March 2016.

As announced at Budget 2014, duty rates on all tobacco products will increase by 2% above RPI inflation. Duty on hand-rolling tobacco will also increase by an additional 3% above this rate, to 5% above RPI. These changes will come into effect from 6pm on 16 March 2016.

Following the earlier consultation, the government will introduce a Minimum Excise Tax on cigarettes.

Capital gains tax

Budget 2016 announces that, from 6 April 2016, the higher rate of Capital Gains Tax (CGT) will be reduced from 28% to 20%, and the basic rate will be reduced from 18% to 10%. There will be an 8 percentage point surcharge on these new rates for carried interest and for gains on residential property. This will ensure that CGT provides an incentive to invest in companies over property. Private Residence Relief will continue to ensure that an individual’s main home is not subject to CGT.

In addition, entrepreneurs’ relief will be extended to long term investors in unlisted companies. This will provide a 10% rate of CGT for gains on newly issued shares in unlisted companies purchased on or after 17 March 2016, provided they are held for a minimum of three years from 6 April 2016, and subject to a separate lifetime limit of £10 million of gains.

Corporation tax

The government will reduce the corporation tax rate to 17% for the Financial Year commencing 1 April 2020.

At Summer Budget 2015 the government announced it would bring forward corporation tax payment dates for those companies that have taxable profits over £20 million, so tax is paid closer to the point at which these companies make a profit. They will be required to pay tax in instalments in the third, sixth, ninth and twelfth months of the year. The government will delay the introduction of the new payment schedule by two years, so it will apply to accounting periods The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 122 of 314 starting on or after 1 April 2019. The new rules, including the new commencement date, will be legislated later this year.

The government has also commissioned the OTS to review options for simplifying the computation of corporation tax, with terms of reference to be published shortly.

Education & Skills

Lifetime learning For the first time direct government support will be available to adults wishing to study at any qualification level, from basic skills right the way up to PhD. During this parliament, loans will be introduced for level 3 to level 6 training in further education, part-time second degrees in STEM, and postgraduate taught master’s courses.

From 2018-19, loans of up to £25,000 will be available to any English student without a Research Council living allowance who can win a place for doctoral study at a UK university. They will be added to any outstanding master’s loan and repaid on the same terms, but with the intention of setting a repayment rate of 9% for doctoral loans and a combined 9% repayment rate if people take out a doctoral and master’s loan. The government will launch a technical consultation on the detail. Those who take out only a master’s loan will still repay at 6%.

Master’s loans The government will extend the eligibility of master’s loans to include three-year part-time courses with no full-time equivalent.

Longer school day The government will provide up to £285 million a year to give 25% of secondary schools increased opportunity to extend their school day.

Expand breakfast clubs Starting from September 2017, the government will provide £10 million funding to expand the number of healthy breakfast clubs.

Every school an academy The government expects all schools to become academies by 2020, or to have an academy order in place in order to convert by 2022.

National Funding Formula for schools Subject to consultation, the government’s aim is for 90% of schools who will gain funding increases to receive the full amount they are due by 2020.

Northern Powerhouse The government will invest £20 million a year to raise education standards across the Northern Powerhouse.

Double primary school PE and sport premium From September 2017 the government will increase the primary school PE and sport premium funding from £160 million per year to £320 million per year.

Post-16 maths The government will ask Professor Sir Adrian Smith to review how to improve the study of maths from 16 to 18.

Mentoring The government will provide £14 million over the Spending Review period to deliver a mentoring scheme for disadvantaged young teenagers.

Employment and earnings

Government action to reward work and reform benefits has delivered a stronger labour market in the UK, with an employment rate that has risen faster in the UK than in any other G7 country since 2010 making progress towards the government’s goal of full employment. The data for 2015 showed:

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cipp.org.uk Page 123 of 314  a record employment rate of 74.1% in Q4 2015  the employment rate of women had risen to 69.1% by the end of 2015, a record high  74% of the increase in employment in 2015 was driven by full-time workers  high and medium skill occupations accounted for 92% of the growth in employment in the year to Q4 2015  a strong demand for labour with 767,000 vacancies in Q4 2015, a record high  the claimant count fell to a 40 year low in 2015  working age inactivity fell by over 600,000 from 2010 to 2015

This strong employment performance has been accompanied by rising real wages. Earnings growth picked up in much of 2015, with total annual pay rising 2.5% on the year in nominal terms, and 2.3% in real terms. This represents the highest annual growth in nominal and real earnings since 2008.

Wages had been rising above inflation for 15 consecutive months by the end of 2015. Living standards, as measured by real household disposable income (RHDI) per capita, are expected to have risen in 2015 at their fastest rate in 14 years, driven by rising earnings and low inflation.

Small businesses

Under the banner of ‘backing small businesses’ the Chancellor outlined several changes in the rates and taxes that business have to pay.

Business rates

Small Business Rate Relief to be set at 100% for premises with a rateable value of £12,000 or less, with a taper relief for those with a rateable value of £12,000 - £15,000. These two measures combined will benefit up to 650,000 businesses and make a saving for each of up to £5,900 in 2017/18. The government will also increase standard business rates multiplier to rateable value of £51,000. This will mean that 250,000 smaller properties will no longer pay the higher rate.

National insurance contributions for the self employed

For the self-employed the abolition of Class 2 rate from April 2018 will be welcomed as it represents an annual tax saving on average of £134. Class 4 NICs will be reformed so that the self-employed can continue building their entitlement to the State Pension and other benefits. The government will set out its plans for the contributory benefit tests in its response to the recent consultation on this reform.

Stamp duty

Stamp duty on commercial properties will become a more progressive tax, with the lowest rate being reduced to 0% for transactions up to £150,000, 2% for transactions between £150,001 and £250,000, and 5% for transactions £250,000 and above. This will mean that businesses will pay the same or less stamp duty than at present. These changes will take effect 17 March 2016.

VAT

The government will increase the VAT registration threshold in line with inflation to £83,000 from 1 April 2016. This will save around 2,000 small businesses from having to register for VAT by the end of the 2016-17 financial year.

Sugar levy

The government will introduce a new soft drinks industry levy to be paid by producers and importers of soft drinks that contain added sugar. The levy will be charged on volumes according to total sugar content. There will be an exclusion for small operators, and the government will consult on the details over the summer for legislation in Finance Bill 2017 and implementation from April 2018 onwards.

In England, revenue from the soft drinks industry levy over the scorecard period will be used to:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 124 of 314  double the primary school PE and sport premium from £160 million per year to £320 million per year from September 2017 to help schools support healthier, more active lifestyles. This funding will enable primary schools to make further improvements to the quality and breadth of PE and sport they offer, such as by introducing new activities and after school clubs and making greater use of coaches  provide up to £285 million a year to give 25% of secondary schools increased opportunity to extend their school day to offer a wider range of activities for pupils, including more sport  provide £10 million funding a year to expand breakfast clubs in up to 1,600 schools starting from September 2017, to ensure more children have a nutritious breakfast as a healthy start to their school day

The Barnett formula will be applied to spending in Scotland, Wales and Northern Ireland on these new initiatives in the normal way.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 125 of 314 General Government News

Launch of new data sharing consultation 17 March 2016

The Government has launched a consultation which aims to maximise opportunities for effective data sharing in public sector organisations.

The consultation Better use of data in government, focuses on data held by public sector organisations and will assess how data is accessed and used. It seeks to improve data security across government whilst making citizens’ lives easier.

The consultation aims to maximise opportunities for effective data sharing and build on areas of good practice. The Cabinet Office and the Department for Work and Pensions (DWP) have been working closely together to prevent electoral fraud through the sharing and use of data to confirm legitimacy of applications to vote. The Driver and Vehicle Licensing Agency (DVLA) have also developed a service, allowing people to view all their driving licence information, such as the amount of penalty points. It is also possible to share this data with car insurers or hire companies, where you consent for this to happen.

The consultation asks people to consider the proposals and whether they are appropriate. It looks at how government can share data to:

 improve outcomes for the public by ensuring public authorities have the data they need to deliver the right service to the right citizen at the right time, for example around running the Troubled Families programme  support the administering of fuel poverty payments  enable access to civil registration data, for example births, deaths and marriages – this prevents authorities sending letters to people who are deceased  reduce the billions of pounds lost and cost to the taxpayer in preventing, detecting and dealing with fraud against the public sector  help citizens manage their debt more effectively and reduce the estimated £24.1 billion of overdue debt owed to government  enable the Office for National Statistics (ONS) to access detailed administrative data from across government and businesses to provide more accurate, frequent and timely statistics and to update how the census is managed, rather than using surveys  support accredited researchers to access and link data to carry out research for public benefit.

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Better use of data in government – open consultation 12 April 2016

The Cabinet Office is currently running a consultation which will close on 22 April 2016. The consultation is seeking comments and views from as wide a range of people as possible.

In the forward from Minister for the Cabinet Office and Paymaster General, the Rt Hon Matt Hancock MP confirms the issues this consultation looks to address “When data is used effectively, everyone benefits from better services that can be delivered at a lower cost to taxpayers. Citizens too have a strong expectation that data will be used responsibly, proportionately and securely ensuring that their data is respected and handled sensitively. As the volume of data and our capacity to deliver digital services grow, the opportunities to improve services increase — but so too must our governance and safeguards to best protect our data against increasing cyber security threats.”

The paper works on the premise that information sharing between public authorities, where the information is well governed, proportionate and secure, ‘can improve the lives of citizens and go on to support decisions on the economy which allow businesses to flourish, and improve the efficiency and effectiveness of the public sector’.

This consultation looks at enabling greater information sharing between public authorities and the proposals fall into 3 categories:

Improving public services

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cipp.org.uk Page 126 of 314  allowing public authorities to share personal data in specific contexts to improve the welfare of a specific person  enabling public authorities to access to civil registration data (births, deaths and marriages)

Addressing fraud and debt  helping citizens manage their debt more effectively and reduce the overdue debt that they owe to government  helping detect and prevent the losses government currently experiences due to fraudulent activity

Allowing use of data for research and official statistics  giving the Office for National Statistics access to detailed administrative government data to improve their statistics  using de-identified data in secure facilities to carry out research for public benefit

Your views can be submitted by Friday 22 April 2016 in writing to the:

Data Sharing Policy Team, Floor 6, Aviation House, London WC2B 6NH

Or by e-mail to [email protected]

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BIS civil servants to strike over Sheffield closure plans 17 May 2016

Civil servants working at the Department for Business, Innovation and Skills (BIS) are to go on strike over plans to close the department’s Sheffield site.

Civil Service World (CSW) has reported that Public and Commercial Services (PCS) union has announced a one-day strike of policy officials set to be affected by the Department for Business, Innovation and Skills' (BIS) plan to close its office in Sheffield

BIS announced earlier this year that it intends to shut its St Paul’s Place site by 2018, in favour of centralising its policymaking staff at its London headquarters.

The move, which the department says could help save £14m and create a more effective policymaking operation, potentially places more than 240 jobs at risk, and has been criticised by unions and local MPs as running counter to promises to hand more power away from Whitehall.

In a recent statement, the Public and Commercial Services (PCS) union said there had been “overwhelming” support for industrial action by its policy members at the site. A one-day strike will now take place on Thursday, May 19, after 96% of the 150 affected PCS members backed action on a 53% turnout.

The union is also considering further action, and PCS general secretary Mark Serwotka said the move “sends the clearest possible message to BIS ministers and senior officials that these plans are wrong and must be reversed”.

He added: “The closure of this office is precisely the opposite of what the government claims to want for the north and the wider civil service.”

BIS minister Anna Soubry this week confirmed that staff affected by the closure will learn of their fate on May 23. CSW understands that several meetings of the BIS Board are still to take place before that final decision is taken.

Soubry was speaking in the House of Commons, as MPs backed a parliamentary motion calling on the National Audit Office public spending watchdog to take a detailed look at BIS’s plans.

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cipp.org.uk Page 127 of 314

Queen’s Speech 2016 19 May 2016

There were no major revelations to directly affect the payroll profession in the Queen’s Speech today, however there will be a new Pensions Bill and there was much to note of general interest with the introduction of 21 new Bills.

The Queen’s Speech takes place at the start of each Parliamentary session and sets out the government’s policies and proposed legislative programme for the new session.

The Prime Minister said that this is a One Nation Queen’s Speech from a One Nation Government and that it uses the opportunity of a strengthening economy to:

 deliver security for working people;  increase life chances for the most disadvantaged; and  strengthen our national security

The Speech included confirmation of many previous commitments made by government in the March 2016 Budget.

The Pensions Bill is to further reform Britain’s private pensions system by:

 Providing better protections for members in Master Trust pension schemes – including millions of automatically enrolled savers.  Capping early exit charges to ensure that excessive charges do not prevent occupational scheme members from taking advantage of pension freedoms.  Providing access to a straight forward private pensions guidance service for customers by creating a new pensions guidance body by bringing together the Pensions Advisory Service, Pension Wise and the pensions services offered by the Money Advice Service.  Creating a new money guidance body which would replace the Money Advice Service and be charged with identifying gaps in the financial guidance market to make sure consumers can access high quality debt and money guidance.

Devolution: There are no devolved administration interests in respect of Scotland or Wales. Northern Ireland makes its own legislation in relation to pensions. The money guidance bodies will operate UK wide, and financial services is a reserved matter. However, devolved administration issues may arise due to links with financial education (devolved).

The Digital Economy Bill will include:

 Giving every household a legal right to a fast broadband connection.  New laws to help telecommunications providers build the infrastructure needed for faster broadband and better mobile networks.  Allowing consumers to be automatically compensated when things go wrong with their broadband service.

Devolution: Communications, broadcasting and intellectual property are reserved matters (where only the UK Parliament can pass laws).

The Lifetime Savings Bill will include:

 The new Help to Save scheme, which will help those from low incomes build up their savings. Workers in receipt of working tax credits or Universal Credit who save up to £50 a month will receive a Government bonus of 50% - to a maximum of £600 – after two years.  The new Lifetime ISA for young people, with a Government top up bonus of 25% on all savings up to £4,000 a year.

Devolution: Applies to the whole UK.

Work will continue on the Bills that are already in progress such as the Wales Bill, High Speed Rail (London-West Midlands) Bill and the Policing and Crime Bill. And work will also continue with other commitments such as Seven day

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cipp.org.uk Page 128 of 314 NHS in England, the Northern Powerhouse, National Security and support for working people (including the new National Living Wage).

Other new Bills include the Modern Transport Bill which will include legislation to enable the future development of the UK’s first commercial spaceports and new laws to make the UK ready to pioneer driverless cars.

The Local Growth and Jobs Bill will include a transfer of up to £13 billion to councils through allowing them to retain 100% of the business rates they collect and new measures to allow combined authority mayors to levy business rate supplements in order to fund infrastructure projects where there is the support of local business.

The Education for All Bill will include new laws to expand the academies programme in the poorest performing local authority areas and a new funding formula to deliver fair funding for every school and pupil in the country.

The Prison and Courts Reform Bill will include new powers for Prison Governors to allow them unprecedented levels of control over all aspects of prison management and a complete overhaul of education, health and training to reduce re-offending and give people the chance of a fresh start.

The Bill of Rights will include measures to reform and modernise the UK human rights framework and protections against abuse of the system and misuse of human rights laws.

The Counter-Extremism and Safeguarding Bill will include stronger powers to disrupt extremists and protect the public.

The Criminal Finances Bill will include measures to reform proceeds of crime legislation to allow the government to recoup more illicit income and make it a new criminal offence for corporations that fail to stop staff facilitating tax evasion.

The Small Charitable Donations Bill will allow thousands of charities and community amateur sports clubs to maximise fundraising power by reforming the Gift Aid Small Donations Scheme to ensure it supports the maximum number of charities and donations possible.

To read the Queen’s Speech and for further detail in associated documents go to GOV.UK.

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ONS reports on internet users in 2016 23 May 2016

In the same week that it was announced that government flagship service GOV.UK Verify had passed the Digital by Default Service Standard Assessment that will enable it to go from BETA service to a live service, the Office of National Statistics (ONS) have published their annual report on Internet users in the UK.

The annual statistical bulletin Internet users in the UK: 2016 can be downloaded in PDF format but the main points in summary report are that:

 87.9% of adults in the UK (45.9 million) had recently (in the last 3 months) used the internet, compared with 86.2% in 2015.  10.2% (5.3 million) had never used the internet compared with 11.4% in 2015.  Almost all adults aged 16 to 24 years were recent internet users (99.2%), in contrast with 38.7% of adults aged 75 years and over.  89.4% of men (22.8 million) and 86.4% of women (23.1 million) were recent internet users, up from 87.9% and 84.6% in 2015.  Women aged 75 and over, had seen the largest rise in recent internet use, up 169.0% from 2011; however, still less than a third (32.6%) were recent users in 2016.  25.0% of disabled adults had never used the internet in 2016, down from 27.4% in 2015.  Of the NUTS* 1 regions, Northern Ireland had seen the largest increase (13.2 percentage points) in recent internet use since 2011; however, in 2016 it was still the region with the lowest recent usage (82.0%).  Inactive adults who had never used the internet or who used the internet more than 3 months ago, has decreased by 13.3 percentage points since 2011.

* NUTS (Nomenclature of Territorial Units for Statistics) was created by the European Office for Statistics (Eurostat) as a single hierarchical classification of spatial units used for statistical production across the European Union (EU).

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cipp.org.uk Page 129 of 314 The ONS are constantly aiming to improve this release and its associated commentary and would welcome any feedback that readers might have. Contact can be made by telephone to Cecil Prescott on 01633 456767 or via email at [email protected].

Of the ten Government services that can be used with GOV.UK Verify one of the services provided via HMRC is includes Help friends or family with their tax.

This service enables an individual to rregister online as a ‘trusted helper’ to help a friend or relative:  check they’re paying the right amount of Income Tax  check or update their personal tax account  claim a tax refund  check or update their company car tax

The person you’re helping must then use the service to accept your registration. If they can’t go online, you may be able to call HM Revenue and Customs (HMRC) on their behalf.

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Voter Registration for EU Referendum 24 May 2016

23 May marks the one month countdown to the EU Referendum, a once in a generation decision on whether the UK should remain or leave the European Union.

It is important that as many people as possible understand the need to register to vote ahead of this if they haven’t already.

With this in mind the Electoral Commission are calling on as many communities, networks, businesses and individuals as possible to spread the word about the need to register to vote by Tuesday 7 June.

The Electoral Commission have suggested some simple things that could be done to promote the message:

 Print and put up posters in public facing buildings and staff rooms  Add a register to vote message to your website and bulletins/newsletters  Use social media accounts such as Twitter and Facebook to promote the need to register by 07 June  Encourage networks, friends and colleagues to register  Hold a voter registration drive in your workplace or community.

The Electoral Commission are also providing specific additional resources for overseas voters, Northern Ireland voters and also a Welsh version of their EU Referendum guide . These additional resources are on the Electoral Commission’s website.

 If you are not already registered to vote, you must register by 07 June to have a say in the EU Referendum which takes place on 23 June  You can register online and it just takes a couple of minutes  You’ll need your national insurance (NI) number to hand, which can be found on payslips, P60s, student loan forms  If you can’t find your NI number visit the NI help service  If you are going to be away on 23 June you can apply for a postal or proxy vote (where someone votes on your behalf)  Register to vote at GOV.UK.

Please note that activity can continue until the registration deadline on 07 June unless your organisation is majority publicly funded. If that is the case please plan your voter registration activity from 7 May - 26 May. From 27 May, section 125 of the Political Parties, Elections and Referendum Act 2000 will apply. More info here

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 130 of 314 Queen’s awards include Office of Tax Simplification 15 June 2016

Several public servants in the area of tax have been honoured by the Queen this year. They include John Whiting who is the Tax director for the Office of Tax Simplification (OTS).

John Whiting received an OBE for services to Tax Simplification.

CIPP comment The CIPP applaud the work of the OTS so far, and John Whiting’s contribution. He has been a regular attendee at many of our National Forums in which he has updated our members, but perhaps more importantly, he has sought their views on several different aspects under consideration to ensure the OTS makes fully informed recommendations.

Read the full Birthday Honours lists 2016.

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Tax Director of OTS steps down 20 June 2016

John Whiting has made the decision to step down from his position as Tax Director for the Office for Tax Simplification (OTS).

John Whiting recently received an OBE for services to Tax Simplification. As we mentioned at the time of the Queen’s birthday honours, John Whiting has been a regular attendee at many of our National Forums in which he has updated our members, but perhaps more importantly, has sought their views on several different aspects under consideration to ensure the OTS makes fully informed recommendations.

The CIPP applaud the work of the OTS so far, and John Whiting’s contribution and look forward to working with his replacement, when appointed.

The Treasury has started the recruitment process for a permanent Tax Director which closes to applications on 14 July 2016.

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National Audit Office Diversity and Inclusion Annual Report 2015-16 4 July 2016

The National Audit Office (NAO) has published their Diversity and Inclusion annual report which aims to summarise progress over the first year of the 2015-2018 strategy.

The NAO is an organisation with a far-reaching mission to secure improvements in the way public services are delivered and this first annual report has been published as part of their three-year diversity and inclusion strategy which highlights that the NAO have made good progress under each of the three strategic pillars:

 Talent pipeline  Inclusive work environment  Diversity in the work of the NAO

In the press release that accompanied the reports publication, Amyas Morse, Comptroller and Auditor General says:

“There has been a strong focus in 2015-16 on inclusion in the workplace, and we have introduced a new approach to flexible working, trusting our people to work in a way which meets personal and business needs. Our support of Access Accountancy and the social mobility agenda has also continued with the introduction of a work experience The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 131 of 314 programme for school pupils. Focusing on diversity in our work is also something we take seriously, as it helps drive improvement in the services delivered by our clients. Although we have made some progress there are still areas where we need to improve. We recognise, for example, that our talent pipeline is not as diverse as we would like and selection will be a particular focus over the next year.”

The report can be accessed and read in full along with a separate report on equality data which has been published in recognition of the NAO commitment to the Public Sector Equality Duty.

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BIS 2020 transformation programme 12 July 2016

BIS 2020 is the Department for Business, Innovation & Skills’ ongoing strategic transformation programme which aims to modernise the way that BIS works, reduce operating costs and deliver a simpler, smaller department that is more flexible and responsive to stakeholders.

This study will examine:  how the programme was planned;  how the early stages of implementation are progressing; and  the quality of analysis that supports the programme.

If you would like to provide evidence for this study please email the study team on [email protected], putting the study title in the subject line. The team will consider all evidence provided; however, due to the volume of information they receive BIS may not respond to you directly. If you need to raise a concern you can use the contact form.

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Who’s who in the new Prime Minister’s Cabinet 28 July 2016

The full details of all ministerial and government appointments following Theresa May becoming Prime Minister on 13 July 2016 has been published.

Her Majesty’s Government - July 2016

Prime Minister, First Lord of the Treasury and Minister for the Civil Service  Rt Hon Theresa May MP

HM Treasury  Chancellor of the Exchequer – Rt Hon Philip Hammond MP  Chief Secretary to the Treasury – Rt Hon David Gauke MP  Financial Secretary – Jane Ellison MP  Economic Secretary – Simon Kirby MP†  Commercial Secretary – Lord O’Neill of Gatley*

Home Office  Secretary of State for the Home Department – Rt Hon Amber Rudd MP  Minister of State – Brandon Lewis MP  Minister of State – Ben Wallace MP  Minister of State – Robert Goodwill MP  Minister of State – Baroness Williams of Trafford  Parliamentary Under Secretary of State – Sarah Newton MP  Parliamentary Under Secretary of State – Baroness Shields OBE (jointly with the Department for Culture, Media and Sport)*

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 132 of 314 Foreign and Commonwealth Office  Secretary of State for Foreign and Commonwealth Affairs – Rt Hon Boris Johnson MP  Minister of State – Rt Hon Sir Alan Duncan MP  Minister of State – Rt Hon Baroness Anelay of St Johns DBE (jointly with the Department for International Development)  Parliamentary Under Secretary of State – Tobias Ellwood MP  Parliamentary Under Secretary of State – Alok Sharma MP

Ministry of Defence  Secretary of State for Defence – Rt Hon Michael Fallon MP  Minister of State – Rt Hon Mike Penning MP  Minister of State – Rt Hon Earl Howe (and Deputy Leader of the House of Lords)*  Parliamentary Under Secretary of State – Mark Lancaster TD MP  Parliamentary Under Secretary of State – Harriett Baldwin MP

Ministry of Justice  Lord Chancellor, and Secretary of State for Justice – Rt Hon Elizabeth Truss MP  Minister of State – Sir Oliver Heald QC MP  Parliamentary Under Secretary of State – Sam Gyimah MP  Parliamentary Under Secretary of State – Phillip Lee MP

Department for Education  Secretary of State for Education, and Minister for Women and Equalities – Rt Hon Justine Greening MP  Minister of State – Jo Johnson MP (jointly with the Department for Business, Energy and Industrial Strategy)  Minister of State – Nick Gibb MP  Minister of State – Edward Timpson MP  Minister of State – Rt Hon Robert Halfon MP  Parliamentary Under Secretary of State – Lord Nash  Parliamentary Under Secretary of State – Caroline Dinenage MP

Department for Exiting the European Union  Secretary of State for Exiting the European Union – Rt Hon David Davis MP  Minister of State – Rt Hon David Jones MP  Parliamentary Under Secretary of State – Lord Bridges of Headley MBE  Parliamentary Under Secretary of State – Robin Walker MP

Department for International Trade  Secretary of State for International Trade, and President of the Board of Trade – Rt Hon Liam Fox MP  Minister of State – Lord Price CVO  Minister of State – Rt Hon Greg Hands MP  Parliamentary Under Secretary of State – Mark Garnier MP

Department for Business, Energy and Industrial Strategy  Secretary of State for Business, Energy and Industrial Strategy – Rt Hon Greg Clark MP  Minister of State – Jo Johnson MP (jointly with the Department for Education)  Minister of State – Nick Hurd MP  Minister of State – Baroness Neville-Rolfe DBE CMG  Parliamentary Under Secretary of State – Margot James MP  Parliamentary Under Secretary of State – Jesse Norman MP

The Department for Business, Innovation & Skills (BIS) has become the Department for Business, Energy and Industrial Strategy (BEIS). The Skills element will be taken up by the Department for Education.

Department of Health  Secretary of State for Health – Rt Hon Jeremy Hunt MP  Minister of State – Philip Dunne MP  Parliamentary Under Secretary of State – Nicola Blackwood MP  Parliamentary Under Secretary of State – David Mowat MP  Parliamentary Under Secretary of State – Lord Prior of Brampton

Department for Work and Pensions The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 133 of 314  Secretary of State for Work and Pensions – Rt Hon Damian Green MP  Minister of State – Penny Mordaunt MP  Minister of State – Damian Hinds MP  Minister of State – Lord Freud  Parliamentary Under Secretary of State – Caroline Nokes MP  Parliamentary Under Secretary of State – Richard Harrington MP

Department for Transport  Secretary of State for Transport – Rt Hon Chris Grayling MP  Minister of State – Rt Hon John Hayes MP  Parliamentary Under Secretary of State – Paul Maynard MP  Parliamentary Under Secretary of State – Andrew Jones MP  Parliamentary Under Secretary of State – Lord Ahmad of Wimbledon

Department for Communities and Local Government  Secretary of State for Communities and Local Government – Rt Hon Sajid Javid MP  Minister of State – Gavin Barwell MP  Parliamentary Under Secretary of State – Andrew Percy MP  Parliamentary Under Secretary of State – Marcus Jones MP  Parliamentary Under Secretary of State – Lord Bourne of Aberystwyth (jointly with the Wales Office)

Office of the Leader of the House of Commons  Lord President of the Council, and Leader of the House of Commons – Rt Hon David Lidington MP  Parliamentary Secretary (Deputy Leader of the House of Commons) * – Michael Ellis MP (and Assistant Whip (paid))

Office of the Leader of the House of Lords  Lord Privy Seal, and Leader of the House of Lords – Rt Hon Baroness Evans of Bowes Park  Deputy Leader of the House of Lords – Rt Hon Earl Howe (and Minister of State at the Ministry of Defence)

Scotland Office  Secretary of State for Scotland – Rt Hon David Mundell MP  Parliamentary Under Secretary of State – Lord Dunlop (jointly with the Northern Ireland Office)

Wales Office  Secretary of State for Wales – Rt Hon Alun Cairns MP  Parliamentary Under Secretary of State – Guto Bebb MP (and Government Whip (paid))  Parliamentary Under Secretary of State – Lord Bourne of Aberystwyth (jointly with the Department for Communities and Local Government)

Northern Ireland Office  Secretary of State for Northern Ireland – Rt Hon James Brokenshire MP  Parliamentary Under Secretary of State – Kris Hopkins MP  Parliamentary Under Secretary of State – Lord Dunlop (jointly with the Scotland Office)

Department for Environment, Food and Rural Affairs  Secretary of State for Environment, Food and Rural Affairs – Rt Hon Andrea Leadsom MP  Minister of State – George Eustice MP  Parliamentary Under Secretary of State – Thérèse Coffey MP  Parliamentary Under Secretary of State – Lord Gardiner of Kimble

Department for International Development  Secretary of State for International Development – Rt Hon Priti Patel MP  Minister of State – Rory Stewart OBE MP  Minister of State – Rt Hon Baroness Anelay of St Johns DBE (jointly with the Foreign and Commonwealth Office)  Parliamentary Under Secretary of State – James Wharton MP

Department for Culture, Media and Sport

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 134 of 314  Secretary of State for Culture, Media and Sport – Rt Hon Karen Bradley MP  Minister of State – Rt Hon Matt Hancock MP  Parliamentary Under Secretary of State – Tracey Crouch MP  Parliamentary Under Secretary of State – Rob Wilson MP  Parliamentary Under Secretary of State – Baroness Shields OBE (jointly with the Home Office)  Parliamentary Under Secretary of State* – Lord Ashton of Hyde (and a Lord in Waiting (paid))

Cabinet Office  Paymaster General, and Minister for the Cabinet Office – Rt Hon Ben Gummer MP  Parliamentary Secretary – Chris Skidmore MP  Chancellor of the Duchy of Lancaster (and Conservative Party Chair) – Rt Hon Patrick McLoughlin MP

Other appointments are detailed on GOV.UK - Ministerial appointments: July 2016 along with a list of ministers that have left the government.

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Office of Tax Simplification: new board members announced 2 September 2016

Three new non-executive directors have been appointed to the Board of the Office of Tax Simplification (OTS).

Paul Johnson (Director of the Institute of Fiscal Studies), John Cullinane (Tax Policy Director at the Chartered Institute of Taxation) and Kathleen Russ (Head of Tax at Travers Smith) will provide further guidance, support and breadth of knowledge to the OTS board.

They join existing board members, though Adam Broke, who has been a member of the OTS board since the OTS’s inception, will be stepping down from the board.

The OTS was established in 2010 to provide advice to the Chancellor on simplifying the UK tax system and was made a permanent, independent office of HM Treasury in July 2015. It is being put on a statutory footing in the Finance Bill 2016.

To date, the government has implemented almost 200 OTS recommendations to simplify the tax system.

Read the full press release on GOV.UK

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MPs to debate second EU referendum 6 September 2016

MPs will today have the chance to debate the popular online petition which over 4.1 million people signed, calling for a second EU referendum.

Following the Brexit vote on 23 June, 4,144,605 people have, to date, signed a petition on the parliamentary website calling for a second EU referendum.

No petition on the parliamentary website has received this many signatures before and it is well beyond the 100,000 signatures required for Parliament to consider it for a debate.

As Politics Home rightly says, the debate will have no power to alter the vote but if offers the chance for those seeking a referendum on the final Brexit deal, to air their views.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 135 of 314 Autumn Statement 2016 date confirmed 13 September 2016

This year’s Autumn Statement will be on Wednesday 23 November 2016.

The Chancellor of the Exchequer, Philip Hammond, has announced that he will present his first Autumn Statement to Parliament on Wednesday 23 November 2016.

The Autumn Statement is based on the latest forecasts from the Office for Budget Responsibility for the economy and public finances.

CIPP comment

We are due to receive government responses to several consultations at this year’s Autumn Statement. Expected announcements include further detail on:

• the review of income tax and national insurance alignment; • alignment of dates for making-good on benefits-in-kind; and • salary sacrifice for the provision of benefits in kind.

The Policy Team always produce a summary of relevant announcements; watch our news pages on Wednesday 23 November to find out what you need to know.

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Finance Act 2016 19 September 2016

The Finance Bill has eventually received Royal Assent and has become the Finance Act 2016.

GOV.UK hosts the collection of supporting documents for the Finance Act; the vehicle for renewing annual taxes, delivering new tax proposals and maintaining administration of the tax system.

Relevant legislation for the payroll profession include the apprenticeship levy, income tax, paying HMRC, tax administration and tax avoidance and evasion.

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Government Committee launch inquiry on executive pay 20 September 2016

The Business, Innovation, and Skills (BIS) Committee has launched an inquiry on corporate governance, focusing on executive pay, directors duties, and the composition of boardrooms, including worker representation and gender balance in executive positions.

The BIS Committee inquiry follows on from the corporate governance failings highlighted by the Committee’s recent inquiries into BHS and Sports Direct, and in the wake of commitments from the Prime Minister to overhaul corporate governance.

The inquiry questions are as follows:

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Executive pay  What factors have influenced the steep rise in executive pay over the past 30 years relative to salaries of more junior employees?  How should executive pay take account of companies’ long-term performance?  Should executive pay reflect the value added by executives to companies relative to more junior employees? If so, how?  What evidence is there that executive pay is too high? How, if at all, should Government seek to influence or control executive pay?  Do recent high-profile shareholder actions demonstrate that the current framework for controlling executive pay is bedding in effectively? Should shareholders have a greater role?

Directors Duties  Is company law sufficiently clear on the roles of directors and non-executive directors, and are those duties the right ones? If not, how should it be amended?  Is the duty to promote the long-term success of the company clear and enforceable?  How are the interests of shareholders, current and former employees best balanced?  How best should the decisions of Boards be scrutinised and open to challenge?  Should there be greater alignment between the rules governing public and private companies? What would be the consequences of this?  Should additional duties be placed on companies to promote greater transparency, e.g. around the roles of advisors. If so, what should be published and why? What would the impact of this be on business behaviour and costs to business?  How effectively have the provisions of the 1992 Cadbury report been embedded? How best can shareholders have confidence that Executives are subject to independent challenge?  Should Government regulate or rely on guidance and professional bodies to ensure that Directors fulfil their duties effectively?

Composition of Boards  What evidence is there that more diverse company boards perform better?  How should greater diversity of board membership be achieved? What should diversity include, e.g. gender, ethnicity, age, sexuality, disability, experience, socio-economic background?  Should there be worker representation on boards and/or remuneration committees? If so, what form should this take?  What more should be done to increase the number of women in Executive positions on boards?

Written evidence should be submitted online via the Corporate Governance inquiry page by Wednesday 26 October 2016.

Terms of reference: Corporate Governance

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Civil Service Compensation Scheme – Government Response 28 September 2016

The Cabinet Office has published the Government response to the consultation on proposals to reform the Civil Service Compensation Scheme (CSCS). The Cabinet Office ran the consultation from 8 February 2016 until 4 May 2016 and looked to consult with individuals and unions who represent civil servants on the reform of the Civil Service Compensation Scheme. The Government consulted on making changes to the Civil Service Compensation Scheme so that it remains a suitable and appropriate tool. Under the current terms, staff may be incentivised not to put themselves forward for consideration of an exit package and early access to pension provisions are deemed to be out-dated. The consultation document set out the intention for a reformed Compensation Scheme to support both the ability of staff to exit the organisation with dignity and security and the need for the employer to retain those with the skills that will be required in the Civil Service of the future. The consultation set out the following principles:  To align with wider compensation reforms proposed across the public sector including the Government’s manifesto commitment to prevent excessive pay-outs by ending six-figure exit packages;

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 137 of 314  Supporting employers in reshaping and restructuring their workforce to ensure it has the skills required for the future;  To increase the relative attractiveness of the scheme for staff exiting earlier in the process, and to maintain flexibility in voluntary exits to support this aim;  To create significant savings on the current cost of exits and ensure appropriate use of taxpayers money; and  To ensure any early access to pension provision remains appropriate.

The consultation document outlined a range of options for how the Civil Service Compensation Scheme could be reformed to align with the principles above and included a preferred package of reforms:  The standard tariff to be three weeks’ per year of service; Voluntary Exit capped at 18 months’ salary;  Voluntary Redundancy capped at 12 months;  Compulsory Redundancy capped at 9 months;  Only to allow employer funded top up for early access to pension where the member has reached the minimum pension age for a new entrant to the scheme (i.e. 55 at a minimum);  To introduce a cap on CSCS payments at £95,000 in line with proposed legislation; and  Set notice periods for all exits from the Civil Service under the CSCS at 3 months (notice periods are not set under the CSCS but clearly have an impact on total costs).

Full details for the process undertaken throughout this consultation can be found in the consultation document and the detail of the Government’s aim to achieve a negotiated agreement of the majority of the trade unions representing staff covered by the CSCS. However, in brief  The following terms represent the Government’s formal offer to the trade unions:  The standard tariff to be three weeks’ per year of service;  Voluntary Exit capped at 18 months’ salary;  Voluntary Redundancy capped at 18 months’ salary;  Compulsory Redundancy capped at 9 months’ salary;  To maintain flexibility in Voluntary Exit terms to offer between statutory terms and the standard tariff;  Only to allow employer funded top up to pension from age 55 and for this to track 10 years behind state pension age;  To offer a partial buy out option for employees above minimum pension age where the cash value of the exit payment is insufficient to fully buy out the actuarial reduction or where the full exit payment is otherwise affected by restrictions in legislation (e.g. the introduction of the £95,000 exit cap);  Compulsory Redundancy notice periods to be set at 3 months for new starters;  For the lower paid underpin to increase to £24,500; the Inefficiency Compensation tariff to be reformed to align with Voluntary Redundancy terms (i.e. a maximum of 18 months’ salary) as part of a package of reforms – which limits its use to cases of underlying ill health and includes amending the management code and associated guidance and confirms eligibility for alpha and Nuvos members;  A revised 2016 Protocol for Civil Service Redundancies to help speed up the exit process. Key features are:  stronger workforce planning upfront with an enhanced role for the Recruitment and Redeployment Working Group;  minimum periods of formal consultation will be 45 days where there are more than 100 exits and 30 days where there are less than 100 employees;  voluntary exit and voluntary redundancy notice should be served at the point an individual agrees to exit the Civil Service as part of an exit scheme;  four weeks of redeployment support will be given to an individual if they do not accept voluntary redundancy; and  the 2016 Protocol will include the Senior Civil Service.

The terms above are those of the Government’s formal offer to unions. In the event the offer is not accepted, the Government intends to implement a reformed Civil Service scheme with the following terms:  The standard tariff to be three weeks’ per year of service;  Voluntary Exit capped at 15 months’ salary;  Voluntary Redundancy capped at 15 months;  Compulsory Redundancy capped at 9 months;  Only to allow employer funded top up to pension from age 55 and for this to track 10 years behind state pension age;  Compulsory notice periods to be reduced to 3 months for new starters;

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 138 of 314  The inefficiency Compensation tariff reformed to align with Compulsory Redundancy terms (i.e. a maximum of 9 month’s salary) and to revise the PIN40 guidance; and  A set of central redundancy principles to be operated by departments to replace the current 2008 and 2014 protocols.

Full details can be found in the response.

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Consultation on amending the definition of financial advice 23 September 2016

Currently, firms are reluctant to offer guidance services to customers, a key reason being the uncertainty around what constitutes regulated advice and what does not.

A consultation has been published which seeks views from the public on amending the UK definition of financial advice.

As announced at Budget 2016, the government is consulting on amending the UK definition of financial advice. This will give firms the confidence to develop better and more tailored guidance services to help customers make informed financial decisions. Some consumers have relatively straightforward financial needs or small amounts to invest. For such consumers, the cost of full regulated advice may outweigh the benefits, or it may be uneconomic for firms to provide them with regulated advice. Currently, firms are reluctant to offer guidance services to these consumers, increasing the risk of them making poor investment decisions on their own. A key reason for this reluctance is uncertainty around what constitutes regulated advice and what does not.

The main reason for the uncertainty is the fact that UK firms face two definitions of financial advice. The UK currently defines regulated financial advice as ‘advising on investments’ which is set out in the Regulated Activities Order (RAO). This definition is broader and less specific than the definition used in the Markets in Financial Instruments Directive (MiFID), which is based upon a firm giving a customer a personal recommendation. FAMR found that the MiFID definition is clearer for firms and consumers and is also much easier for firms to build into their compliance processes.

The consultation proposes to amend the wording in article 53 of the RAO to reflect the text set out in MiFID, so that consumers only receive “regulated advice” when they are offered a personal recommendation for a specific product.

This consultation closes at 15 November 2016 11:45pm.

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The use of agency workers during strike action in Welsh public services 23 September 2016

The Welsh Government has published a consultation seeking views on proposals about the use of temporary agency workers to cover for Welsh public service employees who are on strike or taking other industrial action.

The UK Government has consulted on proposals to remove regulations that prevent the supply of agency workers by employment businesses to cover employees taking industrial action. The Welsh government is consulting on proposals that sustain the principle of the regulation in Welsh public services, should it be removed by the UK government.

Background Currently Regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 prohibits employment businesses from providing agency workers to cover the duties normally performed by an employee of an organisation who is taking part in a strike or other industrial action, or to cover the work of an employee covering the duties of an employee taking part in a strike or other industrial action.

The UK Government has consulted on a proposal to rescind this regulation.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 139 of 314 Removing the regulation from the Conduct Regulations would allow employers, facing industrial action, to hire temporary agency workers from employment businesses who would then be able to perform some of the functions not being carried out due to the industrial action.

The Welsh Government believes that the use of agency workers, in this fashion, would undermine the right to strike by reducing the impact of industrial action, and affect the balance between employer and trade unions.

The Welsh Government also believes that the UK Government’s approach should not override their ability to pursue the Welsh way of delivering relevant public services. With this in mind, the Welsh Government proposes to protect Social Partnership by ensuring that the current position will continue to apply to Welsh public services should the UK Government act to rescind Regulation 7.

This means not allowing public service employers in Wales to use agency workers, in these circumstances, and this would continue to be the case in the event that the UK Government acts to allow recruitment businesses to offer them.

Views are sought from a wide range of stakeholders, including recruitment businesses, public sector employers, trade unions and the public who are affected by industrial action.

The consultation is open for responses until 6 December 2016. A summary of the responses to the consultation will then be published and an outline of the next steps to be taken.

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Legislation Day 30 September 2016

‘Legislation Day’, the informal name for one of the most significant dates in the year’s tax calendar, will take place on Monday 5 December 2016.

Following the Autumn Statement on the 23 November 2016, the first draft clauses to be included in Finance Bill 2017 will be published on Legislation Day. Consultation on draft legislation will be open until Monday 30 January 2017.

CIPP comment

We are due to receive government responses to several consultations at this year’s Autumn Statement which may well be included in the draft legislation for Finance Bill 2017. Expected announcements include further detail on:

• the review of income tax and national insurance alignment; • alignment of dates for making-good on benefits-in-kind; and • salary sacrifice for the provision of benefits in kind.

The Policy Team always produce a summary of relevant announcements; watch our news pages from Wednesday 23 November to find out what you need to know.

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Adults in England to receive free digital skills training 10 October 2016

Government has announced plans to make training in basic digital skills free for adults in England lacking relevant qualifications.

The proposals, to be included in an amendment to the Digital Economy Bill, will mean publicly-funded basic digital skills training being offered free of charge to adults in England who need it. This is part of the Government’s ambition for the UK to be one of the most digitally-skilled nations in the world.

Secretary of State for Culture, Media and Sport Karen Bradley said: The Chartered Institute of Payroll Professionals Policy News Journal

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“In today’s digital economy, being able to use modern technology and navigate the Internet should be considered as important as English and Maths. But too many people struggle to get by, with more than ten million adults in England lacking the basic digital skills they need. We will make sure all adults who need it can receive free training in digital skills to equip them for the modern world.”

An ONS survey shows that an estimated 5.3 million people in the UK have never used the Internet.

A recent report by Ipsos Mori/Go ON UK found that more than 10 million of the adult population in England lack basic digital skills. The problem can stop people from thriving in a digitised workplace and job market. As many as 35 per cent of people in lower socio-economic groups lack basic digital skills, compared with 13 per cent of those in higher socio-economic groups.

Age is another factor preventing people benefitting from services such as banking, shopping and government tools which are increasingly moving online. Just 43 per cent of over 65s have basic digital skills, compared to 93 per cent of 15 to 24 year olds.

Courses will be delivered by colleges and other adult education providers, and training will be funded from the existing Adult Education Budget.

Government will consult on the details of this new offer in the coming months.

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Managing sickness absence for SMEs 11 October 2016

The cross-government Work and Health Unit is running a competition to find new ways of supporting SMEs to manage sickness absence at an early stage.

Businesses and organisations can apply for a share of £500,000 to develop solutions that will help SMEs manage short-term sickness absence.

As well as improving individual wellbeing, the government is aware that addressing sickness absence offers economic benefits for businesses, employees and the state.

They are keen to look at innovative proposals from those who know best what works for SMEs, and will offer businesses with the most promising solutions a government contract to develop their product or service.

This is a Small Business Research Initiative (SBRI) competition run in partnership with Innovate UK.

Further information can be found on GOV.UK.

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New public body offering debt advice, money and pensions guidance 11 October 2016

Ministers have decided to take forward plans to develop a single public financial guidance body which is responsible for delivering debt advice, money and pensions guidance to the public.

Earlier this year the government consulted on setting up a two body delivery model for government-sponsored guidance. This included replacing the Money Advice Service (MAS) with a new, streamlined, money guidance body, and bringing together the Pensions Advisory Service (TPAS) and Pension Wise into a new, pension guidance body.

Industry and consumer finance groups raised concerns about how two bodies might work together effectively and whether a single body would provide a better service for consumers.

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cipp.org.uk Page 141 of 314 Ministers have listened to these concerns and have decided that a single body would be better able to respond to the different financial guidance needs of consumers, making it easier for them to get access to the help they need to make effective financial decisions.

The Minister for Pensions, Richard Harrington, said:

“A single guidance body will be more efficient and will help consumers make the right financial decisions, and we are committed to ensuring people can access the best free and impartial financial guidance possible.”

The next steps will involve consulting on the best way to design a single body model, so legislation to create new public financial guidance bodies will not be included in the Pensions Schemes Bill.

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Lifetime ISA: The Savings (Government Contributions) Bill 18 October 2016

The Lifetime ISA is being legislated for through the Savings (Government Contributions) Bill and is due to become available from April 2017.

The Savings (Government Contributions) Bill will introduce the Lifetime ISA, where people aged from 18 to 40 will be able to open an individual savings account to which they can contribute up to £4,000 each year up to age 50, and receive a government bonus of 25% on those contributions. The Lifetime ISA account holders will be able to access their funds in full to buy their first home (worth up to £450,000), from age 60, or if terminally ill. Funds withdrawn in other circumstances will be subject to a 25% charge, which returns the government bonus element (including any interest or growth on that bonus) and applies a small additional charge to ensure the product is used for long-term saving.

The Bill will also introduce Help to Save, which will be open to working people in receipt of Universal Credit and have a minimum weekly household earnings equivalent to 16 hours at the national living wage or Working Tax Credit. It will work by providing a 50% government bonus on up to £50 of monthly savings into a Help to Save account. The bonus will be paid after two years, with savers able to continue saving for a further two years, meaning that people can save up to £2,400 and benefit from government bonuses worth up to £1,200.

Details on the design of the Lifetime ISA are provided in an updated design note.

Geographical extent - The provisions of the Bill extend to all four nations of the United Kingdom (Clause 5 of the Bill makes payment of bonuses an excepted matter in the Northern Ireland Act 1998. This provision will require legislative consent from the Northern Ireland Assembly).

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 142 of 314 GOV.UK Verify

Introducing GOV.UK Verify 22 February 2016

Guidance has now been published detailing what GOV.UK Verify is, how it works and how it allows you to access government services online.

GOV.UK Verify is the new way to prove who you are online, so you can use government services like viewing your driving licence or filing your tax. It is being built by Government Digital Service (GDS), working with government departments, the private sector and the Privacy and Consumer Advisory Group.

When you’re using digital services, you need to be sure that your privacy is being protected and your data is secure. Government departments providing services online need to know it’s you (not someone pretending to be you), and to ensure your information is safe.

GOV.UK Verify uses certified companies to check it’s you. Verifying your identity takes around 10 minutes, online. After that it takes less than a minute to verify your identity each time you need to use a GOV.UK service.

The certified company you choose performs some checks before verifying your identity to GOV.UK, such as questions only you know the answer to. You may also be asked to enter a code you receive on your mobile phone, landline or via an app.

Your identity is verified by a certified company each time you want to use a service. You choose the certified company (you can choose as many as you like, and you can change at any time). You don’t have an account with government. This strictly limits the information any certified company or government has about you: no-one has more information than the minimum to perform their function, and there is no central storage of information.

Status GOV.UK Verify is in public beta. While GOV.UK Verify is in beta, it’s optional for users. GOV.UK Verify isn’t a service in its own right. Rather, it provides a way into government services on GOV.UK.

Currently it’s being tested with users and these departments and services:

 Get a State Pension statement, with the Department for Work and Pensions (DWP)  Sign in to your personal tax account, with Her Majesty’s Revenue and Customs (HMRC)  View or share your driving licence information, with the Driver and Vehicle Licensing Agency (DVLA)  Claim a tax refund (HMRC)  Apply for Universal Credit (DWP)  Claim for redundancy and monies owed, with the Department for Business, Innovation and Skills (BIS)  Log in and file your Self Assessment tax return (HMRC)  Claim rural payments, with the Department for Environment, Food and Rural Affairs (Defra)  Help friends or family with their tax (HMRC)  Check or update your company car tax (HMRC)

User feedback will inform continuous improvements and further testing.

This year more companies will join the programme for certification, and more services and government departments will start to use GOV.UK Verify.

GOV.UK Verify will continue to engage with industry, public and private sectors through the Open Identity Exchange (OIX).

GOV.UK Verify has been built to meet 9 identity assurance principles designed to protect people’s privacy and put them in control of their data.

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GOV.UK Verify – access government services safely, securely and privately 29 March 2016 The Chartered Institute of Payroll Professionals Policy News Journal

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HMRC is to begin to offer more Self Assessment customers “2 Step Verification” when logging into their Tax Account. This will mean that customers will, if they wish, help protect their account against fraud and be able to link their mobile phone with their log-in details.

The aim of the service is to make it quick and easy to link to a taxpayers mobile phone. Then, in future after log in, with the User ID and Password, HMRC will send a text that will have a code which will be needed to gain access to a user’s Tax Account.

If the phone gets lost or the number is changed, 2 Step Verification can be deactivated by ringing the Online Services Helpdesk.

HMRC is working to raise awareness about 2 Step Verification and going forward updates on cyber security will be available in agent emails, Agent Update, and the Tax Agent Blog. Customers are being made aware of 2 step verification through direct emails, and information bulletins in other partner organisations.

HMRC are introducing 2 step verification with the aim of providing the following advances and benefits:

Security - HMRC know that criminals attempt to use stolen log-in details to access and exploit customers’ Tax

Accounts. Without the registered mobile phone, they are far less likely to succeed.

Simplification - many people already do it in other walks of life 2 Step Verification is becoming increasingly common across internet banking and email services.

Increased popularity with users - in January 2016 approximately 600, 000 Personal Tax Account users opted-in to use the service.

On screen steps and the option to register with your mobile phones will be available within Your Tax Account starting from 29th March. However it is intended that HMRC will offer access to this optional service to Your Tax Account customers who are enrolled in Self Assessment gradually, so as to ensure that customers are comfortable using the service. It may be several weeks therefore before it appears as an option.

Not all tax payers will be able to access method of 2 Step Verification because:

• they may work in an area where there is no mobile network coverage; • they may not have a mobile phone that they are comfortable using for this purpose; or • they may access Your Tax Account directly through tax/accounting software.

Further solution are being developed which aim to improve security and provide wider access to all taxpayers. Tax agents will be kept informed of future cyber security enhancements by agent emails, Agent Update, and via the Tax Agent Blog.

Recognising how important the security of users and their data is the Government Digital Service (GDS) recently provided an update on how they are continuing to work to make verify better.

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GOV.UK Verify update on progress towards live 3 May 2016

With more than half a million identities verified so far, GOV.UK Verify's Programme Director provides an update on their progress towards live.

Guidance was published in February 2016 detailing what GOV.UK Verify is, how it works and how it allows you to access government services online.

Read the update on progress towards live.

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What kind of fraud does GOV.UK Verify prevent? 9 May 2016

GOV.UK Verify is designed to help fight the growing problem of online identity theft. Identity

Advisor Julian White explains what is meant by identity fraud and describes some of the kinds of fraud GOV.UK Verify’s standards are designed to help prevent.

Point 9 of the Digital by Default Service Standard says:

“Use open standards and common government platforms where available.”

GOV.UK Verify doesn’t just use open standards - we have helped set the standards for identity proofing and verification and online authentication for UK government digital services. These documents are jointly published by the Cabinet Office and CESG, the National Technical Authority for Information Assurance. All the certified companies are required to meet those standards, and have to be independently certified to confirm that they do.

The good practice guides have been designed to mitigate a range of specific identity fraud risks.

Impostors GOV.UK Verify aims to stop others pretending to be you when accessing government services. We call someone that attempts to do this an ‘impostor’. They may try to register with one of the GOV.UK Verify certified companies using stolen identity information.

The many data breaches that have occurred over the last few years mean that a lot of stolen personal data is circulating online. In fact, this information can be bought for very little money by criminals using online criminal marketplaces.

Our guidance on identity proofing and verification explains how the good practice guides require certified companies to carry out a range of checks to prevent someone using this kind of stolen information to successfully access services using your identity.

These checks cover 5 different elements of identity assurance:

 making sure there is evidence that the identity exists (element A)  validating that evidence to make sure it’s valid and / or genuine (element B)  establishing that the person owns the identity (element C)  checking whether the identity registration might be fraudulent (element D)  establishing that the identity has been active over time (element E).

As part of our guidance we require that the certified companies also check to see if your identity is known to have been used by an impostor in the past. If this is the case then they will take extra care to ensure that it is really you and not an impostor.

Account takeover Because of the range of different checks certified companies are required to carry out, it’s quite difficult to create a false identity or steal someone else’s in order to create a GOV.UK Verify account. Criminals may attempt to bypass the registration process and instead try to get access to a verified identity account that has already been set up. We call this ‘account takeover’. The objective is to access the account you’ve created with a certified company and use it to interact with government services.

Usernames and passwords for many online services are available to buy from the dark web, mostly gained from one of the data breaches mentioned earlier. People tend to pick predictable passwords and use the same one across many web sites. If you do that, the cyber criminal doesn’t need to get hold of your username and password for a specific web site. They just need one of your passwords for a single service to work out what your passwords are for other services. The guidance we give on authentication sets out the things we expect the certified companies to do to prevent this kind of attack from being successful. The certified companies offer a range extra security measures that means every sign in is unique: you wouldn’t be able to access an account just using a stolen username and password, you would also need to complete another step such as having a one-off code sent to your mobile phone or generating a code in an

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To get around this, criminals may try to use the account recovery processes to change your login details to something they know. The certified companies have to provide a way for you to access your account if you have forgotten your sign-in details. The certified companies are required to have measures in place to make sure if someone is trying to reset their sign-in details it is really the owner of the account and not someone else. For example, they might ask some security questions based on information you provided when you first create your account or ask you to provide some other proof of your identity.

Hijacking Cyber criminals may not even try to attack your verified identity account with a certified company, but may instead target your computer, tablet or smartphone. They will try to install malicious software (malware) on your device that will let them intercept and interfere with your internet use. This way they can let you sign in as usual, but behind the scenes they can perform actions using your account that you are completely unaware of. We call this ‘hijacking’.

Adam has already written about how we keep GOV.UK Verify secure and protect you from loss of data. Although hijacking is less identity related and more technical, we still count this as ‘identity enabled’ fraud since the criminal is misusing your identity account for their own gain.

GOV.UK Verify, the certified companies and the connected government services try to spot hijacking occuring using a range of technologies but it is incredibly difficult. The most effective protection against this attack is for you to have good quality anti-virus software on your device and keeping it, your operating system, and other software up to date.

Continuous improvement The controls we have built in to GOV.UK Verify and the standards we’ve set for identity assurance mean the service is resilient to a wide range of identity related crime. However, we’re always working to improve the way we work, respond to new and evolving threats and take advantage of the most up to date ways to help protect users of GOV.UK Verify from identity fraud.

We work with colleagues across government and with law enforcement partners who have a current understanding of identity crime and the potential threats to the delivery of online services. This helps us to maintain an up to date understanding of the types of fraud that are being attempted and the methods being used.

We keep the good practice guides constantly under review. We update them regularly to make sure they reflect the evolving and changing ways in which identity fraudsters look to undertake their criminal behaviour.

Here are some links to publications and resources about GOV.UK Verify and identity assurance:

 Introduction to GOV.UK Verify  Film demonstrating GOV.UK Verify  Information about how GOV.UK Verify is performing

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GOV.UK Verify passes the test 23 May 2016

Proving you are who you say you are, when you need to access government services via a digital platform looks to get easier as GOV.UK Verify nears go live.

GOV.UK Verify has so far been trialled across ten services in six government departments, which includes the Driver and Vehicle Licensing Agency (DVLA), HMRC, and the Department for Work and Pensions (DWP).

GOV.UK Verify aims to cut out the face-to-face verification work by allowing citizens to prove who they are online just once and then use that identity across a range of government services.

In a recent speech Cabinet Office minister Matt Hancock revealed the news that the flagship GOV.UK Verify had passed its service assessment and was due to go live “Privacy or cyber security are nothing without reliable verification of identity. So I’m delighted to announce that GOV.UK Verify has passed its service assessment and will go live next week.”

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cipp.org.uk Page 146 of 314 In her blog Janet Hughes, programme director for Verify looked to further define the impact this would have on users and departments and provide a measure of reassurance as Verify switches from beta to live.

“It won’t be a dramatic change in what GOV.UK Verify looks like, and it certainly doesn’t mean we’ve finished developing the service,” she said.

“It means we’ve met the standard required of digital by default services — rightly a tough standard to meet. Users can be assured that GOV.UK Verify is safe, secure, easily improved and meets user needs.”

“It means we’re ready for larger-scale adoption by departments - we’ve got a lot of services in our pipeline preparing to start using GOV.UK Verify over the next year (it will be a gradual, careful, ongoing process, not a ‘big bang’ switchover) and we’ll be posting more about that shortly.” Government Digital Services (GDS) will continue work to “iterate and improve” the service in response to feedback to make the service as simple and straightforward as possible for users.

Government services that can be used with GOV.UK Verify

 Check your Income Tax for the current year, (HMRC)  Sign in to your personal tax account (HMRC)  Sign in and file your Self Assessment tax return (HMRC)  Check or update your company car tax (HMRC)  Help friends or family with their tax (HMRC)  Claim for redundancy and monies owed (BIS)  Get a State Pension statement (DWP)  Apply for Universal Credit (DWP)  View or share your driving licence information (DVLA)  Update your rural payments details, (Defra)

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GOV.UK Verify: Technical delivery update 10 June 2016

If the technical development of GOV.UK Verify grabs your attention, an interesting update has been published on the latest and upcoming work.

“In our first technical delivery update we explained that there are 3 parts to GOV.UK Verify and the delivery team is responsible for building and maintaining 2 of them: the GOV.UK Verify hub and Document Checking Service.

Currently, we’re working on 2 technical delivery priorities: increasing adoption (by departments) of GOV.UK Verify; and improving and maintaining GOV.UK Verify.

The team has been hard at work and successfully took GOV.UK Verify from beta to live last month.”

Read the summary of what the team have been working on and what they plan to do next.

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Improving the experience of verifying with certified companies 27 June 2016

GOV.UK Verify is the new way to prove your identity when using digital government services. An update from a user research specialist explains how they ensure that certified companies provide services that meet the needs of users.

Peter Gale, a user research specialist for GOV.UK Verify and identity assurance provides an update on their blog:

We recently completed the process of connecting certified companies to GOV.UK Verify under the new framework for certified companies. As a user researcher, my main focus in this process was how we ensure that these companies provide services that meet the needs of our users. The Chartered Institute of Payroll Professionals Policy News Journal

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This presented some interesting challenges for us:

 How do we ensure quality, whilst still encouraging innovation and differentiation?  How do we apply the principles of user centred design to a contractual framework for ensuring quality

Read the full update here.

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GDS - continuous iteration of research is the key to building services that meet user needs 4 August 2016

As Government Digital Services (GDS) conclude its 100th round of user testing a recent blog from GDS has revealed the detail and processes that are involved with researching and developing GOV.UK Verify.

100 rounds of user testing might not sound to be much (or maybe it does) but here are some additional numbers to demonstrate the volume of activity taken to date that will put 100 rounds of research into some context:

 600 users  600 hours in the lab  500 hours of analysis  200 hours of presenting results and prioritising issues  30,000 sticky notes

One question – why?

“At GDS, we believe that continuous iteration of research is the key to building services that meet user needs. Our Service Design Manual states that user research should be done in every iteration of every phase - starting in discovery and continuing through live.

Through an iterative design and testing process, we can constantly assess our service to understand if it meets user needs, test new design ideas, identify new issues, and check if any previous issues have been solved.”

Full details can be found in GDS Blog.

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Can online activity history help GOV.UK Verify work for more people? 2 August 2016

Recent research suggests that people appear to be becoming more amenable to using online activity verification and allowing certified companies access to their personal online accounts to acquire a verified identity that gives safer, faster access to government services.

As part of the ongoing work to increase GOV.UK Verify’s demographic coverage, the GDS (Government Digital Service) team have been looking at projects that consider the use of different sources of activity history when proving an individual is who they say they are. In future could you use your Facebook or Linkedin account as part of the verification process?

The GDS Identity Assurance Blog provides an interesting update on this subject:

“There 5 different elements involved in identity verification, and your chosen certified company has to achieve specific thresholds in each one before they can verify your identity. Although the creation of many online accounts does not require details of a real identity at the point the account is set up, the accounts themselves are potentially a useful source of evidence that an identity has been active over time. This means the accounts can provide evidence of activity history, as described in the Good Practice Guide 45, under Element E. The Chartered Institute of Payroll Professionals Policy News Journal

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The user research involved 12 one-to-one sessions with users. We took users through the prototype of the user journey where we introduced a page that allowed them to choose from a number of online accounts to prove their activity history.

The overall reaction to using online accounts such as Facebook, PayPal, LinkedIn and others as part of the process of proving their identity was positive.

The younger the participant, the more likely they were to complete the task with ease. Users from the older demographic, while still completing the task, were more likely to raise privacy concerns or to be worried that their data would be used for purposes other than identity verification.

Because we always operate within the identity assurance principles, any new data source or method for identity proofing would only be implemented by certified companies if a user gave their explicit and informed consent. And it would be one of many options certified companies give users to assert their identity.

Compared to the findings from 2013-2014, our recent research suggests that people appear to be becoming more amenable to using online activity verification and allowing certified companies access to their personal online accounts to acquire a verified identity that gives safer, faster access to government services. Since 2013, there have also been developments in technology that allows for detection of whether the user is a real person or not. With these advancements the activity history of online accounts is much more valuable in an identity verification context.

After completing the user research, Veridu built a service that aligned with our standards for Element E - activity history. The service allowed users to assert their online account activity to see whether it would fulfil requirements for Element E.

We had 86 people, from across participating organisations, testing the service using their real online accounts. The service looked at the activity history within (one or more) online accounts asserted by the users. Veridu reviewed almost 240,000 activity events and scored them as per Element E of the standards. More than 86% of participants - using their online activity from Facebook, Twitter and other social media sites - met the requirements of Element E.

Office for National Statistics survey data commissioned by GDS suggests that 52% of UK adults have a social media account they use on a regular basis (at least once a month). The data we’ve gathered shows that if activity from such accounts could be used for activity history, GOV.UK Verify’s demographic coverage of the adult population overall could increase by 9%, and for the 16-25 demographic could see a potential increase of up to 38%.”

Readers can subscribe to the Identity Assurance Blog for regular updates.

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GOV.UK Verify technical update 11 August 2016

If you are interested in the technical development of GOV.UK Verify then read on for an update on delivery priorities.

In their first technical delivery update the team explained that there are 3 parts to GOV.UK Verify and the delivery team is responsible for building and maintaining 2 of them: the GOV.UK Verify hub and Document Checking Service.

Currently, they are working on 3 technical delivery priorities:

 increasing adoption (by departments) of GOV.UK Verify;  improving the completion rate for GOV.UK Verify users; and  improving and maintaining GOV.UK Verify.

Now that GOV.UK Verify is live, the work to maintain and improve the service continues at pace. Follow the link below to read a summary of what the delivery team has been working on since their last update back in July and what they plan to do next.

Read the summary from the GOV.UK Verify Blog

You can subscribe to the blog to keep up to date with GOV.UK Verify's latest technical developments.

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HMRC Protecting customer data with 2 Step verification 12 September 2016

One main priority for HMRC as we move ever faster to a ‘digital by default’ tax administration is the protection of customer data and from 29th March 2016, HMRC have provided 2 Step Verification.

2 Step Verification provides an extra layer of security and requires a mobile or landline phone for customers using digital tax accounts.

The service has allowed customers to link their mobile or landline phone to their Tax Account login details. This means, when a customer logs in, HMRC will either text them or send them an automated message with a code which, once entered will enable them to gain access to their Tax Account.

If customers lose their phone or change number, 2 Step Verification can be reset by ringing the Online Services Helpdesk. This process helps to protect their account against fraud.

In July HMRC implemented 2 Step Verification for all Personal Tax customers and all business customers enrolled in Self Assessment.

Over the coming months HMRC will begin to provide 2 Step Verification to other heads of duty including, VAT, Corporation Tax, employer PAYE and also to Agents.

HMRC believe that the provision of this service will bring a number of benefits for customers:

“1. Security. We know that criminals attempt to use stolen log-in details to access and exploit customers’ Tax Accounts. Without the registered mobile or landline phone, they are far less likely to succeed.

2. It’s easy. Many of our customers already use 2 Step Verification in other walks of life. It is commonly used across internet banking and e-mail services.

To use the service, all customers have to do is simply follow the on-screen steps, with either a mobile or landline phone to hand.

Businesses will need to ensure that, if more than one individual uses the account ID, they create new users within their account via our delegation tool. This is a simple process and stops authorised individuals from being locked out of the account. We are working with the professional bodies to ensure our solution fits the needs of the agent community and will keep you informed on this.”

Keep an eye out for updates as plans change and the service expands that will be available via further information on GOV.UK.

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GOV.UK Verify: Technical delivery update 19 October 2016

If you interested in the technical development of GOV.UK Verify, read this summary of what’s been happening and what the upcoming priorities are. From the GOV.UK Verify Blog: In our first technical delivery update we explained that there are 3 parts to GOV.UK Verify and the delivery team is responsible for building and maintaining 2 of them: the GOV.UK Verify hub and Document Checking Service. Currently, we’re working on 3 technical delivery priorities: increasing departmental adoption of GOV.UK Verify; improving the completion rate for GOV.UK Verify users; and improving and maintaining GOV.UK Verify. In the past month, we focused on two of these priorities: improving the completion rate and maintaining GOV.UK Verify. As GOV.UK Verify is live, our work to maintain and improve the service continues at pace. Here’s a summary of what we’ve been working on since our last update back in September and what we plan to do next. The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 150 of 314 Improving the completion rate To improve the volume of visits that result in a user creating or re-using a verified account with a certified company, we’ve:  started investigating the technical possibility of helping users to pause their identity verification journey for them to come back and finish it later  analysed our usage logs to find out more about the type of errors users encounter  started working on improving how we handle these errors and provide further support to users. Improving and maintaining GOV.UK Verify We want to continue to improve the way we run the GOV.UK Verify federation and operate the live service effectively. To continue keeping GOV.UK Verify available and secure we’ve:  started automating lengthy steps in our process when releasing code to our live environment  upgraded lots of applications and libraries to their newer versions so we continue to run the most up-to-date and secure code Things we plan to do next In the coming 2 to 3 weeks we expect to:  help users indicate the type of driving licence they have so we can make a better recommendations to them about which certified companies they can use to verify  run an A/B test to find out if asking whether users have a bank account, debit and/or credit would improve our ability to determine which certified companies can verify them  help users continue verifying their identity after they have asked a question or provided feedback to the GOV.UK Verify team  continue recruiting new members for the technical delivery team - we’re looking for web ops engineers, developers and more! If you’re interested in joining us at GDS, check out our current vacancies. Subscribe to the blog to keep up to date with GOV.UK Verify's latest technical developments. If you've used GOV.UK Verify and would like to provide feedback or contact us for support, please submit a user support request.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 151 of 314 HM Revenue & Customs

Employment and Payroll Group

Employment and Payroll Group minutes published 20 April 2016

The minutes from the Employment and Payroll Group (EPG) meetings held in December 2015 and March 2016 have now been published on GOV.UK.

Topics under discussion at the 8 December 2015 meeting included:

 Scottish Rate of Income Tax  Digital Developments  Disputed Charges  Student Loan ( Post Grad)  Intermediaries/IR35  Disability Tax Guide

Topics under discussion at the 9 March 2016 meeting included:

 Digital Developments  RTI Post Implementation Review  HMRC 2nd Incomes Campaign  Apprenticeship Levy  EPG Survey

The minutes can be accessed through this link Employment and Payroll Group as can minutes of previous meetings.

Employment and Payroll Group The Employment and Payroll Group replaced the Employment Consultation Forum in December 2014. The EPG is HMRC’s principal forum for HMRC, and other government departments, to engage with the employment and payroll community. It focuses on high-level operational policy and process issues. It provides a forum through which members can raise and discuss issues or problems in administering payroll obligations or in relation to employment tax issues more generally.

The next EPG meeting is scheduled for 8 June 2016. If you have any agenda items, or any issues you would like raised please email policy with the details

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Employment and Payroll Group minutes published 26 July 2016

The minutes from the Employment and Payroll Group (EPG) meeting held in June 2016 have now been published on GOV.UK.

Topics under discussion at the meeting included:

 Apprenticeship Levy  Digital Developments  Restructuring NICs  Canvassing views of employers re NINO Confirmation

The minutes can be accessed through this link Employment and Payroll Group as can minutes of previous meetings. The Chartered Institute of Payroll Professionals Policy News Journal

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The next EPG meeting is scheduled for 7 September 2016. If you have any agenda items, or any issues you would like us to raise on your behalf, please email policy with the details.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 153 of 314 General HMRC News

Business Tax road map 22 March 2016

HM Treasury has published a Business tax road map which sets out the government’s plans for business taxes to 2020 and beyond.

In 2010, the government set out a corporate tax road map for the first time. This outlined plans to back business through lower corporation tax rates and the modernisation of tax rules and administration. The road map gave businesses the certainty to invest, and a clear and consistent direction for reform. Investment has grown by 30% since 2010, twice as fast as consumption over the same period. Meanwhile the UK was the number one recipient for inward investment in the EU in 2014,119 creating job opportunities across the UK.

The government is building on its achievements in the last Parliament, with a new plan to focus support on small businesses through ambitious reforms to business rates. The Business tax road map will support investment while continuing to crack down on avoidance and aggressive tax planning, making sure rules are fair and taxes paid. In particular, the road map will:

 cut tax rates to drive growth and support small businesses  modernise the business tax system in line with international best practice  ensure a level playing field, with large multinationals paying their fair share of tax

The roadmap aims to give businesses the certainty they need to plan and make the long-term investments that are vital for growth and for boosting the UK’s productivity.

Taxes should be low, but must be paid. There should be a level playing field, including between large businesses and small, and between different corporate structures. The system must encourage entrepreneurship and not reward aggressive tax planning. Wherever possible, the government “… will take opportunities to simplify the tax code, and make the administration of tax fit for modern business practices.”

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Direct Recovery of Debt and vulnerable customers 7 April 2016

Direct Recovery of Debts (DRD), also referred to as enforcement by deduction from accounts, will affect a small number of individuals and businesses who have made an active decision not to pay, or to delay paying, the money they owe, even though they have sufficient funds in their bank and building society accounts.

Concerns have been raised since DRD was first announced, as to how HMRC will protect vulnerable customers, specifically tax payers who find themselves at the receiving end of enforcement action as a result of these new powers. The DRD legislation includes a commitment for HMRC to consider whether someone may be at a ‘particular disadvantage’ in dealing with their taxes, before making a decision whether to proceed; and to publish, in guidance, which factors are relevant to that decision.

The policy paper Direct Recovery of Debts - vulnerable customers describes those factors as set out below. It is not intended to be exhaustive, and does not preclude HMRC from considering other factors outside of this list. The guidance confirms the approach HMRC will be taking in this area, and the range of scenarios that will be considered. Those who are identified as vulnerable will not be considered for DRD, and will be given alternative support to help them pay the money they owe.

Indicators for identifying vulnerable customers

Indicator A - a disability or long-term health condition For example, a disability, mental health condition or learning difficulty that directly impacts on debtors’ ability to communicate with HMRC or to manage their HMRC affairs, meaning they are unable to understand or appreciate their indebtedness. The effects of the disability or condition may be temporary or long-term in nature.

Indicator B - a temporary illness, physical or mental health condition

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 154 of 314 For example, diagnosed with a serious illness or condition that affects them to such an extent that they are unable to understand or appreciate their indebtedness or to put their HMRC affairs in order.

Indicator C - personal issues Issue that affect them to such an extent that they could not understand or cope by themselves. For example:  becoming recently widowed  a family bereavement  being made redundant  a serious illness  caring issues  trauma caused by an assault  domestic or financial abuse.

These may be issues that affect the debtor directly or someone close to them (such as an immediate family member).

Indicator D - lower levels of literacy, numeracy and/or education For example, learning difficulties that mean they are unable to fully understand their indebtedness without advice or support.

Case study John is suffering from Post-Traumatic Stress Disorder, caused by an incident while at his previous employer, which ultimately leads to him being unable to work.

John has no regular income. A substantial charging order against him and the ceasing of his benefits have caused his situation to deteriorate. The demand for the tax bill has added to his stress and has caused confusion, as he is already struggling to deal with his circumstances with no support.

In John’s case, the officer would refer John to specialist support within HMRC and consider the best way to support John in getting his affairs in order. John might also be signposted to a third-party organisation or charity to help him organise his non-tax affairs.

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Identifying genuine HMRC email communications V phishing emails and spam 13 April 2016

Phishing is the fraudulent act of emailing a person in order to obtain their personal/financial information such as passwords and credit card or bank account details. These emails will often include a link to a bogus website encouraging you to enter your personal details.

HMRC have recently updated their guidance on GOV.UK that will help you to check when you have received genuine HMRC contact rather than phishing emails.

The current list of digital and other contact issued from HM Revenue and Customs (HMRC) has been updated to include the Employer Bulletin 59 email.

“HMRC sends informational emails several times a year to employers who have registered to receive them. These emails never ask you to provide personal or financial information.”

The latest batch of emails issued by HMRC will be sent from 11 April 2016. The emails are titled ‘Important information for employers’ and refer to Employer Bulletin 59 (the April edition). The emails include links which direct recipients to pages on the HMRC website, including advice about online security.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 155 of 314 HMRC wins £635 million for the public in landmark case 15 April 2016

Following a lengthy legal battle, The Supreme Court has ruled in favour of HMRC, refusing the Eclipse Film Partners (No 35) LLP, permission to appeal last year’s Court of Appeal decision, protecting an estimated £635 million in tax.

Eclipse claimed to trade in film rights but was in reality a tax avoidance scheme, seeking to create substantial interest relief claims for investors.

People borrowed significant sums of money, at interest, to invest in Eclipse. The capital was supposed to be used by the partnership for trade, so the individuals could make interest relief claims against their other income.

The scheme operated by acquiring the rights to certain Disney films (Enchanted and Underdog) and licensed the same rights back to another Disney entity for a guaranteed income stream.

In reality, the borrowed money simply earned interest, which was then filtered through the partnerships to investors to cover the interest on their loans. This was dressed up as a trading transaction in order to enable the partners to claim tax reliefs.

There were 31 Eclipse partnerships that were designed to run for between 11 and 20 years from 2005/06. Eclipse Film Partners (No 35) LLP is the first of the partnerships to be taken to litigation.

This decision upholds the earlier Court of Appeal decision, concluding that there is no merit in this case being heard any further. As a result the findings of the Court of Appeal remain in place. Investors were not eligible for interest relief and profits from the partnerships remain taxable. This puts the investors in a significantly worse position than if they had never invested in the scheme.

£800m Government investment

The Government has introduced tough new powers and game-changing measures to tackle offshore and onshore tax evasion, and the summer Budget 2015 gave HMRC an additional £800 million to invest in compliance and tax evasion work.

This is expected to recover £7.2 billion in tax over the next five years and includes tripling the number of criminal investigations that HMRC can undertake into serious and complex tax crime, focusing particularly on wealthy individuals and corporates, with the aim of achieving 100 prosecutions a year by the end of the Parliament.

The new measures include:

 higher financial penalties for those hiding assets offshore, such as, for the first time, taking part of the evaded asset as a penalty. These are in addition to existing measures, which already allow for fines of up to 300% of any tax found to have been hidden offshore  new civil penalties on those who enable tax evasion, so they will face a penalty as well as the tax evader  public naming both of tax evaders and those who enable tax evasion  a new criminal offence for corporations that fail to prevent the facilitation of tax evasion. The new power will ensure that corporations exercise due diligence over the service they provide, and ensure that HMRC can prosecute those who don’t  a new strict liability criminal offence for offshore evasion, so in the worst cases it is no longer possible to plead ignorance in an attempt to avoid criminal prosecution.

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File late self-assessment returns now to avoid further daily fines 29 April 2016

The self- assessment return deadline was 31 January 2016 and anyone who did not file their return will have been charged a £100 fixed penalty. Further late filing fines kick in on 1 May 2016, when HMRC will charge taxpayers with overdue tax returns £10 per day. The Chartered Institute of Payroll Professionals Policy News Journal

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The additional £10 per day penalty can be charged for a maximum of 90 days and so anyone who still has a return outstanding at the end of July will have accumulated fines of £1,000 in total. They are also likely to incur a further penalty of at least £300 if the return is not filed by 31 July 2016.

The Low Income Tax Reform Group (LITRG) is urging anyone who has not yet filed their online self-assessment tax return with HMRC for the year ended 5 April 2015, to do so by the end of this month or risk being charged more money.

“…Those on low incomes who may be struggling to deal with the tax system alone can very easily fall foul of them simply due to being insufficiently aware of their tax obligations.

“Importantly, the fines can be appealed against if you have a reasonable excuse for filing the return late.”

Read more from LITRG

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NINO Verification Service- Employment evidence survey 25 May 2016

HMRC would like you to help them build a better online service and have published a survey regarding the NINO verification service.

This is an anonymous business survey designed to help HMRC better understand how businesses use evidence to verify information about their employees.

We would encourage all readers to spare a few minutes to complete this survey which closes on Wednesday 1 June 2016.

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The quality of service for personal taxpayers 26 May 2016

HMRC aimed to move more customers online thereby reducing staff costs but significant numbers of staff were let go before technical improvements were completed leading to a collapse in service quality in 2015. Services have since improved.

HMRC’s digital strategy aims to improve the efficiency and quality of its customer services by moving more personal taxpayers online thereby reducing demand for more costly to handle telephone and postal contact. HMRC, through substantial staff reductions, decreased the cost of its personal tax operations between 2010-11 and 2014-15 by £257 million.

The National Audit Office’s (NAO) report ‘The quality of service for personal taxpayers’ finds that while HMRC maintained or improved customer service up to 2013-14 it then misjudged the cumulative impact of its complex transition and released too many customer service staff before completing service changes.

The NAO found that the quality of service provided by HMRC for personal taxpayers collapsed in 2014-15 and the first seven months of 2015-16 when average call waiting times tripled. Services have subsequently improved following the recruitment of additional staff but whether this performance is sustainable depends on HMRC achieving successful outcomes from its programme ‘Making Tax Digital’.

Between 2010-11 and 2014-15, HMRC cut staff in personal tax from 26,000 to 15,000. To achieve the reductions, it planned to increase automation of the PAYE system, operate on a more flexible basis so staff could move between different services, and move customers from traditional channels to less expensive contact through the expansion of digital services.

HMRC expected to have reduced demand for contact with customers towards the end of the spending review period. It introduced two new services, automated telephony and paperless self-assessment, in 2013-14, but demand for The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 157 of 314 telephone advice did not fall. To live within its budget, it released 5,600 staff from personal tax in 2014-15, reducing customer service capacity. HMRC believes it was over-optimistic about the cumulative impact of the change and had not built sufficient contingency into its plans.

The NAO makes the following recommendations in its report:

HMRC will need to learn and apply the lessons of the last five years and build realism into its assumptions if it is to provide a consistently effective service to taxpayers. It should:

a. Base future decisions on spending on an assessment of the full impact they will have on the delivery of its objectives. HMRC needs a better understanding of the direct and indirect impact of different spending decisions. When it reduces costs, it must take a realistic view of the consequences for customer service and the potential risk to tax revenue.

b. Set targets that strike a balance between its running costs and costs borne by customers. HMRC has not met its pledge to answer 90% of calls by 2015 or to answer 80% of calls within 5 minutes. It should build greater resilience in its call centre services so it meets or exceeds the service standards it sets. In setting targets for future years it should take into account its own running costs and the cost to taxpayers.

c. Be clear and open about how the configuration of its service to taxpayers will change. HMRC should be transparent about how it intends to reduce costs and what it expects of taxpayers. It should provide taxpayers with a good service for all channels.

d. Estimate the administrative burden on personal taxpayers and the voluntary sector and use this to inform its decisions. HMRC estimates the burden on businesses of complying with their tax obligations, but not on individuals or the voluntary sector. Alongside savings to customers from new services, HMRC should take into account the additional costs its savings measures could impose on taxpayers, such as the cost of increased time spent waiting on the telephone.

e. Explore how the behaviour of taxpayers might be affected in response to changes in the way HMRC intends to deliver its services. As part of this work, it should model the impact on tax compliance of planned changes to the way services are provided.

Read the full report The quality of service for personal taxpayers.

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HMRC responds to NAO criticisms of customer service 1 June 2016

HMRC says they have fully recovered from the poor standard of customer service provided in early 2015 and are now offering their best service levels in years.

The National Audit Office (NAO) recently published a report criticising HMRC for periods of poor customer service in 2015.

Responding to the report, Ruth Owen, HMRC’s Director General for Customer Services said:

“We recognise that early in 2015 we didn’t provide the standard of service that people are entitled to expect and we apologised at the time. We have since fully recovered and are now offering our best service levels in years.

Over the past six months we’ve consistently answered calls in an average of six minutes, and have launched new online tax accounts and webchat for everyone, enabling customers to manage their tax affairs wherever and whenever they want.

There’s never been a better or more convenient service for our customers.”

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 158 of 314 HMRC achieved improvements to customer service by:

 recruiting more than 3,000 additional advisers who can work outside normal office hours when many customers choose to call HMRC  introducing more flexible working to deal with large fluctuations in customer demand throughout the year, underpinned by a new telephone system that enables HMRC to move calls around the country in response to demand  launching online services that enable customers to manage their tax affairs when and where they want, including by smartphone, with online support such as webchats. The new personal tax account already has more than 1.5 million users and the business tax account more than five million registered users.

In May and June 2015 HMRC’s average time to answer a call was 19/20 minutes. This dropped to eight minutes in November 2015 and HMRC has maintained between five and six minutes to date.

Announcements by the Chancellor in the 2016 Budget commit to improving customer service performance further, through:

 introducing a seven-day service by April 2017, with extended hours and Sunday opening on main phone lines, as well as online support services like webchats  recruiting more than 800 new staff into the customer services teams, to reduce call answering times and further increase the flexibility to respond to demand  a new secure email service – operated through customers’ online tax accounts – with a faster average response time than the current post handling target.

CIPP comment

The Policy Team ran a survey during March this year to find out if your experiences with HMRC contact centres had improved in the six months since our last survey back in September 2015.

Our initial survey in September aimed to gather data from payroll professionals about their experiences when using the HMRC contact centres. We did this following the announcement that HMRC had reported disappointing customer service performance results and were making extra investment to expand the numbers available to respond to calls. We ran a similar survey six months later to see whether the profession were able to report any noticeable difference to response times and service.

We received a range of comments and clearly the employer helpline has been much in demand and has resulted in a significant number of hours spent ‘hanging on the telephone’. It would appear, based on some of the commentary that response times, in some instances, might have improved slightly in recent months:

“Prior to January 2016, my average call time to either the employee helpline or the employer helpline was 43 minutes. Since then it has reduced dramatically - in February it reduced to less than 15 minutes.”

“I have rung the employer helpline twice during this period; my first call I was holding for 24 minutes, and my second call just two minutes.”

“The most recent occasion was yesterday when I had to wait 20 minutes. Previously occasions were around the 30-40 minute mark.”

We asked “Do you stay on the line until you are able to speak to someone, or do you disconnect the call after a period time?” and responses were largely similar to those in September with 65% staying on the line.

Helen Hargreaves, the CIPP’s Associate Director of Policy & Research said:

“Whilst our research does not show the dramatic increase in performance suggested by HMRC, it is clear that HMRC’s response times have improved in recent months. However, there is definitely room for further improvement and we will be conducting further research in 12 months to establish the impact on performance of the investment announced by the Chancellor in Budget 2016.”

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 159 of 314 Customer Survey – your experience of using automated penalty appeal service and your views on GNS messaging? 17 June 2016

HMRC have produced a survey to gather your views on the Automated Penalty Appeal Service and your experience of receiving messages via the Generic Notification Service.

You will have read in the June edition of the Employer Bulletin some hints and tips on appealing a Penalty using the automated Penalty Appeal Service (PAS).

The article Reporting PAYE on time and avoiding late filing penalties also highlights the use of the Generic Notification Service (GNS) which is used by HMRC to prompt employers where it appears that they may be at risk of receiving a penalty in the future.

Keeping your email up to date on PAYE online is also important if you have registered to receive notifications and alerts.

HMRC have also put together a Generic Notification Service (GNS) Message & Digital Appeal Service Survey to gather your views and experiences of using the automated Penalty Appeal Service and also your views on use of the Generic Notification Service – how useful do you find this service? Could it be improved? If so please complete this survey and let HMRC know.

The confidential survey will remain open until 29 July and should take less than ten minutes to complete. Thank you

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Help HMRC launch a new digital service 8 July 2016

HMRC is currently looking for volunteers from small and medium sized businesses to help trial a new digital service from July 2016 onwards that will make applying for Tax Advantaged Venture Capital (TAVC) schemes simpler.

Are you looking for investment? The Government may be able to help by offering tax relief to individuals who buy shares in your company.

Tax Advantaged Venture Capital (TAVC) schemes are designed to support small and medium-sized businesses by encouraging investment and making it easier to attract funding.

There are 3 schemes:  Enterprise Investment Scheme (EIS) – aims to attract investment from individuals  Seed Enterprise Investment Scheme (SEIS) - supports investment in small, early stage companies and complements the EIS  Social Investment Tax Relief (SITR) – encourages individuals to support social enterprises such as charities and social enterprises

Who can apply?

You may be able to apply if your company is:  small or medium-sized  not listed on a stock exchange

Help HMRC launch a new digital service

HMRC is launching a new digital service in October that will make applying for TAVC schemes simpler.

However, they need small and medium-sized businesses to volunteer to trial the service from July 2016 onwards. HMRC will support all volunteers throughout this process, and your feedback will help them improve the site and ensure that companies get their investment more quickly.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 160 of 314 If you would like to take part in the trials, please email [email protected] or [email protected]

Alternatively, contact Ash on: 07891 156522 Or Chris on: 07342 022768

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Telephone scam warning from HMRC 11 July 2016

There is currently a telephone scam where a recorded message is left, allegedly from HMRC, stating that HMRC are bringing a lawsuit against the individual and is going to sue them.

HMRC is aware that some customers have received telephone calls claiming to be from HMRC requesting personal information/bank account details in order to receive a tax refund, or to demand money for an unpaid tax bill.

There is also another telephone scam where a recorded message is left, allegedly from HMRC, stating that HMRC are bringing a lawsuit against the individual and is going to sue them.

The recipient is asked to phone 0161 8508494 and press “1” to speak to the officer dealing with the case. This scam is widely reported on the internet at whocalledme and seems to be targeting older people. Please do not reply to the message.

HMRC takes security very seriously but you need to be alert. If you cannot verify the identity of the person making the call you should not disclose your personal details. You should report this to Action Fraud, or you can call Action Fraud on 0300 123 2050 (Please note this number will be charged at your normal network rate). They are open Monday to Friday 09:00 - 18:00. Please also see HMRC security advice.

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Changes to HMRC online services login 13 July 2016

In March HMRC highlighted upcoming changes to how you login to their online services. The final changes will come into effect from 18 July 2016.

Agents and clients will now login to our online services through a new web page. You will login in the same way but the page will look different.

The new login page improves the customer experience, strengthens security and enhances the performance of the login service. Many agents and clients have been using the new login for months and it has been thoroughly tested. You can access the page using this link.

Impact of the change on the 18th July 2016. Agents and clients have been able to access HMRC services using the existing HMRC Government Gateway login page. On the 18th July, you will no longer be able to login through that page and the new HMRC Government Gateway login page will have to be used. Users will be automatically re-directed to the new login page if they try to access the old page.

Software developers have been informed of this change and were asked to update their software packages with the new login page by 31 May. The timing of the change to the login page has provided developers with more time to trial and implement any changes.

Some agents and their clients may use 'silent login' - a background process that automatically logs them into the HMRC website (with Government Gateway Usernames and Passwords). They may also need to update the links to HMRC login pages within their internal systems. (Please note, existing submissions to the Government Gateway API (Submission Protocol) will not be affected by this change).

Action Required : The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 161 of 314 Agents and their clients need to be aware that if they use a software application that completes ‘silent login’ using the existing HMRC Government Gateway login page, they should have already updated their software to work with the new login page based on previous HMRC communications.

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Re-platforming of the PAYE EDI Service 29 June 2016

Part of HMRC’s API strategy sees the withdrawal of the use of the Electronic Data Interchange (EDI) channel within 3 years.

At the conference held at the Royal Society in London on 7 September 2015 to launch HMRC’s API Strategy, Mark Dearnley HMRC CDIO, announced that part of that strategy envisages HMRC withdrawing the use of the Electronic Data Interchange (EDI) channel within 3 years. That public statement of intent aimed to give both developers and users of EDI ample notice of HMRC’s intention to phase out the use of EDI as a transactional channel.

That statement has been widely circulated across the EDI community, at IReeN Conferences and via e-mail from Account Managers. HMRC has provided an update of where they are now and what their short to medium term goals are.

A formal Discovery Phase commenced in April to capture the existing “as is” processes for the EDI Service. Consultation has taken place with HMRC key stakeholders to map the business processes and with our technical architects to map the IT dependencies and interfaces.

A meeting, held in May, marked the first formal consultation with representatives of the IReeN User Group, the British Computer Society and the Chartered Institute of Payroll Professionals to map user experience and capture pressure/pain points with the existing service. That customer engagement and consultation will continue and expand throughout this project.

Through the summer HMRC will be exploring technical options for a solution and engaging with the EDI user group to draw in user feedback/research. HMRC will be drawing out high level requirements and later in the year exploring the end technical solution in consultation with EDI users.

Further updates will be forthcoming as the project progresses however in the meantime if you have questions or experiences that you want to share with the EDI user group please contact Samantha Mann, CIPP Senior Policy & Research Officer at policy.

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HMRC Annual Report and Accounts 2015-16 18 July 2016

HMRC has published their Annual Report and Accounts for 2015-16 which at 292 pages covers in detail all aspects of what HMRC do, how they have performed against various targets and how they are held accountable.

HMRC is one of the UK’s biggest organisations. At 31 March 2016, they had around 58,600 full-time equivalent employees in 167 offices across the UK, collecting tax and duties from 45 million individuals and more than 5.4 million businesses, and paying tax credits to 4.4 million families and Child Benefit to 7.4 million families.

The National Audit Office (NAO) has issued their report on HMRC’s Accounts; Amyas Morse, Head of NAO said:

“HMRC is running a complex and challenging set of change programmes, and aiming to maintain service to taxpayers at the same time. On the one hand, it needs to keep its nerve and commitment to its goals even if there are occasional setbacks along the way; on the other, it needs to ensure that it does not make the taxpayer underwrite the risk of failure through service breakdowns.”

Two of the areas covered in the NAO report are tax revenue and spend, as normal, and also HMRC’s plans to transform tax administration.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 162 of 314 Tax revenues and spending in 2015-16

HMRC raised £536.8 billion of tax revenues this year, an increase of £19.1 billion (3.7%) on 2014-15 and paid out £40 billion in benefits and credits (approximately one-fifth of the government’s total benefit expenditure). The taxes that contributed to most of this increase were:

 Income Tax and National Insurance contributions which together increased by £10.3 billion (3.8%)  Corporation Tax which increased by £4.1 billion (9.9%)  VAT which increased by £2.1 billion (1.8%)  Capital Gains Tax which increased by £7.3 billion (28.1%)  Insurance Premium Tax which increased by £3.7 billion (27.6%).

The annual cost of running HMRC was £3.2 billion in 2015-16 (£3.1 billion in 2014-15).

HMRC’s other key performance indicator is its compliance yield which measures the effectiveness of its compliance and enforcement activities. HMRC’s estimate of compliance yield in 2015-16 was £26.6 billion against a target of £26.3 billion. Compliance yield is not simply a cash figure, it draws on a range of different measures of revenue generated or losses prevented all of which involve a degree of estimation and uncertainty.

The National Audit Office (NAO) recommends that HMRC should work to provide further explanation so that readers are better informed about the estimations and assumptions that underlie HMRC’s reporting of its performance.

Transforming tax administration

HMRC has begun to implement its plans to transform how it administers tax. Its vision is to have “the most digitally advanced tax system in the world”. By 2021, it expects to employ 16% fewer staff, substantially rationalise its estate and automate more of its processes. In the past year HMRC has made plans to invest more than £2 billion on its transformation in the next five years; launched digital accounts for individuals; announced plans to close 137 offices and the location of 13 new regional hubs; and secured agreement for its plans to replace its IT services contract, Aspire, which it has revised to reduce the risk of carrying out too much change too quickly.

According to the NAO HMRC’s approach looks credible and proportionate to the scale of the risks involved, and it has worked closely with the Treasury and Cabinet Office to develop and refine its plans. It is too early to evaluate how well its approach is working but one of the most critical tests will be how management responds when things do not go as expected. NAO have identified two areas of risk:

Optimism bias in key assumptions – in the last Parliament, HMRC was over-optimistic about how much change it could deliver all at once, and how fast it could reduce demand for telephone contact in particular. This resulted in a collapse of its service to personal taxpayers in 2014-15 and the first half of 2015-16. HMRC has since recovered the quality of its service to personal taxpayers by recruiting more staff and has adjusted its future resource plans in the light of this experience.

Understanding the costs and benefits to taxpayers – HMRC has yet to estimate the costs for individual taxpayers or businesses of making the transition to online services or to quantify the benefits they can expect. Over the next year, it plans to develop a fuller picture of what it will cost taxpayers to use the new systems. Most business customers will be required to update HMRC quarterly rather than annually about their tax affairs, and some may need to purchase new software that works with the new systems. Some businesses are sceptical of HMRC’s evaluations of the costs and benefits of previous changes to the tax system.

Employment and Payroll Group (EPG)

One of the areas covered by HMRC in their report is about how they work proactively with different organisations that represent their customers - from small to large business groups, professional bodies and charities. Within their report is a piece about the Employment and Payroll Group (EPG):

“The EPG is our principal formal consultation forum for employers, employment taxes and wider payroll obligations. EPG is co-chaired by the Chartered Institute of Payroll Professionals, who have supported us on a number of research and customer insight challenges, providing evidence and running policy think tanks.

The forum members work with us to help identify issues and concerns. It provides the opportunity for early review of guidance, policies and processes to ensure they are designed with customer input, and explained so that customers understand what is required of them.

EPG has been closely involved in a number of significant changes: supporting us on how we interact with customers around underpayments and overpayments of tax, and supporting the development of guidance for new reporting

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cipp.org.uk Page 163 of 314 arrangements for intermediaries. More recently EPG has been directly involved in supporting the implementation of changes to employer National Insurance Contributions for employees under 25, and the new Apprenticeship Levy.”

CIPP comment

The Policy team run several Think Tanks throughout the year; look out for news items inviting members to participate – your input is invaluable to help influence and mould future guidance, policies and processes.

The next EPG meeting is scheduled for 7 September 2016. If you have any agenda items, or any issues you would like the CIPP to raise, please email policy with the details.

Follow these links to read HMRC’s Annual Report and Accounts for 2015-16 and the NAO report.

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New services available through Personal Tax Accounts 1 August 2016

There are now have over 3 million customers using their Personal Tax Account (PTA) with more signing up every day.

From 1 August 2016 all HMRC customers who have PAYE income will be able to establish if their PAYE tax position for 2015-16 was reconciled, or whether they paid too much or too little tax.

For the first time customers who have paid too much tax will be invited to submit their bank details through their PTA. They will then receive their repayment direct to their bank account within three to five days.

Customers who have already authorised their agent to receive their repayment will not be able to use the online repayment service. Any customer wanting to withdraw an assignment or nomination would need to follow the existing guidance at PAYE 91040.

From Monday 1 August some customers may see a slight change to the end of year reconciliation letter they receive. The letter will encourage customers to use their PTA, and in addition their National Insurance number will also be partially obscured to help protect against identity theft.

Customers who are due a refund can chose not to use the repayment service. Instead they can contact HMRC and providing they agree the calculation, request to receive their money by payable order.

If they do not take any action, either through their Personal Tax Account or by contacting HMRC within 45 days, a payable order will be sent automatically.

In the first two weeks of August HMRC will be testing how this works with a proportion of their customers who are owed a tax rebate. Then, providing everything is working as it should, from 22 August, HMRC will write to all those customers who have paid too much tax inviting them to use their PTA to get their rebate quicker.

Later this the year HMRC will be introducing an online payment service for those customers who haven’t paid enough tax through PAYE and will be taking a similar approach both with stakeholders and with customers.

Further updates on the PTA, the Business Tax Account, Making Tax Digital, and Agent Services will continue to be provided through regular briefings to professional bodies, stakeholders, Agent Update, agent emails and posts on the HMRC Tax Agent Blog.

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Government Gateway Transition and Transformation 10 August 2016

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 164 of 314 HMRC’s Software Developers Support Team (SDST) has provided information which details changes to the Government Gateway service over the next two years. As part of this project they need software developers to please complete a short questionnaire.

In summary, the changes are set out below but SDST has also provided a slide presentation which provides further information on the changes, the impacts on software developers and also actions required.

Project RATE (Replication of APIs for Transaction Engine) - the main change affecting third-party applications will be a new domain name of the URL for the Transaction Engine end points secure.dev.gateway.gov.uk and secure.gateway.gov.uk.

Project EMAC - to understand how many software developers provide applications that use the Government Gateway Public API, documented here, SDST need you to please complete a short questionnaire by 15 August (also detailed in the presentation).

Project GG3 - the new Government Gateway service is expected to focus on credential management and authentication and will incorporate enhancements to security. SDST will provide further information on the outcome of Discovery and future engagement and involvement in September 2016.

For further information see the SDST slide presentation.

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Bank of England cuts Bank Rate to 0.25% 8 August 2016

HMRC interest rates are linked to the Bank of England base rate so in line with the recent rate change, HMRC interest rates for late payment will be reduced.

The Bank of England Monetary Policy Committee voted unanimously on 4 August to cut the Bank of England base rate to 0.25%.

HMRC interest rates for late payments will be revised following Bank of England interest rate cut.

These changes will come into effect on 15 August 2016 for quarterly instalment payments and 23 August 2016 for non- quarterly instalment payments.

Repayment interest rates remain unchanged.

Information on the interest rates for late payments will be updated shortly.

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Faster, easier tax repayments via Personal Tax Accounts 25 August 2016

Taxpayers can now get their money back direct from HMRC via their Personal Tax Account without the need for a cheque or trip to the bank.

HMRC has announced a faster and easier tax repayment approach through Personal Tax Accounts.

Taxpayers can now opt to get their money back direct from HMRC through their digital Personal Tax Accounts.

Tax that they have overpaid will be returned directly to their bank account within 3-5 days. The online refund is just one of many services customers can access through their Personal Tax Account.

With over 34 quick and easy services which would have previously meant a letter or phone call to HMRC, the Personal Tax Account makes tax less formal and time consuming.

With the Personal Tax Account customers can: The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 165 of 314  view and update personal details  see how their tax is calculated  see the progress of forms they’ve sent to HMRC  check the expected level of their state pension  find out about Marriage Allowance entitlement, and make a claim online  see tax credits payments and report changes in circumstances.

Webchat is available to support customers who need help while accessing their online tax account.

It takes less than five minutes to get started. Customers will need to set up a Government Gateway account on the second page (unless they already have one). To do this they will need:

 their National Insurance number  either a recent payslip or P60 (a passport can be used if they don’t have these)  a telephone number to receive the one-time security code.

To set up a repayment, customers will need to notify HMRC of their bank account details.

To register, go to Personal Tax Account: sign in or set up.

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Request to opt out of receiving your PAYE annual tax summary 30 August 2016

With the introduction of the Personal Tax Account and the continual drive to reduce paper use where unnecessary, you can now request to opt out of receiving your annual PAYE tax summary from HMRC.

There are two ways you can request to opt out:

 Use the online form service to sign in or set up a Government Gateway account if you don’t have one. If you use the online form, you’ll get a reference number that you can use to track the progress of your form.  Email the form – this doesn’t require a sign in.

In both cases you will need your date of birth and National Insurance number.

Personal Tax Account

If you don’t yet have a personal tax account, it takes less than five minutes to get started and you can use your account to:  check your Income Tax estimate and tax code  fill in, send and view a personal tax return  claim a tax refund  check and manage your tax credits  check your State Pension  track tax forms that you’ve submitted online  check or update your Marriage Allowance  tell HMRC about a change of address  check or update benefits you get from work, eg company car details and medical insurance

These quick and easy services would have previously meant a letter or phone call to HMRC and more services will be added in the future - it is worth taking the time to register.

You will need to set up a Government Gateway account on the second page, unless you already have one. To do this you will need:

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cipp.org.uk Page 166 of 314  your National Insurance number  a recent payslip or P60 (a passport can be used if they don’t have these)  a telephone number to receive the one-time security code.

To register, go to Personal Tax Account: sign in or set up.

You can also sign in with GOV.UK Verify which takes about ten minutes to set up.

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Tackling the hidden economy 1 September 2016

Three consultations have been published aimed at tackling the hidden economy, one of which would see HMRC’s bulk data-gathering powers extended to include customer data held by money service businesses.

Tackling the hidden economy: extension of data-gathering powers to money service businesses

Money service businesses (MSBs) are entities which provide money transmission, cheque cashing, or currency exchange services by way of business. This covers a wide range of business models, including high street money transmitters and their agents, foreign exchange currency traders, and peer-to-peer money transmitters, as well as other enterprises that may offer these services in addition to their main line of business.

This consultation is about a proposal to extend HMRC’s bulk data-gathering powers to include customer data held by money service businesses (MSBs). This data will help HMRC to identify non-compliant customers trading in the hidden economy. The consultation invites views on the proposal and options for implementation, to ensure that it addresses the exploitation of MSBs by non-compliant customers to hide undeclared income, and minimises the compliance burdens on MSBs.

Two parallel consultations on hidden economy measures have been launched alongside this one:

Tackling the hidden economy: conditionality This is a consultation on the principle of conditionality, which would make access to business services or licences dependent on tax registration. Conditionality could help to make it as easy as possible to register for tax, and as difficult as possible for non-compliant businesses to evade their responsibilities

Tackling the hidden economy: sanctions This consultation explores the potential for new penalties and sanctions to tackle hidden economy participants including those who have already been penalised for deliberate non-compliance, but have not changed their behaviour.

The three consultations close on 21 October 2016.

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Telephone scam 2 September 2016

There is currently a telephone scam where a recorded message is left, allegedly from HMRC, stating that HMRC are bringing a lawsuit against the individual and is going to sue them.

The recipient is asked to phone 0161 850 8563 and press “1” to speak to the officer dealing with the case. This scam is becoming widely reported and seems to be targeting older people. Please do not reply to the message.

HMRC takes security very seriously but you need to be alert. If you cannot verify the identity of the person making the call you should not disclose your personal details. You should report these incidents on the Action Fraud website, or you can call them on 0300 123 2040 (Please note this number will be charged at your normal network rate). They are open Monday to Friday 09:00 - 18:00.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 167 of 314 To learn more about dealing with phishing and scams visit GOV.UK.

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Telephone scam 6 September 2016

We have been alerted to another new telephone scam where bogus callers pose as both HMRC ML investigators and bank officials.

According to HMRC they work together to add credibility to their request for banking details.

HMRC takes security very seriously and this is a further reminder that you need to be alert. If you cannot verify the identity of the person making the call you should not disclose your personal details.

You should report these incidents on the Action Fraud website, or you can call them on 0300 123 2040 (Please note this number will be charged at your normal network rate). They are open Monday to Friday 09:00 - 18:00.

To learn more about dealing with phishing and scams visit GOV.UK.

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HMRC timetable to replace PAYE EDI channel 12 September 2016

Following on from our News update on 29 June HMRC have provided a further written update to the EDI User Group regarding the deadline for re-platforming Electronic Data Interchange (EDI).

HMRC will be decommissioning the Electronic Data Interchange (EDI) channel and replacing it with an existing XML service, by April 2018.

Current EDI users will need to migrate away from the service before the deadline to the XML channel. This will strategically position all of HMRC’s PAYE operations across the UK on the same platform. HMRC is committed to providing secure and resilient services and this move ensures that any future enhancements and changes can be managed effectively.

Plans to make the move were originally announced at the API Strategy Launch Conference, on 7 September 2015, where Mark Dearnley, HMRC’s former CDIO, announced that the Department would end its use of the EDI channel within three years.

This important, but minor change, will have no effect on individual employees.

HMRC is putting a new team in place to provide support for the user community, to help them transition, ahead of the deadline.

Background A meeting, held in May, marked the first formal consultation with representatives of the IReeN User Group, the British Computer Society and the Chartered Institute of Payroll Professionals to map user experience and capture pressure/pain points with the existing service. That customer engagement and consultation will continue and expand throughout this project.

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cipp.org.uk Page 168 of 314

HMRC ‘Building Our Future’ 9 September 2016

HM Revenue and Customs (HMRC) has announced the next stage of their Building Our Future transformation to their staff, with some restructuring of their high-level organisation.

As you will know HMRC is transforming into a smaller, more highly-skilled operation, based in fewer locations and offering modern, digital services to customers.

As HMRC has been evolving what they do, and where they do it, as part of this transformation, they have also kept their organisational structure under review, to ensure that it is fit for the future and that it supports their new digital and collaborative ways of working.

As a result, HMRC has now decided to make some further changes to how they are structured. From October, they will be reorganising the Directorates in their four existing lines of business into three new groups:

Customer Strategy and Tax Design A new Customer Strategy and Tax Design group, which brings together the customer strategy, tax policy, process design and tax assurance teams, led by Jim Harra.

Customer Service An expanded Customer Service group, which includes all of the big operational teams, led by Ruth Owen.

Customer Compliance A Customer Compliance group, which will tackle non-compliance and enforcement for all customer groups, including large businesses, led by Jennie Granger.

The three new groups will be supported by the existing Transformation and Corporate Services areas.

The reorganisation builds on other structural changes that HMRC has made over the past couple of years and it will support them to put a greater focus on customers, to change how they provide services to help people get their taxes right, and how they target their response to those who deliberately seek to cheat the system.

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Tax fraudster ordered to pay up or face jail 13 September 2016

A self-employed salesman and entertainer had not submitted a Self Assessment return for more than 14 years; HMRC ordered him to pay back £53,498 or face 12 months in jail.

HMRC found that Jeffrey Alan Brown, 51, a self-employed salesman and entertainer, had not submitted a Self Assessment return for more than 14 years. This was despite earning more than £300,000 in sales commission from a glazing company and £6,900 as a football match entertainer.

Brown was ordered to pay back £53,498, which included interest, within three months or he will face 12 months in jail.He had previously been sentenced for tax fraud in April 2016.

Zoe Ellerbeck, Assistant Director, Fraud Investigation Service, HMRC, said:

“This is a case of a well-known local personality and TV character flaunting the law as if it didn’t apply to him. Brown had submitted tax returns in the past and therefore was well aware of his tax obligations. This was deliberate theft from taxpayers by Brown. We are determined to recover stolen tax from criminals who deprive the UK of vital funds.

Deliberately evading tax in this way is insulting to the honest taxpayers but HMRC is determined to clamp down on financial crime and Brown is now repaying the proceeds of his criminal behaviour. If you know of anyone who is committing tax fraud you can report them by calling our 24-hour hotline on 0800 59 5000.”

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 169 of 314 The HMRC investigation showed that between 2009 and 2015, Brown had been a successful sales representative for Safestyle UK, featuring in the company’s TV advertising earning him £300,000 in untaxed sales commission.

Brown had signed an employment agreement with the window company, agreeing to be responsible for his own Income Tax and National Insurance contributions, but instead chose not to declare his earnings to HMRC. He owed £50,000 for tax returns from February 2009 onwards.

He also worked as an entertainer, using the trading name Brown Loaf Entertainment, as a match host for several football clubs including Burnley Football Club, Accrington Stanley Football Club and Wigan Warriors Rugby League Football Club. But he stopped submitting tax returns from 2001 and never registered the business for legitimate trading, pocketing all the cash he charged the clubs for his services. HMRC also discovered that he used a fake home address on his employment records in an attempt to evade detection and taxes.

Anyone with information regarding fraud is encouraged to contact the Customs Hotline on 0800 59 5000 or report it online.

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Government Gateway migration project 16 September 2016

The current Government Gateway 2 (GG2) is due to close from March 2018. HMRC need input from software developers to determine if they need to replicate the public API.

As part of the decommissioning of GG2, HMRC is migrating Enrolment and Agent-Client functionality and data from GG2 into HMRC (EMAC Project).

Post March 2018 onwards, a new Government Gateway (GG3), will provide online service credential management only for organisations wishing to utilise government digital services.

The change  This will require the current Government Gateway public API to be replicated on the HMRC platform if this service is still required.

Impact on Software Developers  As the public API is read only HMRC can’t see who uses it.  If no software developers use this API then it can be discontinued with no impact.  If the public API is used and needs to be replicated this will result in a change in domain name.

Next steps  To understand if HMRC need to replicate the public API, please complete this short questionnaire.

Please note: Some Software Developers stated that they could not access the google forms survey due to proxy issues, if this is the case please view the attached PDF and send the answers via email to the SDS Team. The preference is via google forms as the responses can be collated quickly.

The original closing date for responses was 15th August 2016, although this has been extended to 23rd September.

HMRC’s Software Development Support Team (SDST) will communicate the results / impact during October.

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HMRC launch Worldwide Disclosure Facility 20 September 2016

Anyone who wants to disclose a UK tax liability that relates wholly or partly to an offshore issue can use the Worldwide Disclosure Facility.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 170 of 314 Over 100 countries have committed to exchange information on a multilateral basis under the Organisation for Economic Co-operation and Development Common Reporting Standard (CRS). The CRS dramatically increases international tax transparency.

On 31 December 2015 all HM Revenue and Customs (HMRC) offshore facilities closed. Up to that date, HMRC gave incentives to encourage people to come forward and clear up their tax affairs. That’s no longer the case, but before automatic exchange and new sanctions come into force, the Worldwide Disclosure Facility (WDF) will be the final chance to come forward before HMRC use CRS data and toughen their approach to offshore non-compliance.

The facility opened on 5 September 2016. After 30 September 2018, new sanctions under Requirement to Correct will be introduced that reflect HMRC’s toughening approach. You can still make a disclosure after that date but those new terms will not be as good as those currently available.

View full guidance from HMRC on the Worldwide Disclosure Facility.

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Museums and galleries tax relief consultation 22 September 2016

A consultation has been published which proposes introducing a new tax relief for museums and galleries from April 2017.

In Budget 2016 this was announced as the government want to encourage the creation of more and higher quality exhibitions, as well as to support touring of exhibitions across the country and abroad, raising the UK’s profile internationally.

The relief will take the form of an additional deduction for corporation tax purposes which can be surrendered for a payable tax credit. To qualify for relief, the institution will therefore need to be within the scope of corporation taxes, for example a museum set up as a charitable company (or a charitable museum producing the exhibition through its trading subsidiary) or a museum set up as a subsidiary company under the control of a local authority.

From 1 April 2017, tax relief will be available for the creative and set-up costs of temporary or touring exhibitions but not for day-to-day running costs.

Geographical extent: The tax relief will be available to all four nations in the UK.

The government will announce the exact rate of relief at some point after the consultation closes (29 October 2016).

Museums and galleries tax relief consultation

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Over 5 million customers are using HMRC’s Personal Tax Account 23 September 2016

The five millionth customer has signed up to the Personal Tax Account, marking a major milestone in the ongoing development of HMRC’s digital services.

Sign into your Personal Tax Account The Personal Tax Account (PTA) was launched in December 2015 and gives customers a one-stop shop for all of their tax information. It gives customers the flexibility to access HMRC’s services at a time that suits them as the service is available 24 hours a day, 7 days a week.

Services are always being added to the PTA but those already live include:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 171 of 314  receiving an estimate on your Income Tax and tax code  filing a Self Assessment tax return  claiming a tax refund directly into your bank account and receiving it within 3-5 working days – removing the need to wait for a cheque or Payable Order  checking and managing your tax credits, including the ability to change your circumstances throughout the year  checking your State Pension  checking or updating your Marriage Allowance  checking or updating benefits you get from work, such as company car details and medical insurance.

The PTA is radically changing the way that customers contact HMRC and the effects of this have already been felt.

Almost 1 million customers renewed their tax credits claim ahead of the 31 July deadline this year, representing a move away from the old paper and telephone methods of renewal. Over 600,000 people have already received their Income Tax refund directly to their bank account without having to wait for a cheque in the post as before. And more than 100,000 people have checked their company car status details and updated them accordingly.

The Personal Tax Account is a major strand of HMRC’s goal to create a tax authority fit for the 21st century. Opening yours takes 5 minutes and can be done by visiting www.gov.uk/personal-tax-account.

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IR35 legislation in the broadcasting industry 10 October 2016

More than 100 BBC presenters are under investigation after being suspected of wrongly using personal service companies to minimise their tax bills.

The Daily Telegraph has reported that a very significant number of BBC news presenters, as well as a number of staff at other broadcasters, face demands to hand over unpaid tax and national insurance contributions after HMRC launched a probe into whether they had incorrectly declared themselves to be self-employed.

The BBC announced in July that it had moved 85 presenters onto its books as full-time employees, after a report published in 2012 found that the corporation paid more than 124 stars in excess of £150,000 a year via personal service companies.

Stars such as Jeremy Paxman and Fiona Bruce have previously been paid via their own service companies, although there is no suggestion that they are suspected of any wrongdoing. The new revelations are included within a tax tribunal judgment involving BBC newsreaders Tim Willcox and Joanna Gosling.

The pair are appealing against a ruling by HMRC that they failed to pay enough tax during years in which they claimed, they were not employed by the corporation and were instead paid via their personal service companies.

A hearing at the First Tier Tax Tribunal in July heard that HMRC began investigating 23 BBC presenters in May last year, to establish whether they had fallen foul of IR35 rules, used to determine whether workers should be taxed as employees, or are self-employed.

“The BBC also understands that HMRC has initiated or indicated their intention to initiate IR35 proceedings in relation to presenters who are engaged by other broadcasting organisations.

The appeals are therefore extremely important not only to the individuals in question but also to the BBC and to the broadcasting industry as a whole. The appeals are likely to be the first cases to test the freelance model in the broadcasting industry against the IR35 legislation.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 172 of 314 Accountant fined for blocking HMRC investigation 12 October 2016

An obstructive accountant who failed to cooperate with a tax fraud investigation has been fined £25,000 under the Serious Organised Crime and Police Act.

In an historic first for HM Revenue and Customs (HMRC), an obstructive accountant who failed to cooperate with a tax fraud investigation has been fined £25,000 under the Serious Organised Crime and Police Act 2005 for failing to comply with Disclosure Notices.

Anil Shah, 66, an accountant from Middlesex, refused to assist HMRC officers who were investigating suspected tax evasion by his clients, despite being served with the legally binding documents. Shah was warned that if he didn’t pay the fine within 28 days he would face 18 months in prison.

The Disclosure Notices, which require individuals to share paperwork and information with HMRC when part of a criminal investigation, were ignored by Shah. When challenged by investigators, he made a number of statements that were found to be totally untrue. This included saying that he didn’t act for clients, when he did.

Simon York, Director, Fraud Investigation Service, HMRC, said:

“As a professional accountant Shah's role was to offer sound advice to his clients and comply with HMRC regulations. Instead he abused his privileged position, knowingly broke the law, and failed in his professional duties.

HMRC is determined to clamp down on financial crime. Today’s result sends a clear message to anyone who is considering trying to cover up tax fraud – nobody is beyond our reach.

If you commit or help others to commit a financial crime, HMRC can and will come after you and you too could end up paying the price or finding yourself behind bars.”

Two of Shah’s clients were jailed for seven years in 2015 for a £1.2 million VAT fraud. A further trial of a number of his, now, former clients recently concluded and they are due to be sentenced on 20 October 2016 at Southwark Crown Court.

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Personal Tax Account – have you registered yet? 13 October 2016

It only takes five minutes to register and you can view all of your tax information in one place.

The Personal Tax Account (PTA) was launched in December 2015 and gives customers a one-stop shop for all of their tax information. It gives customers the flexibility to access HMRC’s services at a time that suits them as the service is available 24 hours a day, 7 days a week.

Over five million people have has signed up to the Personal Tax Account. Services are always being added to the PTA but those already live include:

 receiving an estimate on your Income Tax and tax code  filing a Self Assessment tax return  claiming a tax refund directly into your bank account and receiving it within 3-5 working days – removing the need to wait for a cheque or Payable Order  checking and managing your tax credits, including the ability to change your circumstances throughout the year  checking your State Pension  checking or updating your Marriage Allowance  checking or updating benefits you get from work, such as company car details and medical insurance.

The PTA is radically changing the way that customers contact HMRC and the effects of this have already been felt.

cipp.org.uk Page 173 of 314 Income Tax refund directly to their bank account without having to wait for a cheque in the post as before. And more than 100,000 people have checked their company car status details and updated them accordingly.

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HMRC’s new Tax Assurance Commissioner 17 October 2016

Jim Harra has been appointed as HMRC’s Tax Assurance Commissioner following organisational changes within HMRC.

Jim Harra BC takes over from Edward Troup who is relinquishing the tax assurance role now that he is Executive Chair with wider responsibility for HMRC.

With his wealth of tax expertise and experience, Jim is well placed to oversee the assurance and dispute governance arrangements that allow Parliament and the public to be confident that HMRC secures the right tax under the law when resolving tax disputes. Jim does not directly engage with taxpayers to discuss their specific tax liabilities, nor is he responsible for the HMRC operational units that manage taxpayers’ compliance.

The tax assurance role was one of the changes introduced in 2012 to strengthen HMRC’s governance and assurance of tax disputes.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 174 of 314 HMRC Employer Bulletins

HMRC Employer Bulletin – April 2016 13 April 2016

HMRC have published issue 59 of the Employer Bulletin. The Employer Bulletin is published 6 times a year and aims to provide employers and agents with the latest information on topics and issues that may affect them.

Topics in this edition include:

 A round up of Budget 2016 highlights  Updated PAYE Desktop Viewer  Statutory Sick Pay and the Percentage Threshold Scheme  Single Director Companies changes with the Employment Allowance

And many more updates affecting employers and their payroll providers.

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HMRC Employer Bulletin – June 2016 16 June 2016

HMRC have published issue 60 of the Employer Bulletin. The Employer Bulletin is published 6 times a year and aims to provide employers and agents with the latest information on topics and issues that may affect them.

Topics in this edition include:

 Reporting expenses and benefits for tax year 2015-16  Personal Tax Accounts  Reporting PAYE and avoiding late filing penalties  Student Loans

And many more updates affecting employers and their payroll providers.

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Employer Bulletin - August 2016 19 August 2016

HMRC have published the latest issue the Employer Bulletin, a must read for employers and agents to find out the latest information on payroll topics and issues.

There are as usual a variety of important and interesting articles in the latest bi-monthly bulletin. Below are 3 items worth highlighting:

Apollo Fuels judgment Apollo Fuels had an arrangement whereby the company would lease second hand cars to its employees as opposed to providing them free and appealed against the decision to treat this as a benefit in kind. The First Tier Tribunal and the Upper Tribunal both found that the price paid under the leases was market value and consequently there was no benefit to the employees.

HMRC appealed to the Court of Appeal who concluded that a benefit in its ordinary sense has to exist before Chapter 6 applies (Chapter 6 is the shorthand for Chapter 6, Part 3 Income Tax (Earnings and Pensions) Act 2003 (ITEPA) – the chapter that contains the legislation for car benefits-in-kind). The case is now final.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 175 of 314 The government announced changes to the company car, provided living accommodation and loan benefit in kind legislation in Budget 2016 that were effective from 6 April 2016. These changes ensure that the relevant benefit in kind legislation applies in the way the legislation applied before the Apollo Fuels judgment.

HMRC have produced guidance for compliance staff about how to handle open enquiry cases for up to and including the tax year ending 5 April 2016 where the Apollo Fuels judgment could be in point. This guidance covers both cars and vans and can be found in the Employment Income Manual.

Mileage regulations In November 2015, as part of the introduction of the new exemption for paid or reimbursed expenses which replaced the dispensations regime, amendments were made to the Income Tax (Pay As You Earn) Regulations 2003 to remove the requirement for expenses payments to be reported on form P11D.

However, those amendments also inadvertently removed the requirement to report taxable mileage allowance payments and taxable passenger payments on form P11D. This was not the intention, as the new exemption for paid or reimbursed expenses was not intended to affect the tax treatment of mileage payments. Therefore a further amendment to those regulations was made in July to correct this error.

Statutory Payments Calculator The Statutory Payments calculator should not be used when a mistimed payment has occurred in the relevant period as it will not use the correct divisor to calculate the average weekly earnings. Using the calculator in such cases will not produce the correct entitlement.

Where mistimed payments have occurred in the relevant period, employers should calculate entitlement manually in accordance with the guidance on GOV.UK.

Employer Bulletin 61 - August 2016

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Employer Bulletin - October 2016 14 October 2016

A key message in the latest Employer Bulletin is the importance of helping HMRC with some specific questions on the consultation for Making Tax Digital.

“Making Tax Digital will involve significant changes to the way in which the tax system will operate and as such will impact the way you currently operate your payroll. The article on page 2 gives you with some information about the consultation pack and provides a link to the actual document. It also includes a request to employers to respond to the consultation, especially in relation to some specific questions outlined in the article and also asks for volunteers to work alongside us to develop these changes.

So please don’t underestimate the scale of these changes and if you can please respond to the consultation document and send us your details if you are interested in helping us make sure we get this right for both employers and individuals.”

On Tuesday 25 October from 1pm to 2pm |HMRC are hosting a Talking Points webinar on Making Tax Digital which will also give you an opportunity to provide HMRC with your views and responses to the six Consultation Documents released on 15 August 2016. You can register here for this session.

The Employer Bulletin is a must read for employers and agents to find out the latest information on payroll topics and issues.

Employer Bulletin: October 2016

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 176 of 314 Making Tax Digital

HMRC working with tax agents 5 April 2016

Making Tax Digital (MTD) is at the heart of HMRC’S plans to transform the tax system, delivering a real time system that is more effective, more efficient and easier for taxpayers and agents.

HMRC's Agent Strategy, Stakeholder and Engagement Team blog about their work with Tax Agents and have provided an informative piece on Making Tax Digital (MTD):

The introduction of digital tax accounts will enable agents, where their client has given them permission to do so, to view and manage their clients’ tax affairs in one place.

Over 90% of agents can and want to use digital services and 95% already file online. And the majority of clients already provide their tax information digitally, with 99% of VAT returns, 98% of Corporation Tax and 86% of Self Assessment done online. The new digital accounts will enable agents to provide their clients with more certainty over their tax bill and access to an in-year picture of their tax position.

MTD does not mean four tax returns a year. The new digital accounts will integrate all the different information individuals and businesses already provide to HMRC into a simple, streamlined system; and once a quarter businesses and agents can check and submit the information they have been collecting digitally to HMRC. This will remove the requirement to collate and prepare the onerous annual tax return.

No additional records are needed for MTD either. The increased digitalisation will improve the quality of records, and reduce errors – meaning fewer of your clients facing the shock of a bigger tax bill than they expected at the end of the year.

Earlier this month we published a video on YouTube explaining how tax is being digitally transformed for businesses, and how MTD will make life easier for business.

For many clients using an agent is a considered choice and the introduction of MTD is not intended to change the professional relationship that exists between clients and their advisors. Many businesses will continue to choose to pay an agent to manage their tax affairs, enabling them to focus on their businesses.

Agent Online Self Serve (AOSS) is working with MTD to start enabling access to business digital services. Agents access to their client’s Digital Tax Accounts online will be enabled through third party software or web interfaces, where their client has given them permission to do so. Over 1000 agents are using an AOSS private beta service providing a view of employer client’s PAYE liabilities and payments. Other agents who meet the criteria will be invited to take part in the AOSS private beta service over the coming months. Updates on AOSS will be provided through regular briefings to stakeholders and posts on this blog.

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ABAB 2016 Annual Report and Making Tax Digital 11 April 2016

The Administrative Burdens Advisory Board’s (ABAB) approach is to be an independent ‘critical friend’ to HMRC, and their latest annual report highlights their reservations about the announcement to mandate digital record keeping and introduce quarterly online reporting.

We have reported on this topic several times since it was first announced in the Spending Review and Autumn Statement 2015 that £1.3 million would be invested to transform HMRC into one of the most digitally advanced tax administrations in the world. This will see most businesses, self-employed people and landlords being required to keep track of their tax affairs digitally and update HMRC, at least quarterly, via their digital tax account starting from 2018.

No real detail was provided in the original announcement and even the Treasury Committee voiced concerns in a letter to David Gauke on behalf of small businesses asking that assurance be given that they will not be compelled to pay tax sooner than now and will not be required to provide quarterly updates requiring more burdensome record keeping than now.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 177 of 314 On this particular subject, ABAB’s report says:

“…we are very supportive of the move to digital but have reservations as to whether this will meet the needs for all small businesses, together with the level of support that will be available and the pace of change. Therefore compulsory digital record keeping and quarterly online updates is not an approach we can endorse. We are concerned that the proposals for quarterly updates will be more burdensome than they currently are with increased record keeping and compliance costs. This will have a big impact on the smallest of businesses. The requirement that as part of the reforms all businesses will have to keep records digitally is a significant concern, given the timescales to educate businesses and provide the necessary tools for them. We also have reservations around the current capability of software being able to deliver HMRC’s vision and the appetite amongst small businesses to utilise them, so we therefore urge HMRC to explore this further urgently.”

“…We are pleased to see that HMRC have formed the Assisted Digital Group to explore such issues and we will work closely with them to ensure that our concerns are addressed and that this understanding is obtained to inform delivery. As part of this engagement, we will be examining carefully the cost implications for businesses of conforming to MTD requirements. “

“…We urge HMRC to engage and consult with key business representatives and in particular the Office of Tax Simplification (OTS) to help identify, inform and support simplification.“

We will work closely with HMRC in 2016/17 and monitor the developments of the Making Tax Digital agenda. “

A consultation is due to be published this year but as yet no timescale has been provided.

ABAB’s 2016 Annual Report will be available on GOV.UK shortly but in the meantime you can read the full report through the link below.

ABAB 2016 Annual Report

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Making Tax Digital will require software compatibility 3 May 2016

The Treasury Committee has written to the Financial Secretary to the Treasury, David Gauke, outlining their concerns that making tax digital is going to be a costly transition for all businesses if software has to be compatible with HMRC requirements.

The letter refers to research conducted by The Institute of Chartered Accountants in England and Wales (ICAEW) which suggests that 75 per cent of all businesses, and 82 per cent of sole traders, would need to change their record keeping systems to comply with the Government's new proposals for Making Tax Digital (MTD).

The letter also quotes from a briefing by the Tax Faculty team at ICAEW which says that businesses would be required not just to submit information to HMRC online once a quarter, but that they would also be required to do all their record keeping in a prescribed digital format.

Further to this briefing in a news item the ICAEW said:

“One aspect in particular has not, in our view, been as clearly articulated as it might have been. It is that MTD will also include a requirement for digital record keeping. While HMRC has said very clearly that it does not want transactional data in the proposed quarterly returns, what it will want is for businesses and self employed people themselves to keep their accounting records digitally. Verbally we are told that using excel is not digital record keeping; it will have to be accounting software. If so, this will have serious book keeping consequences for many businesses and it is certain that the old brown paper parcel approach to book keeping will be dead.”

The Treasury Committee’s letter also states: “It is not too late to do something about this. A thorough impact assessment is the minimum required before proceeding with the Government's proposals to make digital record keeping compulsory.”

CIPP comment There is to be a wide-ranging consultation exercise on Making Tax Digital which is due to start shortly. The Policy Team will be reading and disseminating all documents to the payroll profession and will of course involve members The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 178 of 314 and the industry accordingly for your invaluable input.

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Making Tax Digital 13 June 2016

David Gauke has responded to concerns from the Treasury Committee that making tax digital is going to be a costly transition for all businesses if software has to be compatible with HMRC requirements.

At the end of April the Treasury Committee wrote to the Financial Secretary to the Treasury, David Gauke outlining their concerns. The letter refers to research conducted by The Institute of Chartered Accountants in England and Wales (ICAEW) which suggests that 75 per cent of all businesses, and 82 per cent of sole traders, would need to change their record keeping systems to comply with the Government's new proposals for Making Tax Digital (MTD).

The Treasury Committee has now received a response from David Gauke where he addresses concerns and provides assurance to businesses, large and small. The letter can be read in full here but in summary:

The response acknowledges that there is no doubt Making Tax Digital is the futur". The government is committed to reducing burdens for taxpayers and building a transparent and accessible tax system fit for the digital age.

The tax system has not kept up with the technological advances of the digital age. Currently, taxpayers have to review 18-month old records, stored in a variety of formats, none of which can interact with HMRC systems. Either they complete a lengthy HMRC form, re-entering data recorded elsewhere or they go to their accountants and drop off a carrier bag of records, getting them to complete their return on their behalf. When they pay their final tax bill, it is on money made up to 21 months previously. Clearly it is an outdated system designed for a world of paper and not fit for the 21st century.

Making Tax Digital will deliver greater control, certainty, and confidence to businesses. The software will do much of the work to provide HMRC with the required information for the quarterly updates, so submitting an update will feel very light touch. It will also provide nudges and prompts that flag up reliefs or allowances to which businesses may be entitled, and offer access to built-in help to enable businesses to get their tax affairs right. HMRC has already started testing proposals with businesses and they have been generally positive about the Making Tax Digital software, saying that it appears simple to use and much easier to submit tax information than the current system.

The government has been clear since the first announcement at Autumn Statement 2015 that the reforms would involve both digital record keeping and quarterly updates. Indeed the Making Tax Digital Roadmap (published in December 2015) sets this out -"Businesses will use software that compiles their tax data as part of their ordinary day- to-day activity, highlighting any possible errors . . .. offering prompts for information that might otherwise be overlooked. Once the software has compiled the relevant data, businesses or their agents will feed it directly into HMRC systems"

Since December, both HMRC and I have had a number of discussions with business representatives. In January, I also set out to colleagues in a Westminster Hall debate that "updates will be generated from digital records. It will be much quicker, easier and far less burdensome than the current process. The agony of the annual tax return will be a thing of the past'. In a previous letter, David Gauke was also explicit that "businesses keeping paper records will need to switch to digital tools, for example an app on a smartphone, to record their income and expenditure."

Last September HMRC published its Third Party Software and Application Programming Interface (API) strategy. The aim of this strategy is to deliver the widest range of compatible and secure software products and enable providers to bring more sophisticated products to the market whilst ensuring their compatibility with HMRC systems. HMRC is already seeing this strategy deliver new and innovative products. For those businesses already using record keeping software HMRC is exploring to what extent anything new will be necessary or whether existing software packages will be sufficient with the aim of minimal disruption.

HMRC will publish an initial assessment of the impacts of the new requirements for businesses alongside an overview of the potential costs and savings for businesses as part of the planned consultations this year. This will include the contribution these reforms will make towards the £400m administrative burdens reduction target for business.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 179 of 314 There will be an opportunity for interested parties to consider the initial assumptions behind the impact assessment when it is published, and the detail of the proposals when the formal consultation begins. HMRC will be working extensively with stakeholders throughout 2016 to develop their evidence which will inform the updated assessment in the Tax Information and Impact Note to be published alongside draft legislation.

These proposals will require a behaviour shift for many smaller businesses, but it is important to note that they go with the grain of what millions of businesses are already accustomed to doing -transacting online, including with the taxman. Research by the Department for Business Innovation and Skills in 2015 found that 97% of small businesses and 92% of micro businesses had access to the internet at work. It is therefore unsurprising that the overwhelming majority of returns for the main business taxes are submitted online.

Some two million small and medium sized business are already using software for payroll and VAT. In the last year the number of users accessing their digital tax account has more than doubled to over 5 million. Businesses therefore have a strong appetite for digital services, as do the agents who represent them. An overwhelming number of businesses already choose to maintain their records in a digital format even though there is currently no requirement for them to do so.

HMRC will ensure that compatible software products are available to suit the budgets and needs of all businesses, including some free products for those small businesses with the simplest affairs. Of those businesses not currently using software, HMRC will provide additional support to build their confidence in using digital tools for their business, simplifying their affairs and integrating tax into their ordinary day to day activity.

Most stakeholder groups have welcomed the vision of a transformed and fully digital tax system, but HMRC is aware that concerns about its implementation still remain. HMRC will listen to stakeholders who represent small businesses and their intermediaries ensuring that the final design takes account of their views and is fully informed by existing practices.

CIPP comment As we have said previously and David Gauke also mentions above, there is to be a wide-ranging consultation exercise on Making Tax Digital which is due to start shortly – at least four separate consultations are to be published. The Policy Team will be reading and disseminating all documents to the payroll profession and will of course involve members and the industry accordingly for your invaluable input. Please do get involved if you are able to.

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Making Tax Digital consultations published 16 August 2016

The anticipated Making Tax Digital (MTD) consultations have been published and due to the scale of the reforms, HMRC has brought out six separate documents, each focusing on specific customer groups or specific elements of the Making Tax Digital changes.

At Budget 2015, the government set out the vision for a transformed tax system. The MTD Roadmap, published in December 2015, set out the government’s plans to deliver a fully digital tax service by 2020.

These reforms are ambitious and radical and there is a lot to design and develop before 2020 and HMRC recognises the importance of consulting widely with interested parties to help shape these changes. The consultation period will run for a full 12 weeks until 7 November 2016.

Although this is the start of the formal consultation period, HMRC has been engaging extensively with stakeholders since Making Tax Digital was announced in 2015 and much of the content of these consultations has been informed by that engagement.

Overview for small businesses, self-employed and smaller landlords Alongside the six consultations HMRC has published a document which provides an easier way to respond to the Making Tax Digital consultations than the full formal consultations. It is specifically aimed at small businesses, the self- employed and landlords and includes a summary of the main issues and selected questions, with links to the full consultations at various points, if more detail is required.

CIPP comment The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 180 of 314 As these consultations are specific to certain MTD elements and groups, they will not be of interest to everyone; however the Policy Team will be reading the documents in detail to assess which areas are relevant to payroll professionals and employers in general. There will most certainly be some surveys coming your way on the Making Tax Digital reforms and we will endeavour to space them out to allow time for your input.

THE SIX CONSULTATIONS

Making Tax Digital: Bringing business tax into the digital age This consultation considers how digital record keeping and regular updates should operate. The proposals allow tax to be integrated into day to day business activity and enable businesses to provide a single update for multiple taxes, while offering maximum flexibility.

Making Tax Digital: Tax administration This consultation covers aspects of the tax administration framework that need to change to support Making Tax Digital. It also sets out proposals to align aspects of the tax administration framework across taxes, including the simplification of late filing and late payment sanctions.

Making Tax Digital: Transforming the tax system through the better use of information This consultation focuses on how HMRC will make better use of the information they currently receive from third parties to provide a more transparent service for customers that reduces end of year under and over-payments.

Making Tax Digital: Voluntary pay as you go This consultation looks at options for customers covered by the requirement for digital record keeping to make and manage their voluntary payments. It considers how voluntary payments will be allocated across a customer’s different taxes and explores the best way of dealing with the repayment of voluntary payments.

Business Income Tax: Simplifying tax for unincorporated businesses This consultation seeks views on changing how the self-employed map accounting periods onto the tax year (reform of basis period rules). It also seeks views on extending cash basis accounting to larger businesses; reducing reporting requirements for businesses and also removing the need to distinguish between capital and revenue for businesses using cash basis accounting.

Business Income Tax: Simplified cash basis for unincorporated property businesses This consultation considers the extension of cash basis accounting to landlords.

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Making Tax Digital for Business: Consultation events 8 September 2016

HMRC is starting to roll out a series of face-to-face events to discuss the recently published Making Tax Digital consultations.

HMRC want to encourage everyone who is interested in Making Tax Digital to give their views and respond to the consultations.

To help with this, HMRC is running a programme of webinars and face-to-face events across the UK which will provide more detail on the consultations and an opportunity to ask questions and give feedback.

Webinars Live webinars last for an hour. You can ask questions during the presentation and get answers from the HMRC host. You can register in advance, and you should log in at least 5 minutes before a live webinar is due to start.

HMRC are running two webinars:  Introduction to Making Tax Digital, for anyone interested in the Making Tax Digital reforms  Overview of Making Tax Digital for Agents, which is designed specifically for tax agents and advisers

Introduction to Making Tax Digital Find out what Making Tax Digital means to you, including an overview of all the consultations around specific elements of the Making Tax Digital reforms. Register for any of these sessions by clicking the links below.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 181 of 314  6 September 2016, 1pm to 2pm  9 September 2016, 11am to midday  14 September 2016, 3pm to 4pm  15 September 2016, 11am to midday  19 September 2016, 2pm to 3pm  21 September 2016, 3pm to 4pm  22 September 2016, 11am to midday  27 September 2016, 1pm to 2pm

Overview of Making Tax Digital for Agents An overview of the 6 Making Tax Digital consultations published on 15 August 2016, designed specifically for tax agents and advisers. Register for these sessions by clicking the links below.

19 September 2016, 4pm to 5pm 25 October 2016, 1pm to 2pm

Face-to-face events HMRC are running a series of face-to-face events across the UK throughout September and October 2016. Full details of dates, times and subjects covered are detailed on GOV.UK and also how to apply for a place.

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Treasury committee urges delay to tax changes 21 September 2016

The Treasury select committee has called for a delay to plans for a quarterly tax-filing system for small businesses and the self-employed.

Rt Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, has written to Rt Hon. Philip Hammond MP, Chancellor of the Exchequer, to urge caution over the implementation of the Making Tax Digital reforms.

The letter highlights the need for the Treasury and HMRC to carefully to consider all the comments received on the MTD consultations. …”Given the length of these papers and the complexity of the issues, many of those comments may well not be received much before the closing date of 7 November. Legislating in Finance Bill 2017 means that there will be little time for further development of the proposals between the end of the consultation and the normal date for the publication of draft Finance Bill clauses, around the end of November.”

The letter also highlights come of the issues that have already been put to the committee:

“At first sight, it was a relief to read that many businesses already transact with HMRC digitally for VAT and corporation tax. However, the detail makes clear that the new requirement for digital record keeping and reporting is far more than simply entering a handful of totals (which could come easily from paper or an Excel spreadsheet) into an online VAT return. It is tantamount to prescription by HMRC, for the first time, of a particular form in which accounting records · must be maintained.

The proposal for free digital tools for the smallest businesses with the simplest affairs was welcome. But views can only be formed when there is more information on what will be available, to whom or for what type or level of income and for how long its free availability can be assured. The software industry, the government and the small business sector will have different, and competing, objectives in defining this.

The consultation papers do not make clear how the quarterly updates will align with Universal Credit monthly updates, which will also be needed from the low paid.

There will be an exemption for people whose income is less than £10,000. But this is below the level of the Personal Allowance. So it appears that this concession will only be for those who do not pay tax, including new businesses who would otherwise be obliged by MTD to notify HMRC within four months of starting a business. In such cases, there would be no benefit, to the businesses or to HMRC, if they were to submit quarterly reports.

Those businesses with a turnover of just over £ 10,000 (and with profits offer less than £10,000) will be hardest hit if they are obliged to change their working practices; those who currently employ a book-keeper once a year to prepare their tax return might find themselves having to employ the book-keeper four times a year. This could be very burdensome.” The Chartered Institute of Payroll Professionals Policy News Journal

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The letter also states:

“MTD may improve the customer experience for a growing number of people who are able to engage digitally. For example, so called 'nudges and prompts', if designed properly, could make dealing with HMRC a less intimidating experience; it could provide the facility of 'what if scenarios to give businesses certainty about the tax consequences of their decisions. Implemented carefully, it could do some good. But it could also do much harm.

The consultation is therefore crucial. It needs to be meaningful. There may be a case for delaying the implementation of MTD. A year's extension for an unspecified group of businesses may not be enough.

There may also be merit in piloting the systems. From this, the lessons from customers' experiences can be learnt, and well before digital reporting is made mandatory.

HMRC's proposals are major changes. There remains considerable cause for concern with the proposals. Better to get it right than to stick to a rigid timetable.”

CIPP comment

We would urge employers to get involved in the MTD consultations if you haven’t already.

Webinar There is an Overview of Making Tax Digital for Agents on 25 October 2016, 1pm to 2pm

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 183 of 314 National Insurance

Employment Allowance further guidance for employers 7 April 2016

Employment Allowance guidance has been updated to reflect changes from 6 April 2016.

The guidance for single directors clarifies what action a company or their payroll providers should take where they may have lost eligibility:

Change to Employment Allowance from 6 April 2016

From 6 April 2016, limited companies where the director is the only employee paid earnings above the Secondary Threshold for Class 1 National Insurance contributions will no longer be able to claim Employment Allowance. The Secondary Threshold is £156 a week for the 2016 to 2017 tax year.

A company is no longer eligible for the allowance if:

 only one employee (or director) in the limited company is paid above the Secondary Threshold  that employee is a director of the limited company.

This means that companies with several employees, where the director is the only employee paid above the Secondary Threshold, will no longer be eligible for the Employment Allowance. This change only applies to limited companies.

If you’re self-employed, you won’t be affected by this change.

Stopping your Employment Allowance claim

If you are affected by these changes and at the start of the tax year your company is no longer eligible to claim the Employment Allowance, you should stop your claim. Select ‘no’ in the ‘Employment Allowance indicator’ field within your payroll software, and submit an Employment Payment Summary (EPS) to HMRC.

You must ensure you pay the full amount of employer Class 1 National Insurance contributions (NICs), without deducting the Employment Allowance.

These changes will not affect any claims made in previous years.

The additional employee test

If your company circumstances change and more than one employee or director earns above the Secondary Threshold, you’ll be eligible for Employment Allowance for the whole tax year. This includes companies where:

 all employees are directors where both earn above the Secondary Threshold  the company employs husband and wife directors where both earn above the Secondary Threshold  the company employs seasonal workers where one or more is an employee earning above the Secondary Threshold in a week  where you’re the only UK based employee of an international company that meets the other eligibility criteria, and you earn above the Secondary Threshold in a week.

The decisive factor is that the additional employee(s) must be paid above the Secondary Threshold (£156 in the tax year 2016 to 2017).

Directors must be paid above the annual Secondary Threshold (£8,112 for 2016 to 2017, or pro-rata if the directorship began after the start of the tax year).

Changes in the year

If your company has several employees paid above the Secondary Threshold, but your circumstances change during the tax year and the director becomes the only employee paid above the Secondary Threshold, you can still claim the Employment Allowance for the tax year. You should stop it for the following tax year, unless there are further changes to your circumstances and a further employee is taken on and paid above the Secondary Threshold.

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Application for deferment of payment of Class 1 National Insurance contributions (CA72A) 14 April 2016

Form CA72A has been updated for the 2016-17 tax year along with guidance notes on applying to defer payment of Class 1 National Insurance contributions.

If an employee has more than one job and expects to pay primary Class 1 NICs on earnings of at least: o £827 each week, (£3,583 each month) throughout the whole tax year in one job o £982 each week, (£4,255 each month) throughout the whole tax year in 2 or more jobs

They can make a request to defer paying some Class 1 NICs in any other job(s) they have, until HMRC can calculate the correct amount of NICs due after the end of the following tax year.

Application can be made on form CA72A or online through a Government Gateway account. Whilst it is recommended that application is made as soon as possible before 6 April 2016, HMRC will accept applications up to 14 February 2017.

Help and advice on deferment is available: • By telephone to Deferment Services on 03000 560 631 • Or by post to: National Insurance Contributions and Employers Office HM Revenue and Customs BX9 1BX United Kingdom

If HMRC allow an employee to defer they will let you know:

• Which employer will have to pay Class 1 NICs with (the main employer(s)) • Which employer(s) you can defer payment with and will send the deferring employer(s) a deferment certificate that asks them to deduct at the additional Class 1 primary percentage rate of 2% on all earnings above the PT during the 2016 to 2017 tax year.

The employer will also be asked to adjust their records to reflect the deferment table letter in use and, if applicable provide a refund of any over deductions during 2016-17.

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Rates and allowances: National Insurance contributions 12 May 2016

An error was identified relating to the monthly NIC threshold for this tax year, which has now been corrected.

The monthly threshold held at Rates and allowances: National Insurance contributions section 1.2 was showing the threshold as being £3584, whereas the correct amount should be £3583.

This has now been amended. Thank you to one of our members for letting us know and to HMRC and GOV.UK for their prompt action.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 185 of 314 National Insurance numbers with prefix KC 11 July 2016

A small number of National Insurance numbers with prefix KC have been issued; HMRC are assuring employers that these are valid and should be used as normal.

HMRC has published the message below on the Basic PAYE Tools (BPT) error messages and the Pay As You Earn (PAYE): service availability and issues pages on GOV.UK.

We are aware that a small number of National Insurance numbers with prefix 'KC' were issued recently and that these are causing some problems for our customers.

The National Insurance numbers with the prefix 'KC' are valid and customers receiving them should use them as normal.

If you are experiencing issues when submitting Real Time Information (RTI) data for an employee with this National Insurance number, the following steps should be taken:

 the National Insurance number field should be left blank  you should make sure the employee address field is completed in those cases  if you/your employee has a 'KC' National Insurance number, they don't need to request a new one

We are working hard to resolve this issue quickly and will provide more information shortly.

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National Insurance numbers with prefix KC 26 August 2016

From 15 November 2016 you will be able to submit Real Time Information data for employees using National Insurance number prefix KC.

HMRC’s Software Developers Support Team (SDST) has provided the following information which will be used to update the PAYE Service Issues page:

"In July we told you that a small number of our customers were experiencing when submitting Real Time Information (RTI) data for employees with National Insurance numbers with prefix 'KC'

From 15 November 2016 customers will be able to submit Real Time Information data for employees using this National Insurance number prefix.

However we are aware that some software products, including HMRC's Basic PAYE Tools, will not be updated before April 2017. If this applies to you then you should continue to follow this guidance when submitting your Real Time Information:

 the National Insurance number field should be left blank . you should make sure the employee address field is completed in those cases.

If you/your employee has a 'KC' National Insurance number, they don't need to request a new one. You should continue to apply tax codes and notices you receive from us in the normal way"

SDST has also advised that updated RIM artefacts for RTI will be provided shortly, along with confirmation of the release dates for the TPVS, VSIPS and LTS test services. The NINO validation will be changed as follows:

 The characters D F I Q U and V are not used as either the first or second letter of a NINO prefix.  The letter O is not used as the second letter of a prefix.  Prefixes BG, GB, KN, NK, NT, TN and ZZ are not to be used.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 187 of 314 National Minimum Wage/Living Wage

Low Pay Commission report on National Minimum Wage 18 March 2016

The Low Pay Commission (LPC) has published its 2016 Spring Report on the NMW. The core focus of the report is the recommendations on the rates affecting workers under 25 and apprentices to apply from 1 October 2016 which the government has accepted.

The report includes the underlying evidence base, including extensive analysis of trends in growth, employment and pay. The report also provides analysis of the National Living Wage, which comes into force on 1 April 2016 for workers aged 25 and over, and sets out the preliminary views on how the LPC will approach making recommendations on its future path.

The government has also confirmed that it will be aligning the cycle of the National Minimum Wage and the National Living Wage from April 2017. This means that the recommendations will last 6 months rather than the usual 12. As a consequence, the LPC will be making further recommendations in the Autumn on the level of all minimum wage rates (including the National Living Wage) from April 2017. To inform the next recommendations, the LPC will be consulting again in the Spring.

Structure, level and increases in the 2016 Spring Report on the NMW.

From October Current level From April 2016 Increase 2016-April 2017 National Living Wage £7.20 £7.20 n/a Adult rate (21+) £6.70 (25+) Adult rate (21-24) £6.70 £6.95 3.7% Youth Development £5.30 £5.55 4.7% Rate (18-20)

16-17 Year Old £3.87 £4.00 3.4% Rate

Apprentice Rate £3.30 £3.40 3%

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National Minimum and Living Wage guidance 1 April 2016

The Department for Business, Innovation and Skills (BIS) has published updated guidance on calculating the minimum wage which includes the new National Living Wage.

The guidance on calculating the minimum wage therefore also applies to workers entitled to the National Living Wage and covers eligibility, calculation, working hours to be included and enforcement of the minimum wage.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 188 of 314 National Minimum Wage and National Living Wage law enforcement 4 April 2016

The policy on HMRC enforcement, prosecution and naming employers who break national minimum wage law has been updated to reflect changes which came into effect on 1 April 2016.

The Department for Business, Innovation and Skills (BIS) is responsible for National Minimum Wage and National Living Wage policy, which HMRC enforces.

The document on National Minimum Wage and National Living Wage law enforcement sets out the policy civil and criminal enforcement and the policy on naming employers who break minimum wage law.

National Living Wage The National Living Wage applies to workers aged 25 and over from 1 April 2016. This new rate of pay was introduced through amendment to the National Minimum Wage Regulations 2015 to ensure that the rules that apply to the National Minimum Wage rates for workers aged under 25 also apply to workers entitled to the National Living Wage. In line with the policy set out in the minimum wage law document, HMRC will enforce the National Living Wage as part of the National Minimum Wage framework.

Financial penalty increase The Government has increased the penalties imposed on employers that underpay their workers in breach of the minimum wage legislation from 100% to 200% of arrears owed to workers. The increased National Minimum Wage penalty came into effect on 1 April 2016. The revised penalty applies to any notice of underpayment relating to a pay reference period beginning on or after 1 April 2016. The maximum penalty is £20,000 per worker. The revised penalty is calculated as 200% of the total underpayment for all of the workers specified in a Notice of Underpayment relating to pay reference periods that commence on or after 1 April 2016. Where this amount would be less than £100, the minimum penalty of £100 should still be applied. Where this amount would be more than £20,000, the maximum penalty of £20,000 per worker should be applied. The penalty is reduced by 50% if the unpaid wages are paid within 14 days.

Naming and shaming If HMRC investigates an employer that is breaking minimum wage law they will be issued with a Notice of Underpayment by HMRC. This is a formal notice that sets out the arrears of minimum wage to be repaid by the employer together with the penalty for non-compliance with the requirement to pay workers the minimum wage. An information sheet is given to the employer at the start of the investigation which sets out details about the BIS naming scheme. The employer will have 28 days to appeal against the Notice of Underpayment issued by HMRC. If the employer does not appeal or an appeal has been unsuccessful HMRC will refer the employer to BIS for automatic naming under the scheme.

Further details can be found in the policy document on National Minimum Wage and National Living Wage law enforcement.

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Consultation on the National Living Wage and National Minimum Wage rates 18 April 2016

A consultation has been published which is seeking evidence to inform the Low Pay Commission's report on the path of the National Living Wage and the National Minimum Wage rates to apply from April 2017.

The Low Pay Commission (LPC) has launched a consultation on the level of the UK’s minimum wage rates to apply from April 2017- 2018, on which they have been asked to make recommendations to the Government by October 2016. The background being the recent introduction of the National Living Wage (NLW), a higher rate for workers aged 25 and over. For the NLW, the LPC are asked to advise on the path to 60 per cent of median earnings by 2020 ‘subject to sustained economic growth’.

For the rates affecting those aged under 25 and apprentices, the LPC are asked to continue to make recommendations on their traditional basis of ‘helping as many low-paid workers as possible without damaging their employment prospects’. All the rates are being aligned to run from April.

On the National Living Wage, the LPC are particularly interested in:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 189 of 314  evidence on the effect of the introductory rate of £7.20 on workers, employers, the labour market and the economy - including how firms and workers are adjusting and impacts on pay, terms and conditions, income, hours, progression, employment and competitiveness;  views of the projected ‘on target’ rate for April 2017. The figure will change between now and the autumn as new pay data and forecasts are published but the current estimate is to be around £7.60 in April 2017, rising to just over £9 by 2020.  views on the LPC’s proposed approach to making recommendations on the NLW (set out in the consultation letter).

On the other minimum wage rates (21-24, 18-20, 16-17, apprentices), the LPC are particularly interested in:

 views on how to adjust the level of the recommendations given that an April 2017 increase will come six months after the forthcoming October 2016 increases. This reflects the fact that the NLW was introduced on a different calendar to the other rates whose schedule is being revised to align with it. The consequence is two increases in 18 months rather than the 24 that would otherwise apply.  evidence on the impact of the rates on younger workers’ employment prospects including evidence on how widely the new 21-24 Year Old Rate is used, and whether the NLW has affected the employment prospects of workers aged under 25.

Full questions are in the consultation letter. The deadline for responses to the consultation is 5pm on 29 July 2016.

CIPP comment Look out for a survey on this as the Policy Team will be asking for your views and experiences.

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National Living Wage: LPC looking for volunteers 22 April 2016

The Low Pay Commission are looking for volunteers to take part in some research which will enable them to monitor anonymised payroll data to track over time what the true impact of the National Living Wage is.

The gains to the business are:

a) providing hard evidence of NLW impacts with the potential to influence policy b) possible insights into how staff are progressing over time.

Volunteer costs, as such would be limited to time to provide the information and managing concerns re confidentiality. We would like to stress that what is being looked for is anonymised payroll data only at company level i.e. pay and hours.

If any members with minimum wage employees would be interested in helping the LPC with their research, please email policy with LPC NLW research in the subject box.

Think Tank The CIPP Policy Team is also in the process of organising a National Living Wage and National Minimum Wage 2017 Think Tank, to be held in London in June (date TBC), to support the survey research and our consultation submission to the LPC consultation paper.

If anyone outside of the Greater London Area is interested in attending, please email policy with NLW NMW Think Tank in the subject box.

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National Minimum Wage: Employer compliance 12 May 2016

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 190 of 314 A report from the National Audit Office (NAO) shows that HMRC has significantly reduced the average time taken to investigate complaints about employers’ non-compliance with the National Minimum Wage; however some complainants still have to wait over 240 days to get their cases resolved.

Since the government began enforcing the National Minimum Wage in April 1999, HMRC has identified £68 million in arrears for over 313,000 workers, according to the NAO’s report Ensuring employers comply with National Minimum Wage regulations. The number of workers identified as being owed arrears in 2015-16 was 58,000 compared to 26,000 in 2014-15.

The NAO’s analysis of HMRC’s caseload (as at December 2015), shows that 72% of open cases are less than 120 days old compared to 42% in December 2013. The time taken to investigate complaints varies considerably and depends on a number of factors such as the complexity of cases and the co-operation of the employer.

Amyas Morse, head of the NAO said:

“With the implementation of the National Living Wage, it is even more important that the government ensures its compliance programme reflects the changing risks within the labour market, and maintains its progress in ensuring all employers pay the minimum wage. The government also needs to reduce the time it takes to investigate complaints and resolve cases.”

The report finds that non-compliance with the National Minimum Wage in the social care sector remains a concern. The Low Pay Commission continues to assess this sector as high risk and has previously reported that up to 10.6% of care workers may not be paid the National Minimum Wage. The Department for Business, Innovation and Skills (BIS) re-classified the social care sector as a high priority sector for 2015-16.

There is no accurate overall measure of non-compliance with the National Minimum Wage regulations and, as a result, it has been difficult to assess the effectiveness of HMRC enforcement activities over time. The government has increased the resources available for compliance and enforcement with the National Minimum Wage.

The NAO finds that the number of referrals passed to HMRC from the helpline has reduced significantly in the year ending December 2015 from 2,327 in 2015 to 1,340 in 2015. In April 2015, BIS changed the operator of the helpline and is now assessing how this change, and other factors, have affected the number of calls.

Both BIS and HMRC have strengthened the sanctions which they are able to apply to non-compliant employers. Since October 2014, BIS has regularly named and shamed non-compliant employers. Between October 2013 and February 2016, it has published the details of 490 employers who failed to pay their workers the National Minimum Wage. Between 2009-10 and 2015-16, HMRC has imposed penalties of nearly £5.6 million on non-compliant employers, and has prosecuted nine employers who fit the criteria set by BIS.

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Age Discrimination and the National Living Wage 10 June 2016

A debate has taken place in the House of Commons on age discrimination and the National Living Wage (NLW).

The findings of the debate have yet to be published but we would assume they will help inform the Low Pay Commission’s report to government due in October. A debate pack was produced ahead of the meeting which has all relevant minimum wage information to inform the debate, including detail from the Office for Budget Responsibility (OBR) estimating the direct effect the NLW will have on earnings.

According to the OBR around ¾ million people aged 25 and over would move from receiving the NMW to the higher NLW. Just under 2 million people would move from having hourly earnings between the £8.25 assumed NMW rate and the £9.35 assumed NLW rate to at least the NLW rate. Hourly earnings of around £9.35 would place an individual at the 16th percentile of the earnings distributions. Assuming the spillover effects extend to the 25th percentile implies that an additional 3.5 million people will also be affected, taking the total number of people affected to around 6 million.

Assuming no change in employment hours worked, the NLW would result in a 0.3 per cent increase in whole economy compensation of employees, which employers could respond to in a variety of ways, including:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 191 of 314  reducing hours;  reducing jobs;  replacing over 25s with younger workers; or  increasing prices.

It is estimated that as a result of the NLW, by 2020 there would be 60,000 fewer jobs that there would otherwise have been.

The introduction of the NLW alongside a new 21-24 year old age band led to renewed interest in the rationale behind NMW age-banding, fears that workers over 25 would be discriminated against in favour of younger, cheaper workers.

The rationale for minimum wage age banding has typically been that younger workers occupy a more vulnerable position in the labour market, with a greater need to acquire experience and that if younger workers were eligible for the full minimum wage they might be priced out of the labour market.

The LPC has always supported lower minimum wages for younger workers.

CIPP comment

A consultation has been published which is seeking evidence to inform the Low Pay Commission's (LPC) report on the level of the UK’s minimum wage rates to apply from April 2017- 2018, on which they have been asked to make recommendations to the government by October 2016.

On the National Living Wage, the LPC are particularly interested in evidence on the effect of the introductory rate of £7.20 on workers, employers, the labour market and the economy - including how firms and workers are adjusting and impacts on pay, terms and conditions etc. and also views of the projected ‘on target’ rate for April 2017 - the current estimate is to be around £7.60 in April 2017, rising to just over £9 by 2020.

The CIPP Policy Team will be running a survey shortly and will also be hosting a think tank with the Low Pay Commission later this month to help inform the report.

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CIPP Survey: your views and experiences on the impact and rates of the NLW and NMW 13 June 2016

The CIPP Policy & Research team has produced a survey to aid in the gathering of data and experiences from employers and payroll professionals that will help to measure the impact of the National Living Wage and the National Minimum Wage.

Background

The Low Pay Commission (LPC) recently published a consultation which seeks to gather evidence to inform the Low Pay Commission's report on the path of the National Living Wage and the National Minimum Wage rates to apply from April 2017.

Set against the background of the recent introduction of the National Living Wage (NLW), a higher rate for workers aged 25 and over, the Low Pay Commission have been asked also to advise on the path to 60 per cent of median earnings by 2020 ‘subject to sustained economic growth’.

For the rates affecting those aged under 25 and apprentices, the LPC have been asked to continue to make recommendations on their traditional basis of ‘helping as many low-paid workers as possible without damaging their employment prospects’. All the rates are being aligned to run from April 2017.

On the National Living Wage, the LPC are particularly interested in:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 192 of 314  evidence on the effect of the introductory rate of £7.20 on workers, employers, the labour market and the economy - including how firms and workers are adjusting and impacts on pay, terms and conditions, income, hours, progression, employment and competitiveness;  views of the projected ‘on target’ rate for April 2017. The figure will change between now and the autumn as new pay data and forecasts are published but the current estimate is to be around £7.60 in April 2017, rising to just over £9 by 2020.  views on the LPC’s proposed approach to making recommendations on the NLW (set out in the consultation letter).

On the other minimum wage rates (21-24, 18-20, 16-17, apprentices), the LPC are particularly interested in:

Your views and evidence from this survey will feed in to the CIPP written response and provide statistical data to support the views also being gathered at a CIPP roundtable being held in London on 14 June 2016.

The survey will close on Monday 1 July. Thank you for your input to this survey, we estimate that it will take between 10 minutes to 25 minutes to complete depending on additional supporting narrative and/or data you provide.

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National Minimum Wage and National Living Wage 16 June 2016

Sports Direct is one of the latest businesses to come under fire for not adhering to national minimum wage regulations.

Britain’s largest union, Unite, has been leading a campaign against ‘shameful’ work practices at Sports Direct. Unite revealed to a select committee that some workers received their wages through pre-paid debit cards; costing £10 to get, workers are charged £10 a month in ‘administrative fees’ for the card, as well as 75 pence for cash withdrawals.

As well as Sports Direct tycoon Mike Ashley admitting workers were paid below the minimum wage, the committee also heard how workers, if they were one minute late at the retailer’s Shirebrook warehouse, were docked 15 minutes' pay.

It also emerged that The Best Connection was charging workers a fee of over £2.45 for ‘insurance services’ straight from their weekly wages with no explanation.

Penalties for failure to comply With the introduction of the National Living Wage in April the penalty for non-payment is 200% of the amount owed, unless the arrears are paid within 14 days. The maximum fine for non-payment is £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.

Acas has useful information and guidance on both The National Living Wage and National Minimum Wage.

CIPP comment The CIPP Policy & Research team has produced a survey to aid in the gathering of data and experiences from employers and payroll professionals that will help to measure the impact of the National Living Wage and the National Minimum Wage. The survey will close on Monday 1 July 2016.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 193 of 314 Summary of the National Minimum Wage (Workplace Internships) Bill 2016- 17 5 July 2016

This National Minimum Wage (Workplace Internships) Bill 2016-17 is expected to have its second reading debate on Friday 4 November 2016.

This Bill which looks to require the Secretary of State to apply the provisions of the National Minimum Wage Act 1998 to workplace internships; and for connected purposes was presented to Parliament for its first reading on Wednesday 29 June 2016 and there was no debate on the Bill at this stage.

This Bill is a Private Member’s Bill. A Private Member’s Bill is often not printed until close to the second reading debate. If you wish to know more about this bill you can contact the sponsor Alec Shelbrooke.

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Early evidence on the impact of the National Living Wage 22 July 2016

The Resolution Foundation has published research which shows that reduced employment does not appear to be the primary response employers make to a rising wage floor, such as the National Living Wage introduced in April 2016.

The Resolution Foundation has combined official data and a bespoke survey to better understand employers’ initial reaction to the announcement and implementation of the National Living Wage (NLW) and their plans for the future. They have also considered the implications of the Brexit vote for the future trajectory of the NLW.

The analysis of early employment indicators and the survey of employers supports the conclusion of much previous research on the National Minimum Wage (NMW): reduced employment does not appear to be the primary response employers make to a rising wage floor. Not predicting precisely how employers will move forward as the NLW increases further, especially with the uncertainty surrounding the UK’s departure from the EU, the Resolution Foundation’s survey suggests that lower employment represents the primary strategy for only a handful of employers.

The most common response in the survey was to raise prices with customers facing higher costs as a result. Analysis of the impact of the NMW found that while there was little evidence of overall inflation being higher, prices in industries most dependent on minimum wage workers including takeaways, hotels and domestic services, did rise considerably faster than higher-paying sectors. Again, past evidence can only be a guide to future responses particularly when wage increases are so much larger.

According to the Resolution Foundation the UK’s vote to leave the EU will have important consequences for the NLW’s trajectory. “Should projections which envisage real wage growth slowing, the NLW by 2020 is likely to prove difficult to implement for many firms in low-paying sectors. The Low Pay Commission’s expertise will be of particular value in the coming years, drawing upon analysis of the impact increases are having to date, how the most-affected sectors are reacting and what path ahead can deliver for low-paid workers, without putting their jobs at risk.”

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NMW guidance and enforcement – did you know? 3 August 2016

A recent question within the Low Pay Commission consultation on NMW and NLW rates got us thinking about what information can be found on the subject of compliance enforcement within HMRC.

Looking back over recent issues of CIPP Policy News articles – which can be found in the Policy News Journal – we thought we might provide a reminder on where guidance can be found on various aspects of operating and complying with the National Minimum Wage and National Living Wage.

National Minimum and Living Wage guidance

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 194 of 314 The Department for Business, Innovation and Skills (BIS) has published updated guidance on calculating the minimum wage which includes the new National Living Wage.

National Minimum Wage and National Living Wage law enforcement

The policy on HMRC enforcement, prosecution and naming employers who break national minimum wage law was updated with changes which came into effect on 1 April 2016.

The Department for Business, Innovation and Skills (BIS) is responsible for National Minimum Wage and National Living Wage policy, which HMRC enforces.

The document on National Minimum Wage and National Living Wage law enforcement sets out the policy civil and criminal enforcement and the policy on naming employers who break minimum wage law.

National Living Wage

The National Living Wage applies to workers aged 25 and over from 1 April 2016. This new rate of pay was introduced through amendment to the National Minimum Wage Regulations 2015 to ensure that the rules that apply to the National Minimum Wage rates for workers aged under 25 also apply to workers entitled to the National Living Wage. In line with the policy set out in the minimum wage law document, HMRC will enforce the National Living Wage as part of the National Minimum Wage framework.

Financial penalty increase

The Government has increased the penalties imposed on employers that underpay their workers in breach of the minimum wage legislation from 100% to 200% of arrears owed to workers. The increased National Minimum Wage penalty came into effect on 1 April 2016. The revised penalty applies to any notice of underpayment relating to a pay reference period beginning on or after 1 April 2016. The maximum penalty is £20,000 per worker. The revised penalty is calculated as 200% of the total underpayment for all of the workers specified in a Notice of Underpayment relating to pay reference periods that commence on or after 1 April 2016. Where this amount would be less than £100, the minimum penalty of £100 should still be applied. Where this amount would be more than £20,000, the maximum penalty of £20,000 per worker should be applied. The penalty is reduced by 50% if the unpaid wages are paid within 14 days.

Naming and shaming

If HMRC investigates an employer that is breaking minimum wage law they will be issued with a Notice of Underpayment by HMRC. This is a formal notice that sets out the arrears of minimum wage to be repaid by the employer together with the penalty for non-compliance with the requirement to pay workers the minimum wage. An information sheet is given to the employer at the start of the investigation which sets out details about the BIS naming scheme. The employer will have 28 days to appeal against the Notice of Underpayment issued by HMRC. If the employer does not appeal or an appeal has been unsuccessful HMRC will refer the employer to BIS for automatic naming under the scheme.

Further details can be found in the policy document on National Minimum Wage and National Living Wage law enforcement.

HMRC have also produced a webinar on the subject of the National Minimum Wage to add to their range of educational material to help employers on the far reaching subject of employment. You can register to receive alerts when a new webinar is scheduled via HMRC subscription service

The Policy News Journal is updated every two weeks.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 195 of 314 Living Wage Champion Awards Open 5 August 2016

The Living Wage Champion Awards celebrate individuals and organisations that have made a real difference by supporting the Living Wage movement.

The Awards are open to accredited Living Wage Employers, Recognised Service Providers and individuals who have made an outstanding contribution to the campaign.

These awards celebrate the organisations that have done the most to implement, promote and celebrate the Living Wage in their regions during 2016. Judges will be looking for evidence that organisations have gone above and beyond to promote the Living Wage.

The Living Wage Foundation will announce Employer Champions for each region of the UK, as well as - for the first time ever – three Anniversary Awards; special commendations for individuals that have shown great leadership over a length of time.

The Awards are free to enter and the closing deadline for applications is 2 September 2016. The winners are announced during Living Wage Week 2016, a UK-wide celebration of the Living Wage and Living Wage Employers, which takes place from 31 October to 5 November 2016.

For full details of categories and entry requirements, see the Living Wage Champion Awards page.

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Largest ever list of National Minimum Wage offenders published 15 August 2016

The largest list of employers to be named and shamed for failing to pay their workers the National Minimum Wage has been published.

197 employers who failed to pay their workers the legal minimum have been publicly named.

Between them, the 197 companies named owed £465,291 in arrears, across a range of employers including:

 Football clubs  Hotels  Care homes  Hairdressers.

The Department for Business, Energy and Industrial Strategy said all of the money owed to these workers has been paid back to them.

Since the scheme was introduced in October 2013, 687 employers have been named and shamed, with total arrears of more than £3.5 million.

The National Living Wage for workers aged 25 and over was introduced in April this year, which has meant a pay rise of more than £900-a-year for someone previously working full time on the National Minimum Wage. For workers under the age of 25, the National Minimum Wage still applies. It is an employer’s responsibility to be aware of the different minimum wage rates depending on the circumstances of their workers – and to make sure all eligible workers are paid at least the minimum rate they are entitled to.

The National Living Wage will be enforced equally robustly alongside the National Minimum Wage.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 196 of 314 £1m in back pay for non-payment of National Minimum Wage 17 August 2016

Unite union has secured a minimum wage victory for Sports Direct workers who are set to receive back pay totalling an estimated £1 million for non-payment of the minimum wage.

96 per cent of Unite members directly employed by Sports Direct at Shirebrook backed the deal secured by Unite. The payments, back dated to May 2012 for direct employees and agency workers, cover unpaid searches at the end of shifts and could be worth up to £1,000 for some workers, the union estimates.

Workers directly employed by Sports Direct and through the employment agency The Best Connection are expected to start receiving the back pay in full towards the end of August.

However, Unite understands that as many 1,700 Transline agency workers at the site may only initially receive half the back pay they are owed because of Transline’s refusal to honour its commitments from when it took over from Blue Arrow at Shirebrook two years ago.

The back pay follows an admission by retail tycoon Mike Ashley of non-payment of the minimum wage at a recent hearing of the House of Commons Business, Innovation and Skills (BiS) select committee. The hearing followed a sustained campaign by Unite and undercover reports by the Guardian and the BBC’s Inside Out team.

Commenting Unite assistant general secretary Steve Turner said: “This is a significant victory in Unite’s ongoing campaign to secure justice and dignity at work for workers at Sports Direct and demonstrates the importance of modern trade unions in Britain today.

“But investors and customers alike should not be fooled into thinking that everything is now rosy at Sports Direct’s Shirebrook warehouse. Transline, one of the employment agencies involved, is disgracefully still trying to short-change workers by seeking to duck its responsibilities.

Transline and The Best Connection supply over 3,000 agency workers to work for Sports Direct in its Shirebrook warehouse. In 2014 Transline was stripped of its license to supply labour to the food industry.

Both Transline and The Best Connection were warned of being in contempt of parliament and lying when the BIS committee recently published its report into employment practices at Sports Direct.

On the use of employment agencies Unite assistant general secretary Steve Turner went on to warn:

“Mike Ashley and the Sports Direct board should be under no illusions. The charge of ‘Victorian’ work practices will continue to weigh heavily on Sports Direct until it moves long standing agency workers onto direct, permanent contracts and weans itself off its reliance upon zero hours contracts.

“Unite will seek to engage constructively with Sports Direct where possible and urges the retailer to continue dialogue with us so that we can assist it in meeting Mike Ashley’s ambition of being an exemplar employer.”

Read the full press release from Unite union.

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The National Minimum Wage (Amendment) (No. 2) Regulations 2016 30 September 2016

The Regulations that amend the National Minimum Wage Regulations 2015 come into force on 1 October 2016.

The National Minimum Wage (Amendment) (No. 2) Regulations 2016 amend the National Minimum Wage Regulations 2015:

Geographical extent – The National Minimum Wage Regulations apply to all four nations in the UK.

These Regulations come into force on 1st October 2016 and make the following changes:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 197 of 314  Adult rate (21-24) increases from £6.70 to £6.95  Youth Development Rate (18-20) increases from £5.30 to £5.55  16-17 Year Old Rate increases from £3.87 to £4.00  Apprentice Rate increases from £3.30 to £3.40  accommodation offset increases from £5.08 to £5.35

Further information on the National Minimum Wage and National Living Wage rates is available on GOV.UK.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 198 of 314 PAYE (Pay As You Earn)

Aligning national insurance and income tax

Aligning national insurance and income tax 10 March 2016

The OTS has published the findings of a detailed review into bringing the two payroll taxes closer together which includes a seven stage closer alignment plan.

The Office of Tax Simplification (OTS) has published the findings of a detailed review into bringing the two payroll taxes closer together to create a simpler and more modern system.

The review recommends a seven-stage programme to closer alignment as outlined below, to achieve a system more aligned to current and future working patterns, but cautions that the impacts need to be carefully understood and considered.

1. Move to an annual, cumulative and aggregated assessment period for employee NICs as happens with PAYE and income tax. This could mean many people paying more NICs and many paying less NICs. 2. Base employers’ NICs on whole payroll costs. This would be easier to understand and reduce distortions from fragmented hours. 3. More closely align the NICs position for the UK’s 4.7m, and rising, self-employed with that of employees. This would remove complexity and could potentially deliver more benefits. 4. Critically review the contributory principle, but first increase understanding of what it really does – and doesn’t – do; for example, finding people who believe that NICs pays for the NHS and that they need to have a full contributions record to qualify for NHS treatment is worrying. 5. Align the definition of earnings for IT and NICs and the reliefs available for IT and NICs to make it more equal for employees and cut the burden of managing the differences for employers. 6. In the same way, bring taxable benefits in kind fully into NICs to remove the distortions in the NICs treatment of non-cash pay. 7. Harmonise the rules governing the management of IT and NICs, and their administration, including setting up a method so that any changes can operate automatically for both taxes, to make it easier for employers and HMRC to administer the system and reduce unnecessary differences.

The OTS review concludes there would need to be a well-signposted path to this major reform with clear explanations to ensure all groups were well aware of the implications.

The CIPP Policy Team will be consulting with the payroll profession on this so watch out for a survey in the coming weeks.

Read the full review - Closer alignment of income tax and national insurance contributions

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Income tax and National Insurance alignment 13 May 2016

The Office for Tax Simplification (OTS) has published the terms of reference for its second phase review of income tax and national insurance alignment

The government has asked the OTS to undertake two further reviews, building on the work and recommendations in its earlier reports:

1. a review on the impact of moving employee NICs to an annual, cumulative and aggregated basis (‘ACA’) similar to PAYE income tax. NICs is currently calculated on a pay period basis; and 2. a review on the reform of employer NICs to a payroll based charge.

Whilst these structural changes could be considered in isolation, if the basis of assessment for Class 1 primary NICs moves to ACA, it would be natural to review the basis for Class 1 secondary NICs at the same time. The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 199 of 314

The OTS will publish a further report ahead of Autumn Statement 2016. The government will then respond in full on all the OTS’s proposals to bring IT and NICs closer together.

The merger of IT and NICs, the extension of NICs to non-earned income or to pension income, and international cross- border issues, are outside the scope of these specific reviews. However, the OTS has received (and will no doubt continue to receive) a range of views on these issues, and may reflect these where they contribute to future debate on simplification.

The report will set out who might pay less and who might pay more (the ‘gainers and losers’), and the benefits and challenges of an ACA system of employee’s NICs and a payroll tax system of employer NICs including implementation and transitional issues.

The report is contingent on the availability of new data within the timescale, either based on deeper analysis of existing sources or on commissioning new data sets.

The report will enhance understanding and engagement with these issues with all impacted parties.

CIPP comment The Policy Team will continue to be involved in all consultation and will be asking for your input so please watch out for more news on this complex area

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 200 of 314 Employee Share Schemes

User testing to improve 2015-16 share scheme returns – are you ready to file? 6 April 2016

The Employment-related Securities (ERS) Bulletin No 22 (April 2016) has been published and provides details of a staggered release of the 2015-16 returns service.

HMRC are also looking for some customers who would be willing and able to upload either an EMI or Other template and file as soon as the service goes live on 6 April. This would enable them to track your submission through the service and ensure there are no issues. If you feel this is something you would be able to help us with, again, do please get in touch with HMRC ERS team via email.

Following the technical difficulties encountered last year by the ERS service, HMRC have been working hard to make improvements to the service. These improvements are being user tested thoroughly to avoid further problems as customer look to file 2015-16 annual returns.

User testing is vital to ensure that the system that is designed is fully fit for purpose and useful to customers, who will use the service, when they come to submit a live return. During research customers won’t be asked to submit live data. If you would like to support this work and be involved with the user testing please contact the ERS team by email.

As part of this work, HMRC will be releasing the returns service in stages and have prioritised the schemes and file formats most commonly used for release first. As at the 6 April the service will accept submissions of EMI (Enterprise Management Incentives) returns in .ods format and submissions for ‘Other’ (non-tax advantaged arrangements) in .ods format.

Submissions of SIP (Share Incentive Plan), SAYE (Save as You Earn) and CSOP (Company Share Option Plan) returns in .ods, and those in the less widely used .csv format, will be accepted a few weeks later around the end of April 2016.

If you create your own CSV files using the published technical guidance, which is recommended if you have more than 10,000 lines of data, then these will not be accepted online until the end of May 2016. You can however and in the meantime, check your CSV files for formatting errors using the Employment related securities (ERS) checking service.

Customer filing patterns In line with other taxes, the majority of customers choose to file towards the end of the filing period with 80% filing in June 2015 for the 6 July deadline. As a result it is anticipated that the impact of the reduced service during April and May will be minimal.

An Employment Related Securities Bulletin – issue 22 can be viewed on the Gov.uk website.

The templates for 2014-15 will be withdrawn from 6 April. Any companies that still need to submit a 14-15 return can do so on the 15-16 template, selecting the relevant return year within the service.

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Consultation on employee share schemes NIC elections 22 April 2016

A consultation has been published on whether companies with non tax-advantaged share schemes require the continued availability of a National Insurance Contribution (NIC) election.

A NIC election is the means of legally transferring to the employee the Employer’s Class 1 NIC obligation on the occasion of chargeable events in connection with employment-related securities options, and with restricted or convertible employment-related securities.

This consultation is designed to gather views and evidence from companies with nontax-advantaged share schemes about whether there is a need for the continued availability of a NIC election. NIC agreements will continue to be available. The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 201 of 314

The consultation is particularly relevant for accounting and legal advisers of companies which offer non tax- advantaged share schemes, particularly multinational companies with UK employees.

The deadline for responding to this consultation is13 July 2016; by email to [email protected] or by writing to Employee Shares & Securities Unit, HM Revenue and Customs, Room G53, 100 Parliament Street, London, SW1A 2BQ.

If you would like the Policy Team to respond on your behalf, please email us with NIC elections in the subject box.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 202 of 314 Expat News

Expat starter checklist 13 July 2016

An updated version of the starter checklist for employees seconded to work in the UK by an overseas employer has been published, including a printable version.

If you are an employer use this expat starter checklist to record information about a new employee who still has a contract with their overseas employer, but has temporarily come to work for you in the UK.

Further information about PAYE for employees who come to work in the UK, including the differences in calculating and making deductions can be found here.

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Expat tax claim (R38 (Expat)) 15 July 2016

Form R38 (Expat) has been updated with a change of return postal address.

Foreign nationals assigned to the UK, who have paid too much tax and want to claim back the overpayment, can use form R38 (Expat). This form can also be used to authorise a representative to get the payment on their behalf.

Go to GOV.UK for full details.

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Consultation on non-dom reforms 22 August 2016

The government has published the consultation on the reforms to the way that individuals with a foreign domicile (non- doms) are taxed in the UK.

At the Summer Budget 2015, the government announced a series of reforms to the way that individuals with a foreign domicile (‘non-doms’) are taxed in the UK. These changes will bring an end to permanent non-dom status for tax purposes and mean that non-doms can no longer escape a UK inheritance tax (IHT) charge on UK residential property through use of an offshore structure like a company or a trust.

At the Autumn Statement 2015, the government made a further announcement that it would consult on how to change the Business Investment Relief rules to encourage greater investment into UK businesses.

A consultation was published in September 2015 setting out the detail of the proposals to deem certain non-doms to be UK-domiciled for tax purposes.

This latest consultation document provides an update on those proposals and sets out the detail of proposals to charge IHT on UK residential property. Much, but not all, of the draft legislation for the reforms is attached to the consultation.

If you would like to respond directly to this consultation, the submission deadline is 20 October 2016.

Email to: [email protected]

Write to: Personal Tax Team HM Treasury 1 Horse Guards Road London SW1A 2HQ

The Chartered Institute of Payroll Professionals Policy News Journal

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CIPP comment The CIPP represent members on the joint forum on the joint forum on Expatriate Tax and National Insurance Contributions. This is a sub group of the main Employment and Payroll Group and is a partnership between HMRC, employers and professional and payroll advisers that acts to improve liaison between HMRC and its customers for the operation of the tax and NICs system for all international secondments of labour, both inbound and outbound.

If you would like to make any comments about this consultation that you would like fed into the next Expat forum, please email policy using ‘non-doms’ as the subject.

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Benchmark Scale Rates for inward assignees 23 August 2016

The 15 hour scale rate can now be applied to inward assignees subject to them meeting the qualifying conditions and provided that there is a robust checking system in place.

Exemption for amounts which would otherwise be deductible: Payments at a benchmark rate

The income Tax (Approved Expenses) Regulations 2016. (SI 2015/1948)

For periods prior to 6 April 2016 see EIM30050.

Employers wishing to pay or reimburse expenses may use the benchmark rates set out in the Income Tax (Approved Expenses) Regulations without needing the prior approval of an officer of Revenue & Customs.

The regulations set out the rates which employers can use for payment or reimbursement of employees expenses where the relevant qualifying conditions are met. These regulations replace the previously published benchmark scale rates (See EIM05230)

These rates are the maximum tax and NICs free amounts that can be paid by employers who choose to use the system. An employer can pay less than these rates if it wants to do so. If a higher payment or expense reimbursement is made without agreeing a bespoke scale rate with HMRC (see EIM30250), any excess over the published rate should be subject to tax and NIC’s.

Although it will no longer be necessary to undertake a sampling exercise to establish that the amount paid is a reasonable estimate of expenses employees actually incur in these circumstances, employers will still need to have a checking process in place, (see EIM30270) and be able to demonstrate that they satisfy the travel and subsistence rules at Section 337 ITEPA 2003 (see EIM32350 onwards) and Section 338 ITEPA 2003 (see EIM32000 onwards).

Rates are set as follows:

Minimum journey time Maximum amount of meal allowance

5 Hours £5 10 Hours £10 15 Hours (and ongoing at 8pm) £25

Where a scale rate of £5 or £10 is paid and the qualifying journey in respect of which it is paid lasts beyond 8pm a supplementary rate of £10 can be paid to cover the additional expenses necessarily incurred as a result of working late.

A meal is defined as a combination of food and drink and would take a normal dictionary meaning. Where employees are required to start early or finish late on a regular basis, the over 5 hour and 10 hour rate, whichever is applicable, can be paid provided that all the other qualifying conditions are satisfied.

Qualifying conditions - Benchmark scale rates must only be used where all the qualifying conditions are met. The qualifying conditions are:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 204 of 314  the travel must be in the performance of an employee’s duties or to a temporary place of work, on a journey that is not substantially ordinary commuting.  the employee should be absent from his normal place of work or home for a continuous period in excess of five hours or ten hours.  the employee should have incurred a cost on a meal (food and drink) after starting the journey and retained appropriate evidence of their expenditure.

Employers can pay less than the published rates. If an employer pays less than the published rates, employees cannot claim tax relief on the difference, but if they spend more on expenses than the amount that is reimbursed they can still claim a deduction from HMRC for the difference between what they actually spent on the expense and the amount reimbursed by their employer in the normal manner, subject to their having retained appropriate evidence. If a higher amount is paid without agreeing a bespoke scale rate with HMRC, the excess should be subject to tax and NICs.

An employee can only be reimbursed for a meal once. If the cost of an evening meal or breakfast is reimbursed on an actual basis, because it is included in the cost of an overnight stay, the employee would not also be entitled to a benchmark rate in respect of those meals.

It is a condition of the Income Tax (Approved Expenses) Regulations that employers using the benchmark scale rates to pay or reimburse their employees that they have an appropriate checking system in place to ensure that payments are only made on qualifying occasions. See EIM30270.

Working Rule Agreements – The published scale rates do not apply to employees covered by Working Rule Agreements, for which separate specific rates are already set for particular occupations. See EIM71300. Overnight accommodation rate - A benchmark rate has not been set for overnight accommodation costs. Employers wishing to agree a rate with HMRC for overnight accommodation will need to apply using the bespoke rate process. See EIM30250.

Overnight subsistence rate - The over 15 hour rate for subsistence will almost always apply where an employee is required to stay away overnight, provided the cost of any meals is not also included in an accommodation payment. Staying with friends and family rate - A rate has not been set for a scale rate payment for staying with friends and family. The travel rules still apply to actual costs of subsistence incurred while staying with friends and family. See EIM30073.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 205 of 314 General PAYE News

Rates and thresholds for employers 2016 to 2017 1 April 2016

The rates, allowances and duties have been updated on GOV.UK for the tax year 2016 to 2017.

- PAYE tax and Class 1 National Insurance contributions - Tax thresholds, rates and codes - Class 1 National Insurance thresholds - Class 1 National Insurance rates - Class 1A National Insurance: expenses and benefits - Class 1B National Insurance: PAYE Settlement Agreements (PSAs) - National Minimum Wage - Statutory maternity, paternity, adoption and shared parental pay - Statutory Sick Pay (SSP) - Student loan recovery - Company cars: Advisory Fuel Rates (AFRs) - Employee vehicles: Mileage Allowance Payments (MAPs)

CIPP comment The National Minimum Wage (NMW) section now includes the National Living Wage (NLW) and the statutory payments section now shows that the first six weeks of Statutory Adoption Leave (SAL) is paid at 90% of earnings.

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Scottish S prefix tax codes 15 April 2016

HMRC has fixed the problem that was preventing the Scottish S prefix on tax codes from being shown on the P9s in third party software or the PAYE Desktop Viewer.

The recovery action will result in the reissue of all P9s for schemes which contained any Scottish tax codes and which were accessed via the Data Provisioning Service (DPS). The re-issue of the P9s will be complete by midday on Thursday 17 March 2016.

Employers will receive an email alert notifying them that a new P9 is available. Even if you have previously downloaded the P9 data please do so again to make sure that you have the correct codes for your employees.

HMRC apologise for any inconvenience this issue has caused.

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Check-off u-turn in Trade Union Bill 21 April 2016

The Government has backed away from plans to ban workers from opting to pay their union subscriptions through payroll in the public sector – the system known as ‘check-off’.

The TUC has reported the news that check-off would not be prohibited, as originally intended through the Trade Union Bill. Ministers announced in the House of Lords this week that workers could continue to opt for check-off where unions reimburse any costs to the employer.

TUC General Secretary Frances O’Grady said the TUC are delighted that the Government has listened and that this decision is the result of months of union and TUC lobbying.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 206 of 314 He said that banning workers from choosing to pay union subs in a convenient way through their payroll would, as many have warned, damaged industrial relations and morale in key services.

While acknowledging that this is an important milestone, the TUC remains opposed to the Trade Union Bill in its entirety and will continue to push for further changes when it is debated again in the House of Commons next week.

They will be urging MPs to back sensible amendments from the Lords around the use of electronic balloting, facility time and union political funds.”

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Further consultation on tips, gratuities, cover and service charges 3 May 2016

Further to the call for evidence on tips, gratuities, cover and service charges, the Department for Business, Innovation & Skills (BIS) has published a consultation seeking views on proposals for further action.

Background

In August 2015 the Department for Business, Innovation & Skills (BIS) published a call for evidence on tips, gratuities, cover and service charges.

The call for evidence initially focused on the hospitality sector. BIS also received evidence from other sectors where the payment of tips, gratuities, cover and service charges is commonplace, including gambling, betting, hairdressing and taxi operators.

The CIPP surveyed members and what was apparent from the responses was the low awareness of the Voluntary Code of Practice for payroll practitioners and low visibility for customers on premises where tips and gratuities are administered. There also appears to be a lack of trust in businesses to pass on the full entitlement of tips and gratuities to workers.

Next steps

BIS has reported that their analysis of the call for evidence submissions showed that there is broad agreement that intervention is required to improve the treatment and transparency of these payments.

So BIS has now published a consultation based around three broad policy objectives that they believe all discretionary payments for service should be subject to; they should be:

 clear to consumers that they are voluntary  received by workers  clear and transparent to consumers and workers in terms of how the payments are treated.

CIPP comment The Policy Team will naturally be dissecting the consultation and asking members and the payroll profession for their input so please do watch out for a survey on this subject in the coming weeks.

The consultation runs from 2 May 2016 to 27 June 2016.

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Pension flexibility - reporting of non-taxable death benefits through RTI 4 May 2016

HMRC has highlighted an issue where P6 coding notices are being issued for death benefit payments that are entirely non-taxable.

HMRC provided the following article which will also be published in the next Pension Schemes Newsletter: The Chartered Institute of Payroll Professionals Policy News Journal

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“Pension flexibility - reporting of non-taxable death benefits through RTI

In Pension Schemes Newsletter 72 we gave guidance on the reporting of non-taxable death benefits through RTI from April 2016.

We have received a number of queries from pension payers/providers regarding P6 tax coding notices being issued by HMRC for death benefit payments that are entirely non-taxable (i.e. an entry in data item 173 only of the full payment submission (FPS)).

P6 coding notices are not relevant to these payments. We are currently investigating this to identify why these notices are being issued, however in the meantime scheme administrators should stop reporting these non-taxable death benefit payments with immediate effect. You should continue to keep records of these payments.

You should not report these entirely non-taxable payments at all for 2016 however you will be required to start reporting these again from April 2017 onwards.

This guidance only applies to death benefit payments where the whole of the payment is non-taxable. All other payments including non-taxable elements should continue to be reported as per previous guidance.

Any pension payer/provider who needs further guidance on this please email [email protected] and put reporting non-taxable death benefit payments in the subject line of the email

We are sorry for any inconvenience or confusion this may cause.”

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Payroll Giving approved agencies 6 May 2016

The list of organisations that are approved and monitored by HMRC for the purposes of Payroll Giving has been updated.

This is a list of organisations that can help you to promote Payroll Giving in the workplace, whether using a professional fundraising organisation, staff champions or a chosen charity.

The list doesn’t include all approved Payroll Giving agencies, only those that ask to be included. Some agencies restrict services to particular employers and do not take on other employers.

Approved agencies that are not listed here will be able to produce a letter of approval from HMRC if required by employers.

Employers can contact a Payroll Giving agency to set up a scheme.

Follow this link for further information on Payroll Giving.

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New record for number of payments processed by Bacs 6 May 2016

An impressive 103.7 million payments were processed in just one day in April by Bacs – a new record for the number of transactions in a single day.

That’s the equivalent of 6.7 million payments passing through the Bacs system each hour the processing window was open (15.5 hours), or 111,000 per minute.

The record-breaking figure, set on Thursday 28 April, surpasses the previous daily high of 103 million transactions set just last year on 31 July 2015. The Chartered Institute of Payroll Professionals Policy News Journal

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Making regular payments by Direct Debit has become second nature for millions of consumers, with almost nine-out- of-ten adults in the UK having at least one Direct Debit and around 73 per cent of household bills paid this way. And nearly 90 per cent of the country’s workforce is paid using Bacs Direct Credit and almost one billion welfare payments are made this way every year.

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Changes to internet security in the payments industry 9 May 2016

A reminder for UK businesses to act now to accommodate changes to internet security in June or they could find themselves locked out of secure payment websites.

The global internet community is set to introduce a new and more sophisticated level of internet security and Bacs is again warning businesses to act now to avoid losing access to vital payment services when internet security changes from 13 June 2016.

The changes could have serious implications for UK businesses that use Bacs Payment Schemes Limited (Bacs) to make salary and supplier payments or to collect by payments by Direct Debit.

Bacs highlight ten things all business should know about the new security and its impact:

1. Currently, most secure internet sites are protected by Secure Hash Algorithm-1 SSL, or SHA –1 SSL 2. Bacs is also making the internet more secure 3. Businesses that use Bacs to make or collect payments will be affected 4. Any business that wants to access Bacs via Bacstel-IP will need to make sure they have the right IT in place to support these changes 5. Failure to update a company's systems will mean it is unable to access secure services 6. Bacs is implementing these changes on 13 June 2016 7. Bacs is adopting the new measures before the internet community 8. Ask your IT department for assistance 9. Companies who use a bureau may be affected 10. Banks will support look after companies with smartcards and signing solutions.

See the Bacs website for full details of the10 things businesses need to know about the changes.

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PAYE late filing penalties - continuation of 3-day easement and risk-based approach to charging penalties 20 May 2016

Following a review of the three day easement and risk-assessed approach adopted last tax year which has seen a significant reduction in returns filed late, it has been decided to continue this approach for a further tax year. As a result employers will not incur penalties for delays of up to three days in filing PAYE information during the 2016-17 tax year.

Late filing penalties will continue to be reviewed on a risk-assessed basis rather than be issued automatically.

The three day easement is not an extension to the statutory filing date which remains unchanged. Employers are required to file on or before each payment date unless the circumstances set out in the ‘sending an FPS after payday guidance’ are met. HMRC won't charge a late filing penalty for delays of up to three days after the statutory filing date, however employers who persistently file after the statutory filing date but within three days, will be monitored and may be contacted or considered for a penalty.

HMRC will continue to review their approach to PAYE late filing penalties beyond 5 April 2017 in line with the wider review of penalties and will continue to focus on penalising those who deliberately and persistently fail to meet

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HMRC issues update to CA39 - Contracted-out salary related pension schemes 20 May 2016

HMRC have issued an updated version of the CA39 - Contracted-out salary related pension schemes

There was an error in CA39 for the 2015-16 tax year where earnings in column 1d are recorded incorrectly by £2 per month (maximum £24) for any employees who are within all of the following:

 entitled to pay Married Women's Reduced Rate,  in a Salary Related Contracted Out pension scheme,  earning above the UEL for 2015-16,  are monthly paid, and  have their NICs calculated manually by using CA39 tables.

The calculation of NICs is not affected.

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CIPP survey on the BIS consultation on tips, gratuities, cover and service charges 23 May 2016

In August 2015 the Department for Business, Innovation & Skills (BIS) published a call for evidence on tips, gratuities, cover and service charges.

The CIPP surveyed members and what was apparent from the responses was the low awareness of the voluntary Code of Practice for payroll practitioners and low visibility for customers on premises where tips and gratuities are administered. There also appears to be a lack of trust in businesses to pass on the full entitlement of tips and gratuities to workers.

BIS has now published a further consultation based around three broad policy objectives that they believe all discretionary payments for service should be subject to; they should be:

 clear to consumers that they are voluntary  received by workers  clear and transparent to consumers and workers in terms of how the payments are treated.

In order to respond to the consultation the CIPP Policy team has created a survey to collect your views and would be very grateful if you could spare a few minutes to respond to this survey.

The survey should take around 10 minutes to complete and will close on 13 June 2016.

Thank you for your help.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 210 of 314 Getting Basic PAYE Tools working on Linux 24 May 2016

A revised version of the guidance for running Basic PAYE Tools on a Linux operating system has been published.

If you are having problems running Basic PAYE Tools on a Linux operating system, the guide will help you to install the files.

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Primary school children should be taught about taxation and pensions 25 May 2016

Following an inquiry in Parliament on Financial Education for Young People findings show how important it is that young people understand the role of public money – from taxation to pensions – and their role within it and should focus on real-life contexts, such as paying taxes and reading bank statements.

With financial education introduced into the English secondary national curriculum, the All Party Parliamentary Group (APPG) on Financial Education for Young People held an extensive six month inquiry into the impact and effectiveness of financial education. The inquiry – the first of the new Parliament – was published in May 2016.

With children and young people exposed to an increasing range of financial decisions, the APPG’s report sets out a number of policy recommendations for strengthening financial education in schools.

Crucially, the APPG believe that lessons on money management should start earlier, with statutory status extended to primary level, and both current and new teachers must receive appropriate support to confidently deliver teaching in this area. It also recommends that a new money guidance body should also be set a remit to coordinate and signpost best practice in financial education for teachers.

Read the report: Financial Education in Schools: Two Years On – Job Done?

CIPP comment

The CIPP is committed to delivering education to individuals in the UK relating to payroll, pensions and financial awareness. We are also working, through the Growth and Innovation Fund (GIF) project, to create new jobs in payroll, bookkeeping and financial administration to support business growth and sustainability, as well as support the government’s plans to get people back to work. This work includes:

Educating young people The CIPP has developed a presentation aimed at 14-24 year olds which can be delivered at schools, colleges and universities across the UK. The presentation is designed to provide young people with an understanding of what to expect when they go to work in respect of:

 Their salary  Deductions from pay, including student loan deductions and when they might expect to start paying these  Hours worked  Holiday pay entitlement  National minimum wage  What they will need to provide their employer to make sure that they get paid.

To enquire about the CIPP delivering this session at your educational establishment, or even at your offices, please contact the CIPP on 0121 712 1000 or email [email protected].

To become a volunteer for this initiative and deliver this presentation in schools, colleges and universities in your local area, email [email protected].

For more information visit the CIPP website.

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What payroll information to report to HMRC 27 May 2016

Guidance on What payroll information to report to HMRC has been updated to reflect changes from April 2016.

If you're paying employees through PAYE, this guidance tells you what to put in your Full Payment Submission (FPS) and Employer Payment Summary (EPS).

The National Insurance and Late reporting reason sections have been amended to reflect changes from April 2016 (The temporary relaxation reason code E was removed from 6 April 2016).

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1000 small businesses risk being locked out of Bacs after 13 June 8 June 2016

Data from Bacs shows that around 1000 smaller businesses are at risk of missing vital payments to staff and suppliers next week.

Hundreds of businesses are at risk of missing vital payments to staff and suppliers next week. Data from Bacs shows that around 1000 smaller businesses may be locked out of the payment system after failing to make important upgrades.

Security changes - called SHA-256- SSL - are being driven by the global internet community, which will adopt these improved security measures at the end of this year. At that stage, all organisations needing to communicate securely with users across the internet and via extranets will be impacted.

Bacs is making the change before then, on 13 June, to avoid any last minute issues with payments when the existing SHA-1 certificates are switched off.

If you are a small business, Bacs is urging you to check now whether or not you have the right software and operating system in place to make important payments, like payroll as well as to settle invoices. If you work for a small business, ask your finance team if they’ve made these changes.

Any business yet to make the necessary changes should immediately contact their software solutions provider who will be able to help them in becoming compatible with the new security measures.

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CIPP webcast on recent and future changes to payroll legislation 9 June 2016

For a flavour of what the CIPP Policy Team is talking about when presenting legislation updates, listen to our webcast.

CIPP webcast on recent and future changes to payroll legislation

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 212 of 314 Bacs extend deadline date for new security requirements 10 June 2016

Bacs reported recently that around 1000 businesses have failed to make the necessary changes to meet the 13 June deadline. A grace period of 3 months has been provided to ensure their payment commitments are met.

These businesses risked being unable to pay staff and suppliers , forcing Bacs Payment Schemes Limited (Bacs) to step in and give them a grace period in order to make sure they can meet their payment commitments. The new deadline has been set as 19 September 2016.

Bacs’ Mike Hutchinson said:

“We have been telling businesses about these changes for well over a year, and we’re really disappointed that some haven’t taken us seriously. This is the last chance for them to do so – if they don’t make the necessary upgrades by the new deadline, they won’t be able to use Bacs to pay staff or their suppliers; they’ll have to make other arrangements.”

The security changes - called SHA-256- SSL - are driven by the global internet community, which will adopt these improved security measures at the end of this year. At that stage, all organisations needing to communicate securely with users across the internet and via extranets will be impacted. Bacs is making the change early to avoid any last minute issues when the existing SHA-1 certificates are switched off. At the same time, the company is withdrawing support for older connection protocols to provide even more protection, with only TLS 1.1 and 1.2 supported after the deadline.

Businesses choosing not to adopt compatible software upgrades, and an operating system that will support the changes, will have to make alternative arrangements to pay staff and suppliers after 19 September. They will not be able to access Bacs after that final deadline, and there will be no further extension to the date.

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Payroll Giving sees a 3% increase 30 June 2016

The Association of Payroll Giving Organisations (APGO) has announced that the amount donated to charity via Payroll Giving schemes increased by £3.5m this year.

Figures provided by APGO members show that employees from companies around the UK gave £122.5m in the financial year 2015-16, compared to £119m in the year 2014-2015, a 3% increase.

More than 1 million people give directly to charity through their company’s Payroll Giving scheme.

Employers who generously match their employees’ donations have also given more, with their additional contributions totalling £7m, an increase of 6% on last year. It means that £130m in total went to good causes via Payroll Giving last year.

Panikos Efthimiou, Chair of the APGO, said;

“Our members are thrilled by this good news and we would like to thank the huge numbers of employees across the UK who are supporting a charity each and every payday.

Payroll Giving is a great way to support good causes which is tax-effective, hassle-free and provides a crucial regular source of income to thousands of charities.”

Further information about the APGO can be found on their website. Back to Contents

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 213 of 314 Operating PAYE correctly on pension flexibility payments 5 July 2016

In the June edition of the Pension Schemes Newsletter (79) HMRC have provided a reminder for pension scheme administrators on the correct treatment for operating PAYE on pension flexibility payments.

Pension schemes newsletter 67 highlights that when making pension flexibility payments, some pension scheme administrators are still treating these as annual payments and calculating PAYE on a month 12 basis instead of week 1/month 1 basis.

‘Flexibly accessed payments are not annual payments. You should tax these payments using either the emergency code on a week 1/month 1 basis or, where you have a current year P45; using that code on a week 1/month 1 basis. In cases where the fund has not been extinguished, we will then issue a tax code to operate against future payments. This applies to pension flexibility payments from 6 April 2016 onwards.’

Furthermore, HMRC also report Real Time Information (RTI) submissions from pension scheme administrators and providers who are not yet using data items 168, 171, 173 and 174 to report pension flexibility payments and pension death benefit payments. The Pension schemes newsletter 67 provided a reminder that these data items are mandatory where schemes have made these types of payments.

Failing to complete the appropriate data items on RTI full payment submission, could impact on pension scheme customers who may contact HMRC to reclaim a repayment of overpaid tax. HMRC records will not show that a payment has been made and will not reflect that any tax is due back to the customer.

If you need to access the pension schemes helpline the new number is 0300 123 1079. A number of old HMRC pension letters have the old telephone number (0845 600 2622) on them. Letters are being updated to replace this with the current helpline number.

The correct telephone number for the Pension Schemes Helpline is Telephone 0300 123 1079

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Making a request for Seafarers' NT Code (R44) 6 July 2016

HMRC have recently updated the guidance on GOV.UK for claiming a Seafarers NT code to include an online application process.

To request a Seafarers’ NT tax code if you want to claim to be provisionally entitled to Seafarers’ Earnings Deduction (SED) for at least 365 days you can either:  use the online form service (sign in to, or set up a Government Gateway account)  fill in the form on-screen, print it off and post it to HM Revenue and Customs (HMRC).

If you use the online form, you’ll get a reference number that you can use to track the progress of your form. By processing this application you are asking HMRC to authorise your employer to make payments to you without deducting Income Tax.

The form must be completed, submitted and have been processed by HMRC before HMRC will consider issuing you with an NT tax code.

To complete the form you will need:

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cipp.org.uk Page 214 of 314  your National Insurance number, you can find this on your payslip, P60 or tax return  your Unique Taxpayer Reference (if you have one) you can find this on your tax return, statement of accounts or any other Self Assessment calculations  your employer’s details including name, PAYE reference, address, date you started the employment, and expected annual earnings  details of any planned visits to the UK during this period of work on a vessel, including the: o visit start and end dates o vessel name o vessel type o official vessel registration number o date you think your Seafarers’ Earnings Deduction (SED) should start.

Further guidance for seafarers can be found at:

 Seafarers Earnings Deduction: tax relief if you work on a ship  National Insurance Contributions - NIC if you work on a ship  Income Tax: EEA resident merchant seafarer repayment claim (R43M(SED))

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Data Provisioning Service (DPS) issue 25 July 2016

HMRC is aware of a problem affecting some Employers/Agents when trying to download Employer Notices (P6/Student Loan/Generic Notifications/Real Time Information (RTI) Notifications) into their third party software or who are unable to view these on the DPS Portal Viewer.

This issue is being investigated urgently and we will update this page when the problem is resolved. HMRC apologises for the inconvenience this is causing. For the latest updates on live service availability, please refer to the relevant service on HMRC’s web page.

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Appealing a penalty – what may count as reasonable? 4 August 2016

You have 30 days from the date on the penalty notice in which to appeal a penalty. Depending on what penalty you are appealing there are a variety of ways in which to appeal.

PAYE and CIS both now have online penalty appeal processes.

The penalty notice

The penalty will be issued on paper and sent through the post. A generic notification (GNS) sent to your online account is not a penalty and cannot be appealed. The penalty will also be issued to the employer and not to the agent. The penalty will contain a unique ID which, assuming that you disagree that the penalty should be paid, will be needed in order to appeal the penalty.

The penalty appeal process

A penalty can be appealed online or by post and the employer or their agent has 30 days in which to lodge an appeal.

The PAYE online account, which might be yours or you might be an agent who holds a list of clients within your PAYE online account, will show details in the left hand menu, of the ability to appeal a penalty. If you select this option and a penalty has been issued, the details will be shown within that section, but you must have received the paper penalty notice in order to lodge the appeal.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 215 of 314 When processing a penalty appeal you will be prompted via a drop down menu for a reason for the appeal.

You reason might be factual, i.e. the penalty is not due because, for example:  You filed on time  The filing expectation of HMRC was wrong  You no longer trade or have any employees.

Alternatively it might fall into the category of reasonable excuse which means that yes, a penalty situation has technically arisen, but you have a reasonable excuse for the penalty to be discharged.

A reasonable excuse is normally something unexpected or outside your control that stopped you meeting a tax obligation, and HMRC list a variety of reasons on GOV.UK that have been accepted as being a reasonable excuse in past appeals, such as:  your partner or another close relative died shortly before the tax return or payment deadline;  you had an unexpected stay in hospital that prevented you from dealing with your tax affairs;  you had a serious or life-threatening illness;  your computer or software failed just before or while you were preparing your online return service issues with HM Revenue and Customs (HMRC) online services;  a fire, flood or theft prevented you from completing your tax return;  postal delays that you couldn’t have predicted

Also helpfully listed are reasons that are highly unlikely (aka will not) to be accepted as a reasonable excuse:  you relied on someone else to send your return and they didn’t  your cheque bounced or payment failed because you didn’t have enough money  you found the HMRC online system too difficult to use  you didn’t get a reminder from HMRC

Payroll software also includes a variety of reason codes that should be used to avoid the risk of a late reporting penalty being issued. If you are reporting a payment to an individual after the date it was paid, you may provide a reason why you have not been able to report on time. A reason should be supplied, where applicable, to each late reported payment within the FPS  A – Notional payment: Payment to Expat by third party or overseas employer  B – Notional payment: Employment related security  C – Notional payment: Other  D – Payment subject to Class 1 NICs but P11D/P9D for tax  F – No requirement to maintain a Deductions Working Sheet or Impractical to report work done on the day  G – Reasonable excuse  H – Correction to earlier submission

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Treatment of income from sporting testimonials 9 August 2016

In response to consultation on the draft legislation for the treatment of income from sporting testimonials, the proposed exemption of £50,000 has been increased to £100,000

As previously announced, legislation will be introduced in Finance Bill 2016 to confirm that income from sporting testimonials and benefit matches for employed sportspersons, irrespective of whether they are arranged by the sportsperson’s club or by an independent testimonial committee, is chargeable to income tax under PAYE.

Legislation is introduced in Finance Bill 2016 to amend Income Tax (Earnings and Pensions) Act 2003 (ITEPA) to clarify the law in this area and confirm that income arising from a non-contractual or non-customary sporting testimonial or benefit for an employed sportsperson is liable to income tax. Legislation will also be introduced before April 2017 to deal with certain consequential amendments for income tax and to set out the National Insurance contributions (NICs) position.

The changes to ITEPA will also include the introduction from 6 April 2017 of a one-off exemption of £100,000 from Income Tax, and corresponding legislation will be introduced for NICs. This will apply to income from a non-contractual or non-customary testimonial being paid to or on behalf of an employed sportsperson. The exemption will apply to

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 216 of 314 income arising from relevant events held in a maximum period of 12 calendar months only, beginning with the date the first event is held in a ‘testimonial year’, even if that year straddles more than one tax year.

If the level of the income arising from the testimonial or testimonial year falls below the value of the exemption, the amount of the unused exemption will not be available to carry forward to a future sporting testimonial or benefit match for the sportsperson, or against any other testimonial events held after the end of that 12 month period.

Any non-contractual or non-customary testimonial events held on or after 6 April 2017 from a testimonial that is awarded or arranged for a sportsperson prior to 25 November 2015 will fall within existing arrangements.

For further details, go to GOV.UK.

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Simplification of the tax and National Insurance treatment of termination payments 11 August 2016

Geographical extent - This regulatory change will apply to all four nations of the UK.

The changes which are due to come into effect in April 2018 include:

The government has analysed the responses to its consultation on termination payments held in summer 2015 and has set out its response and consultation on draft legislation.

The draft legislation is intended to give effect to the changes and the government invites views on whether this objective is achieved. The closing date for responses is 5 October 2016.

CIPP comment The CIPP will be studying the draft regulations and will, as usual, seek member views where appropriate. Read the CIPP response to the Summer 2015 consultation.

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CWG2(2016) Employer Further Guide to PAYE and NICs 17 August 2016

Amendments have made to the CWG2 for payments relating to registered pension schemes where a person has flexibly-accessed their funds and Death Benefit payments relating to pension schemes.

The text amendments are detailed in Chapter 2, paragraphs 24A and 24B of the CWG2(2016) - Employer Further Guide to PAYE and NICs.

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The Chartered Institute of Payroll Professionals Policy News Journal

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New employee coming to work from abroad 22 August 2016

The guidance on PAYE has been updated for employees who come to work in the UK from abroad.

The guidance New employee coming to work from abroad details the differences in calculating and making deductions for employees who come to work in the UK from abroad.

The dates and tax codes have been updated to reflect 2016-17 information within the table in the section, ‘Using the right tax code for a seconded employee’.

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Notice of transfer of surplus Income Tax allowances (575(T)) 22 August 2016

An online forms service is now available to ask HMRC for a transfer of unused Married Couple's Allowance or Blind Person's Allowance to a spouse or civil partner.

To tell HMRC that you want to transfer unused Married Couple’s Allowance or Blind Person’s Allowance to your spouse or civil partner, you can still print the postal form, fill it in by hand and post it to HMRC.

If you use the new online form service (sign in to, or set up a Government Gateway account) you will get a reference number that you can use to track the progress of your form.

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PAYE accounts not showing the latest position 16 September 2016

HMRC is aware that some PAYE accounts are not showing the latest position. This is being investigated urgently.

An update will be published on the PAYE service availability and issues web page when the issue has been resolved.

In the interim, if you believe that your account is incorrect and you wish to check the current position, please contact the Employer Helpline.

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RTI challenges faced by micro-employers 19 September 2016

Research has been conducted with employers who were known to have received a PAYE late filing penalty from HMRC, and those who had made an amendment after the end of the tax year by submitting an Earlier Year Update (EYU).

A qualitative research study for HMRC was conducted; a study with a sub-set of micro employers that are finding payroll reporting Real Time Information (RTI) challenging, to understand barriers to compliance.

This research aims to understand:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 218 of 314 a) what drives error in reporting Pay As You Earn (PAYE) in real time among micro-employers; and b) how might HMRC best support micro-employers to comply with their PAYE reporting requirements.

Most micro-employers are meeting their ‘on or before’ reporting requirements without issue, submitting accurate returns to HMRC in full and on time. However, some micro-employers are not, i.e. their FPS reports are not submitted on time or are reported with missing and/or incorrect information. Furthermore, some micro-employers are using other RTI reporting facilities such as Earlier Year Update forms (EYU) in ways not fully expected. EYUs enable employers to amend the data previously reported for their employee when doing so during a later tax year.

These behaviours were concerning for HMRC for a number of reasons. Managing and resolving irregularities (such as late FPS reporting or EYU processing) is resource intensive for HMRC as each has to be investigated and corrected. Reporting errors also have the potential to impact negatively on the employees involved; they could lead to incorrect tax deductions or, in the future, could impact negatively on Universal Credit.

This research was conducted through 45 qualitative interviews in 2016 with micro-employers and their agents. Importantly, it involves only those who were known to have either received a penalty from HMRC for submitting a FPS late or with missing/incorrect information, or had made use of an EYU. The research participants are therefore a sub- set of all micro-employers.

Key findings

1. Regardless of how the micro-employers interviewed as part of this research manage their payroll, PAYE management is not integrated into the ‘payroll process’. Many do not see it as a coherent, end-to-end process at all, but a set of discrete and dissociated tasks. 2. A lack of understanding of how PAYE real time reporting obligations should be managed is a main source of micro-employer error. Reporting PAYE is often treated separately from the core function of running the payroll, and tied to the (often less frequent) rhythm of paying HMRC and the related tax month deadlines. 3. Dates (knowing what should be done and by when) present the biggest single challenge. 4. Examples of good practice exist, typically when ‘running the payroll’ and all associated tasks are strictly managed and RTI reporting duties are integrated into the payroll process. 5. Micro-employers’ and agents’ misunderstanding of RTI reporting is exacerbated by their own behaviours (lack of checks and low prioritisation), which also contribute to error in RTI submissions. 6. Some errors involved in RTI reporting are attributed to factors outside a micro-employer’s control and these add to the opportunity for error. 7. When compounded by poor understanding and capacity issues, errors can easily escalate from a single issue that should be easily solved to a cascade of problems that some micro-employers lose control over. 8. Penalties can affect behaviour change but their impact is currently limited by a lack of understanding as to why the penalty was issued and a lack of explanation about the way they are implemented and enforced. 9. There is no shortage of information to educate micro-employers about their duties but the investment required to make best use of the available resources (either in terms of time spent self-educating, or money spent on an advisor or premium software) can cause difficulties for those where time and/or available money is scarce.

10. There are two emerging considerations for HMRC:  The first is the need for HMRC to focus on better rather than more support, specifically, generating more accessible resources – such as a road map to guide micro-employers through the process, highlighting the key requirements to be aware of, with links to the relevant detailed information already available, and a summary of important dates to remember.  The second consideration for HMRC is to introduce clarity and consistency on penalties. The penalty system is an existing communication channel and could be used to raise awareness of the causes of penalties by including more detailed information in the penalty notice letter itself, or signposting to a diagnostic tool to help micro-employers to identify the cause of error.

Read the full report: Managing Pay As You Earn in real time: challenges faced by micro-employers.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 219 of 314 Agricultural Wages in Scotland 22 September 2016

The Scottish Agricultural Wages Board (SAWB) has confirmed that they will not be changing their rates from 1 October 2016. In order to align the dates with changes to the National Minimum Wage and National Living Wage, any updates will come into effect from 1 April 2017.

With effect from 1 October 2016, the UK Government will introduce amendments to the rates detailed in the National Minimum Wage (NMW) for workers aged up to and including 24 years of age. The hourly rate for the National Living Wage (NLW) for workers aged 25 and over will remain at £7.20 per hour as set on 1 April 2016.

The NMW and the Agricultural Wages Order in Scotland have historically been updated with effect from 1 October each year. However with the introduction of the NLW, which runs on a different calendar cycle, the UK Government has decided to change the NMW timeframe in order to align with the revised timeframe of the NLW.

This means that the NMW update for October 2016 will run for 6 months before requiring revision on 1 April 2017 along with revised rates for the NLW. In order to match the calendar for the NMW, the Scottish Agricultural Wages Board has decided to delay its annual wages negotiations until later in the year so that Order 64 is introduced with effect from 1 April 2017. This will ensure that the Order is in alignment with the NMW and NLW.

Order 63 will therefore remain in force until 1 April 2017. In terms of NMW / NLW compliance employers will need to ensure that they comply with the appropriate UK legislation during the intervening period. Where the National Minimum Wage and the National Living Wage become higher than the hourly or other minimum rate of pay prescribed under Wages Order 63, the Board is taken to have made an Order fixing minimum rates equal to the NMW and the NLW. Where these circumstances apply, employers affected by the Order will be required to pay minimum rates of pay equal to the NMW and the NLW in respect of any period beginning at or after the time when the NMW and NLW become higher than the minimum rates under this Order.

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Reforms to public sector exit payments: Government Response to consultation 27 September 2016

The government has published its response to the consultation about reforms to public sector exit payments.

The stated aim of these reforms is to make public sector exit terms fairer, more modern and more consistent. Approximately 350 responses were received to the consultation and included responses from unions; public sector employers and employer organisations as well as public sector workers and others responding in an individual capacity.

The majority of responses expressed opposition to the government’s proposals. A small number of responses supported the principles of the government’s proposed reforms and some or all of the specific proposals. The government had previously committed to introducing two other measures on public sector compensation:  a cap on all public sector exit payments at £95,000; and  a ‘clawback’ of redundancy compensation when a highly-paid individual returns to the public sector shortly after receiving an exit payment.

The exit payment framework further includes:  a maximum tariff for calculating exit payments of three weeks’ pay per year of service  a ceiling of 15 months on the maximum number of months’ salary that can be paid as a redundancy payment  a maximum salary of £80,000 on which an exit payment can be based  a taper on the amount of lump sum compensation an individual is entitled to receive as they get closer to their normal pension retirement age  action to limit or end employer-funded early access to pension as an exit term

Full details on the policy and the government’s process for reform are in the response to the consultation.

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The Chartered Institute of Payroll Professionals Policy News Journal

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Call for more employers to offer Payroll Giving to staff 6 October 2016

Top UK business leaders join forces in a new campaign which aims to double Payroll Giving donations annually.

BT Chairman Sir Michael Rake has launched a new phase of the national Geared for Giving Campaign that is calling for every employer in the UK with over 250 employees to offer Payroll Giving to their staff. The campaign aims to double the amount raised by Payroll Giving for charities to £260m annually, by increasing the number of employees giving through pay from one million, to two million within the next five years.

Currently just 23% of the UK’s largest employers offer Payroll Giving. Donations made through Payroll Giving are tax free, making it an easy way to support a charity of your choice and your money goes further to help good causes. Donations are taken each month from an employee’s salary before tax; if you are a basic rate tax payer and donate £10 a month, the charity will receive £12.50 and the more tax you pay, the more they will benefit. A higher rate tax payer donating £10 a month will see their charity receive an impressive £16.67.

By increasing the number of employers signing up to the scheme, Geared for Giving hopes to make giving to charity through your pay a social norm in the UK, creating a vital steady income for charities while enabling people to easily support the charities and causes close to their hearts.

The campaign is funded by a group of the UK’s biggest employers, including ASOS, BT, Beaverbrooks, Experian, Linklaters LLP and The Entertainer. The heads of these companies are encouraging a culture of generosity by calling for every employer across the nation to follow their lead and offer Payroll Giving to their staff.

Watch this short video to learn more

If you regularly give to charity, you can make more of a difference by giving through Payroll Giving as it is tax free, for example:  If you are a 20% tax payer and give £10 a month through Payroll Giving, your chosen charity will receive £12.50.  If you are a higher rate tax payer (40%) you’ll see your money going even further. By donating £10 a month via pay, your chosen charity will receive £16.67.  Charities chosen by additional rate tax payers (45%) will receive a huge 81% on top of their donation. Giving £10 a month via pay means the charity will receive £18.18.

Read what the involved business leaders have to say about Payroll Giving in the full press release.

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Public sector exit payments 17 October 2016

Following the consultation response government expects departments to begin work to produce proposals for reform for each workforce by the end of 2016.

The stated aim of the government’s consultation response is to make public sector exit terms fairer, more modern and more consistent.

The major workforces covered by existing statutory compensation schemes and other contractual exit arrangements are expected to begin reforms immediately, informed by the details below. These are the: Civil Service, NHS, Local Government, Teachers, Police, Firefighters and (taking account of the unique nature of the occupation) Armed Forces.

Chapter 5 of the consultation response outlines the ‘Process and timeline for reform’:

5.1 Consistent with the government’s view that it remains appropriate for the detail of exit arrangements to be negotiated at workforce level, departments responsible for the workforces will take forward the detailed design and

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cipp.org.uk Page 221 of 314 analysis of proposals for exit payment reform, within the overall framework and principles for reform set out in this document. 5.2 Following the publication of this document the government expects departments to begin work immediately to produce proposals for reform for each workforce that are consistent with the terms set out in this document and with the government’s principles for reform.

5.3 As set out above, the government will consider the case for applying elements of the framework flexibly on a workforce by workforce basis. Examples of where the government may consider there is a case for flexibility may include where it can be demonstrated that a particular option may not lead to significant cost savings; where there is an alternative approach that may deliver commensurate cost savings; or where workforce demographics mean that a particular option may have unwarranted equalities or other workforce impacts.

5.4 The government expects departments to put forward proposals for reform within three months of the publication of this government response. Departments should then consult on proposals as appropriate and should follow the normal process of discussions and negotiations with Trade Unions and other workforce representatives in order to seek agreement to their reform proposals. The government expects this discussion process to be concluded, agreement reached and the necessary changes made to compensation schemes and other arrangements within nine months of the publication of this response.

5.5 Should it not be possible to achieve meaningful reform for one or more workforces, the government will consider options for primary legislation to take forward reform.

Geographical extent

Chapter 6 outlines the position for devolved administrations:

6.1 In both the exit payment recovery and exit payment cap reforms, the government position has been that the reforms would apply to those areas which are the responsibility of the UK government. It would be for the Scottish government, Welsh government and Northern Ireland executive to determine if and how they wanted to take forward similar arrangements in relation to devolved bodies and workforces.

6.2 The government will take the same approach to cross-public sector exit payment reform. It will be for the Scottish government, Welsh government and Northern Ireland government to decide individually whether each should set a framework, with a view to seeking agreement on revised exit terms for devolved workforces. Should the government ultimately decide that primary legislation is required in taking forward further reforms, the UK government would request Legislative Consent Motions from the Devolved Administrations where appropriate, which would give the relevant Administration the option of including devolved workforces and schemes under any legislation the UK government brings forward.

6.3 However, if and when a Legislative Consent Motion is required, it would be for the Devolved administrations themselves to decide whether this is a desirable approach.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 222 of 314 Intermediaries

Off-payroll working in the public sector 22 March 2016

The Government announced at Budget 2016 that it will reform the intermediaries legislation for public sector engagements. Liability to pay the correct employment taxes will move from the worker’s own company to the public sector body or agency / third party paying the company.

Further to this announcement a technical note has been published which provides further details on the changes that are being proposed. The note gives not only an overview of the changes but also further technical details and the next steps, including the scope of a consultation document that will be published shortly.

Legislation will be introduced in Finance Bill 2017 and will also be subject to full consultation. In partnership with stakeholders, HMRC will develop a new digital tool that will make the decision on whether or not the rules should apply as simple as possible and provide certainty.

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Employment status: employment intermediaries 7 April 2016

The guidance for employment intermediaries now includes a two minute YouTube video 'Who is an employment intermediary?'

An employment intermediary is a person or business who makes arrangements for someone to work for a third person. They are also often known as an ‘agency’ or ‘employment business’.

If you have any questions about reporting obligations a contact telephone number has now also been included within guidance - . 03000 555 995, Monday to Friday, between 8:30am and 4:30pm.

You must send HMRC a special electronic return with basic information about your business and each worker you supply to a third party if you are a UK employment intermediary and you haven’t operated PAYE. The return is a report (or reports) that must be sent to HMRC at least once every 3 months, you may be charged a penalty if your report is late, incomplete or incorrect. You must use HMRC’s report template. HMRC has provided an online service for you to upload and send your reports.

Full details can be found at Employment status: employment intermediaries.

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Employment Intermediaries Co-ordination Unit (EICU) could help you avoid automated penalties 13 April 2016

The Employment Intermediaries Coordination Unit (EICU) has been set up by HMRC to help agencies and similar labour supply businesses comply with the PAYE, NIC and tax liability rules.

EICU Support The EIC Unit has been designed to provide extra support and will be able to talk callers through the special reporting requirements where staff fall outside of PAYE and NIC and they can be contacted on 03000 555995.

PAYE and National Insurance Contributions (NICs) The Government introduced tightened PAYE and NICs rules for agencies and similar businesses supplying workers to work for their clients from April 2014 which has resulted in the agency, or a similar third party business supplying workers to clients, being treated as an employer who must deduct PAYE and NIC unless it can show there is no right to supervision, direction or control (SDC) over the worker.

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Special reporting requirements From April 2015, an employment intermediary reporting requirement for people supplying workers to clients but who are outside the 2014 ‘agency’ rules was brought in. This resulted in the requirement for the intermediary to submit a quarterly return to HMRC with details of the workers being supplied and of who they are paying. Broadly speaking, if you supply two or more workers to a client and they are not taxed under PAYE then your business needs to send a return. For full detail sees the intermediary guidance.

Automated penalties There has been a period of adjustment to allow for intermediaries to adapt to these new reporting requirements since 6 April 2015. However as from 5 August 2016, when the first quarterly information report for the 2016-2017 tax year becomes due to be filed, HMRC will begin to charge automated penalties for late returns.

Penalties are £250 for a late return, rising to £500 then £1,000 for subsequent late returns. Failure to file a return could result in a penalty of up to £3,000.

The EICU Unit can be contacted on 03000 555995.

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Employment intermediaries: reporting requirements 21 April 2016

Additions and changes have been made to the guidance for employment intermediary reporting from 6 April 2016.

HMRC has not provided any detail as to what exactly has been changed so if the guidance applies to you we would recommend that you review the reporting requirements.

An intermediary is any person who makes arrangements for an individual to work for a third party or be paid by the intermediary for work done for a third party. An employment intermediary is also commonly referred to as an agency.

Intermediaries must return details of all workers they place with clients where the intermediary doesn’t operate Pay As You Earn (PAYE) on the workers’ payments. The return is a report (or reports) that must be sent to HMRC at least once every 3 months. Intermediaries can decide how frequently you upload and send your reports. This could be weekly, monthly, once for each period, or whatever fits in best with how they work.

The intermediary that has the contract with the client is responsible for sending the report (or reports).

You must use HMRC’s report template to create the reports. HMRC has provided an online service for you to upload and send your reports.

You don’t have to send HMRC reports if all the following statement are true. You:  are a UK employer  supply workers to provide their services to end clients and nobody else is involved  operate PAYE when you pay those workers.

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Employment intermediaries: travel expense guidance 28 April 2016

Guidance about the treatment of travel expenses for workers providing personal services to clients through employment intermediaries has been published; however the legislation it reflects contains a technical error about where the supervision, direction or control test applies.

This guidance applies from 6 April 2016 and reflects the legislation as currently laid before Parliament in the Finance Bill 2016. However, this legislation contains a technical error about where the supervision, direction or control test

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cipp.org.uk Page 224 of 314 applies. This will be corrected at the earliest opportunity. Once the legislation has been corrected, the guidance will be updated.

There will be a corresponding amendment made to the Social Security (Contributions) Regulations 2001 (SI2001/1004) for national insurance contributions purposes.

For practical purposes, HMRC does not consider that this correction will alter the ultimate result for the vast majority of workers currently engaged through employment intermediaries, including umbrella companies. Those who are working under supervision, direction or control will, in most instances, be akin to those who are an employee.

Where a worker is engaged through what is commonly known as a personal service company (PSC) (including a managed service company (MSC)), then the rules will remain unchanged.

Travel and subsistence expenses for workers engaged through 'employment intermediaries' from 6 April 2016

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Off-payroll working in the public sector - reform of the intermediaries legislation 31 May 2016

Budget 2016 announced proposals to reform the off-payroll rules for personal services companies working for a public sector engager. A consultation has now been published.

This consultation is about reforming the intermediaries legislation to improve its effectiveness in the public sector. It seeks views on the impacts of this change and design details of the policy, including a new process to help determine whether an intermediary is in scope of the rules.

The consultation asks for opinions on:

 the scope of the reform of the intermediaries legislation  how the reformed rules will work  ways to minimise burdens on engagers who are affected.

Also included is a summary of responses to the discussion paper published in 2015.

The consultation will run until 18 August 2016.

CIPP comment HMRC will be engaging with stakeholders over the summer, including the CIPP, on the best way to implement these reforms. The Policy Team will consult with members and the wider profession in due course.

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Employment Intermediaries – are you reporting or running the risk of penalties? 4 August 2016

Following an introduction year delivered with a ‘light touch’ approach to penalties. HMRC will begin to apply penalties to Employment Intermediaries who fail to submit a report each quarter from the period ending 5 August 2016 where they have not operated PAYE on the workers payments.

Penalties will begin from 6 August for Employment Intermediaries who fail to report information to HMRC of all workers they place with clients where the intermediary does not operate Pay As You Earn (PAYE) on the workers’ payments. The return is a report (or reports) that must be sent to HMRC at least once every 3 months – it is the intermediary that has the contract with the client that is responsible for sending the report (or reports). The Chartered Institute of Payroll Professionals Policy News Journal

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Intermediaries can decide how frequently to upload and send reports. This could be weekly, monthly, once for each period, or whatever fits in best with how they work.

HMRC’s report template must be used to create the reports. HMRC has provided an online service to upload and send reports.

Penalties 5 August 2016 is the deadline for the reporting period 6 April to 5 July 2016. If the report is late a penalty will be automatically charged. The amount of the penalty is based on the number of offences in a 12 month period:

 £250 will be charged for the first offence,  £500 for the second offence  £1,000 for the third and later offences.  To a maximum of £3,000 per quarter.

If a report is submitted late, but at least 12 months have passed since the last time a report was late, it will be treated as a first offence.

If a report is submitted that is incorrect, penalties may apply. An incomplete report, for example a report where any information is missing, will count as an incorrect report. Penalties for incorrect reports will be determined on a case-by- case basis.

If an incorrect report is replaced before the deadline of the next reporting period without being asked to, HMRC will consider this when they decide if a penalty has to be paid.

Where there is a continued failure to send reports, or where reports are frequently sent in late, a penalty of up to £600 per day that the report is late (more than 30 days), may be charged.

There is a right of appeal and details will be included within the penalty notice.

Employment Intermediaries Reporting requirements provides full details.

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CIPP Survey - Off-payroll working in the public sector - reform of the intermediaries legislation 3 August 2016

April 2017 will for the first time require many more payroll professionals to have a working knowledge of the IR35 rules. This reminder provides the last chance for you to respond to this survey and share your opinions about the proposals included within HMRCs Off-payroll working in the public sector - reform of the intermediaries legislation.

The CIPP policy team have published a short survey to collect your opinions about the proposals included within HMRCs Off-payroll working in the public sector - reform of the intermediaries legislation.

Survey responses will support the CIPP written response to this consultation and the survey will remain open until 10 August 2016.

Budget 2016 announced proposals to reform the off-payroll rules for personal services companies working for a public sector engager. This consultation is about reforming the intermediaries legislation to improve its effectiveness in the public sector. It seeks views on the impacts of this change and design details of the policy, including a new digital process to help determine whether an intermediary is in scope of the rules.

The consultation asks for opinions on:

 the scope of the reform of the intermediaries legislation  how the reformed rules will work  ways to minimise burdens on engagers who are affected.

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cipp.org.uk Page 226 of 314 Also included is a summary of responses to the discussion paper published in 2015.

The survey should take approximately 15 minutes to complete and we would recommend that you have access to the consultation paper whilst you consider the various subjects and questions.

Thank you in advance for taking part in this survey.

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CIPP response to consultation on off-payroll working in the public sector 24 August 2016

The Policy and Research team has submitted their formal consultation response to ‘Off-payroll working in the public sector: reform of the intermediaries legislation’.

Background Budget 2016 announced proposals to reform the off-payroll rules for personal services companies working for a public sector engager. This consultation is about reforming the intermediaries legislation to improve its effectiveness in the public sector. It sought views on the impacts of this change and design details of the policy, including a new digital process to help determine whether an intermediary is in scope of the rules.

Following on from the CIPP response to the 2015 consultation, ‘Intermediaries Legislation (IR35): discussion document’ we again reiterate that we respond from the viewpoint that use of a Personal Service Company (PSC) simply to gain a tax or NI advantage is unacceptable. We continue to support increased enforcement by HMRC that results in increased protection of vulnerable workers employed inappropriately through PSCs.

Summary of key findings

Our findings have been gathered from a mix of survey results (survey ran from 18 July to the 8 August 2016) and anecdotal evidence.

Definition of the public sector

The FOI Act and the FOI (Scotland) Act provides a definition that will result in a clearly recognised and consistent approach to defining and recognising public sector engagers.

Overwhelmingly there is support for private companies carrying out public functions to be included within this definition, in fact we would go further to say that subject to a satisfactory timeline for implementation (see below) we would look to see no sector or size of engager excluded.

There is evidence to suggest that all sectors and engager/employer sizes are at risk of non- compliance with IR35, and further more to exclude sectors adds a level of complexity to an already complex framework.

We believe that there should be a legal duty to disclose the information required by the end engager to enable the correct decisions to be made. There is evidence that confirms that if clearly defined and consistent rules don’t exist then the impetus to deliver/disclose information will not happen.

The Digital Tool should be backed by clearly defined expectations of what information is needed to be gathered – and by whom, and what information should be provided – and by whom.

Guidance should be unambiguous to enable engagers to adapt or establish for the first time processes and a clearly defined policy which should include reference to the digital tool.

Making the decision

On paper the decision flow chart appears to be asking the right questions with the right priority and to rule out engagements that are clearly out of scope, with the benefit of appearing to be simple to understand and use The reality however is rarely so straight forward and so we would hope that guidance is being developed that adds a little more depth and includes more working examples that an engager may come across. There should be a recognition that IR35 guidance will in the future be accessed by a far greater number of practitioners than it has in the past as the onus shifts from the small number of PSCs (and their professional advisers) to a wide range of engagers/employers with teams working in Payroll, HR and Finance and procurement departments.

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cipp.org.uk Page 227 of 314 If all facts are known then the two parts of the decision flow chart do have the capacity to provide engagers with certainty on day one of the hire – in an ideal world. Processes will need to recognise that situations and answers may change over the course of time, and where they do the decision flow chart and tests may need to be revisited.

Also in an ideal world, this information and data will be collected as part of the procurement/pre-employment checks and certainly robust processes that are based on clearly defined and mandated rules will be needed.

Digital tool

A robust, reliable and consistent digital tool that is mandatory will be fundamental to the successful delivery of this proposal and we welcome HMRC's encouragement for expressions of interest and we would like to lodge our expression of interest at this point.

Working in collaboration with all stakeholders to design a robust digital tool is the way to achieve this to ensure that every possible view and experience is captured in the end product.

We are concerned however at the delivery timeline – we do not believe that a robust tool with be delivered and fully tested against all possible situations by 6 April 2017 when it will be needed.

Transfer of liability

At this point we would highlight that employers already have significant administrative burdens and liabilities, however and akin to the operation of PAYE by the employer, we agree that the liability for the correct operation should fall to the engager/agency, along with the liability for tax and National Insurance (and penalties and interest where appropriate), when the rules have not been applied correctly? However liability should transfer to the PSC and its directors where the PSC has given false information to the engager. We would highlight that this goes to the heart of HMRC's ability to police the widespread operation of IR35 and we would like to reinforce concerns that we raised in our response to the Intermediaries Legislation (IR35): discussion document:

We are of the view, as a result of anecdotal and survey evidence along with observations of research findings in the Intermediaries Legislation Qualitative Research that engagers and/or employers of every size and every sector display a risk averse nature – as a result we are likely to see a greater number of individuals pay being processed via PAYE ‘just to be safe’. We therefore predict greater use of the appeal process where the PSC and/or engager disagree, this has multiple disadvantages, however the most critical for the purpose of this response is:  Increased administrative cost and burden to the engager – of every size particularly the SME if the Intermediaries Legislation Qualitative Research is to be used as a benchmark.  Increased administrative cost and burden to the PSC  Increased costs to HMRC to process appeals.

Costs

Where views have been given it is clear that there is a strong believe that additional costs of administering this obligation will be significant, both from an administrative perspective as well as the perspective of additional contract sums, which are predicted to increase to account for the impact of IR35 being operated ‘just to be safe’ by risk averse engagers.

Further research, based on known workings of the digital tool along with informed decision making on additional processes required (by both engager and PSC – and agency where applicable) would be needed in order to quantify actual costs.

Recommendations

Delay in implementation – broaden the scope

We would ask for a delay in implementation until April 2019 - but an expansion to all engagements caught by IR35, not only in the public sector but also the private sector. This delay would provide ample time to design, build and thoroughly test the new digital tool which we believe should be mandatory to use but robust and reliable in its findings. This can only be achieved with a measured and not a rushed delivery.

Taking a staggered approach to the obligation for operating IR35 assessments, first by expanding the obligation to the Public Sector and then next we would assume to the wider private and third sector will cause unnecessary complexity and does little to aid the wider understanding of IR35. There appears to be evidence that engagers of all sectors, types and sizes are ignorant of the rules regarding IR35, have inefficient processes in place to ensure compliance if burden The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 228 of 314 is to be passed to them, and are therefore at equal risk of non-compliance or furthering non- compliance by PSCs. If this is the case, then transferring the burden to all engagers would provide the benefit of consistency across the board – rather than the one sector approach that is being proposed.

IR35 is viewed as a specialist area by the majority of payroll professionals who will need to become knowledgeable by the delivery time line.

Despite being just over six months away from a proposed go live date there is still no sign that this news and information is being promoted to the wider Public Sector engager community and their agents. This must happen as a matter of urgency to alert them of the need to adapt and strengthen their internal processes and to begin collecting the data which will enable payroll departments to process ‘deemed payments’.

In addition it needs to be recognised that there may be a delay in collating all information and therefore deemed payments that are processed via RTI may not be reported ‘on or before’.

An appropriate late reason code should be added to the existing list of late reason codes within the data items list to allow for the increased and legitimate risk of this occurring as quite often in a large organisation the decision maker may be very remote from the engager.

Thank you to everyone who took the time to respond to this survey. The full response can be accessed through the link below.

CIPP response to Off-payroll working in public sector reform of intermediaries legislation.

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Employment intermediaries: report template 4 October 2016

Guidance on using the employment intermediaries template for reporting has been updated to highlight that a fresh template should be used for each report submitted so that data from previous reports cannot corrupt the latest report.

How to use the employment intermediaries template

Reports that contain formatting errors and missing data will be able to be sent but penalties may be issued if reports are late, incomplete or incorrect.

Are you reporting or running the risk of penalties? Read our previous article from 4 August 2016

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Payroll Software updates

Software developers: PAYE update 20 27 April 2016

Software Developers PAYE Update number 20 has been published which details a summary of PAYE values of Income Tax and National Insurance changes from 6 April 2016.

Updates are issued from time to time to provide further guidance for PAYE software developers. The aim of these updates is to provide assistance in product development, with the result of reducing and eliminating failure of future live submissions.

The guidance included in these updates is based on results from previous live PAYE submissions but also includes further information that developers may find useful.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 229 of 314 RTI technical specifications updated 27 July 2016

The RTI technical specifications for software developers have been updated and include a new 2017-18 RTI Data Items guide.

The RTI technical specifications have now been updated with version 1.0 of the RTI RIM Artefacts for 2017-18, and the updated 2016-17 RTI RIM Artefacts version 2.2, along with the associated changes documents. The specifications also now include a new 2017-18 RTI Data Items guide.

Please note that this update does not include any changes to validations relating to the ‘KC’ National Insurance number prefix. HMRC’s SDST will provide more information on this as soon as they can.

The test services will be updated in October 2016 and the live service for the beginning of the 2017-18 tax year.

For full details, see Real Time Information Online: support for software developers.

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PAYE tax table specifications for Scottish Rate of Income Tax 5 August 2016

As part of the implementation of wider devolution for Scotland the Scottish Government will be allowed to set income tax bandwidths that differ from the rest of the UK. These powers will apply from 6 April 2017.

Due to this change HMRC’s Software Developers Support Team (SDST) have provided a new draft of the Tax Table Routines specification which includes some new definitions for separate Scottish tax bandwidths.

The overall calculation method in the specification remains the same except that Scottish calculations no longer refer to the same bandwidths as the rUK calculations. The new definitions relating to Scottish bandwidths are shown in the definition list (at 2.1, 3.1, 9.1, 10.1) starting on page 8. The Scottish formulae and Appendices later in the document have also been amended to show these new definitions.

This revised specification is being provided as a draft version initially to give SDST the chance to consider any feedback but it will be finalised/published in the coming weeks. If you do have any feedback please email [email protected] by 26 August.

This Specification supersedes all earlier ones showing the method of computing PAYE tax, and expands on the information contained in the "Employer Further Guide to PAYE and NICs" (CWG2).

Specification for PAYE tax table - draft v5

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PAYE draft forms: specifications for substitute forms P60 for 2016 to 2017 29 September 2016

Specification for employer substitute forms P60 applies for the tax year 2016 to 2017 has been published as part of the Software development for HMRC and PAYE section of GOV.UK. This guide gives information on how to design substitute forms P60, ‘End of Year Certificate’ which employers may use instead of the official form, at the end of the tax year. It also includes information on how to adapt your substitute form P60 for a pension fund scheme and what to do if you intend to issue the substitute form P60 to your employees electronically. This RD1 revised edition applies for the tax year 2016 to 2017 although we note the heading on the GOV.UK page appears to report it as being for 2015 to 2016. Official draft forms P60 were published on GOV.UK for Software Developers on 23 February 2016.

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Government Gateway SSLv3 30 September 2016

Government Gateway will be disabling SSLv3 on a permanent basis on 10 October 2016.

On 30 September 2015, HMRC made a change so that if you were using the SSLv3 protocol to connect to their services you were no longer able to. For the majority of online customers this meant no change as they were already using a more secure protocol (such as TLS1.0, TLS1.1 or TLS1.2) by default.

Government Gateway will be disabling SSLv3 on a permanent basis on 10 October 2016.

If you’re uncertain about the type of secure connection your browser or other software can support, you can check it at Your SSL client is Bad and other similar services.

If you’re still using the SSLv3 protocol it is advised that you use a more secure protocol to connect to Government Gateway.

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Payroll Test Data Survey for Software Developers 3 October 2016

HMRC Software Developers Support Team (SDST) are reviewing their test data provision and to determine how useful this is to their customers, are asking software developers to complete a short survey.

The survey should take less than 3 minutes to complete and all information will be treated in confidence. SDST only require 1 response per company.

Thank you

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PAYE RTI 2017-18: Internet techpack and test services 7 October 2016

The technical specifications for RTI 2017-18 on GOV.UK have been updated and the latest version allows for National Insurance numbers (NINO) with a larger range of 2-letter prefixes (including KC) to be submitted.

The LTS and TPVS/VSIPS test services are now available for 2017-18, with a further update planned for late November to cover the above NINO changes. The DPS test service for 2017-18 is also available now.

National Insurance numbers with ‘KC’ prefix

As a reminder, if you do receive a KC prefix NINO HMRC has advised the following:

In July we told you that a small number of our customers were not able to submit Real Time Information (RTI) data for employees with National Insurance numbers with prefix ‘KC’.

From 15 November 2016 customers will be able to submit RTI data for employees using this National Insurance number prefix.

Some software products, including HMRC’s Basic PAYE Tools, may not be updated before April 2017. If this applies to you then you should continue to follow this guidance when submitting your RTI:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 231 of 314  the National Insurance number field should be left blank  you should make sure the employee address field is completed in those cases

If you/your employee has a ‘KC’ National Insurance number, there is no need to request a new one. You should continue to apply tax codes and notices you receive from us in the normal way.

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PAYE EDI technical specifications: expenses and benefits 11 October 2016

Message implementation guidelines for PAYE Electronic Data Interchange (EDI) software developers have been added to GOV.UK.

Message implementation guidelines for 2016-17 forms P11D, P11d(b) and P46 (Car) have been published on GOV.UK.

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RTI Data Items Guide updated 12 October 2016

The RTI Data Items Guide has been updated with further information relating to car data items.

The revised guide - version 1.1 - is available to download through the link below, however it will be added to the technical specifications on GOV.UK shortly.

RTI Data Items Guide 2017-18 v1.1

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Software developers: Government Gateway downtime 18 October 2016

The Government Gateway ISV (VSIPS) test service will be unavailable from 10:00 until 13:00 on Thursday 20 October.

Software developers can still test using TPVS and LTS as these test services will be unaffected during this time.

HMRC apologise for any inconvenience caused.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 232 of 314 Statutory Payments

Weekly rate of statutory redundancy pay 8 April 2016

The weekly rate of statutory redundancy pay increased to £479 on 6 April 2016. Please be aware that GOV.UK guidance is still showing the 2015-16 rate of £475 and we have asked that this information be updated as soon as possible.

The Employment Rights (Increase of Limits) Order 2016 increases from 6 April 2016 the weekly rate of statutory redundancy pay to £479 and the maximum compensatory award to £78,962.

See our news item from 9 March 2016 for full details.

Northern Ireland is governed by different legislation. The Employment Rights (Increase of Limits) Order (Northern Ireland) 2016 revises the limits on awards and payments under certain employment rights legislation and came into effect on 14 February 2016.

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Statutory Sick Pay recovery period under the Percentage Threshold Scheme ends 14 April 2016

The Percentage Threshold Scheme, which allowed employers some employers to recover and element of Statutory Sick Pay (SSP) they’d paid to their employees came to an end on 5 April 2014.

However, employers had until 5 April 2016 to recover any SSP paid in respect of periods up to 5 April 2014. This date has now passed and employers should no longer seek to make any claims for recovery of SSP.

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The Continuity of Employment Test 8 August 2016

The Statutory Paternity Pay, Statutory Adoption Pay and Statutory Shared Parental Pay (Amendment) Regulations 2015, which came into force on 1 February 2016, alter the general regulations concerning the continuity of employment test that is a condition of entitlement to these statutory payments.

Previously, if the employee’s employment start date falls in the 26th week before the end of the Qualifying Week (in birth cases) or Matching Week (in adoption cases), so that the employee has a total of 25 complete weeks of continuous service, the employee would not be entitled to the statutory payment. This differed from the Statutory Maternity Pay legislation.

The regulatory change means that, in this particular situation only, the first partial week is now rounded up, as it is in the maternity rules, so that the employee has exactly 26 weeks’ service and passes the Continuity of Employment Test.

This regulatory change extends and applies to England, Scotland and Wales.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 233 of 314 Statutory sick pay when an employee is in legal custody 8 September 2016

A recent update on GOV.UK started the questions flowing and as a reminder of how being in Legal Custody would impact on eligibility for SSP, we thought that you might value seeing a couple of examples used to demonstrate the impact.

The guidance that has been updated is under Statutory Sick Pay (SSP): employee circumstances that affect payment. It covers what you need to do when paying sick pay to an employee who is:

 pregnant  in legal custody  in a trade dispute  has overpaid or underpaid, or  earns below the Lower Earnings Limit.

Updated content:

Your employee is in legal custody A Period of Incapacity for Work (PIW) ends (or if day 1 does not arise) with the start of the legal custody and SSP is no longer payable. However, if the incapacity for work continues, a new PIW is formed after release from legal custody regardless of the illness – whether continuing or a new one or a deterioration of the original ailment after an early return to work - and providing all other qualifying rules apply SSP should be paid. If there is less than 8 weeks between the PIWs then the usual linking rules apply and waiting days do not have to be served again. If more than 8 weeks between the PIWs, normal waiting days would apply.

If an employee is sick and is unable to work and then arrested and taken into legal custody, any entitlement to SSP ends.

Impact on eligibility These are the examples used to demonstrate the impact on eligibility for SSP:

Scenario 1 If the employee is taken into custody on the 1st day of sickness a PIW cannot start and they will not be considered for entitlement to SSP. Once released if they are still employed and incapable for work due to sickness they should inform their employer they are sick and usual rules apply e.g. the sickness lasts for 4 days or more a period of incapacity(PIW) has been formed and usual linking rules apply.

Day 1 1st day of Sickness and taken into legal custody = no PIW and not entitlement to SSP. Days 2,3,4 Still sick and still in custody = no PIW and not entitled to SSP. Day 5 Released from custody still sick =No PIW and no entitlement to SSP as has spent some time in legal custody for part of that day. Days 6,7,8,9 Still sick (can be continuing illness or new illness) and unable to work and meets qualifying conditions = has formed PIW on day 9.

 The employee is entitled to SSP from day 9 (must serve 3 waiting days) if this claim does not link to another PIW within 56 days or less; or  The employee is entitled to SSP from day 6 if the employee was absent from work for 4 or more days within 56 days of day 6 (days spent in legal custody do not count towards waiting days or PIWs).

Scenario 2 The employee has already formed a PIW that links to a previous PIW and has served their waiting days. They are in receipt of SSP and were off work sick for 10 days then arrested and taken into legal custody on day 11. That PIW ends after 10 days along with any further entitlement to SSP. Once released if they are still employed and incapable for work due to sickness they should inform their employer they are sick and usual rules apply e.g. the sickness lasts for 4 days or more a 'new' period of incapacity(PIW) has been formed and usual linking rules apply.

Days 1-10 Incapable of work due to sickness and meets all eligibility conditions = PIW formed and entitled to SSP for all qualifying days (days usually works) in those 10 days. Day 11 Taken into Legal Custody = PIW ends and entitlement to SSP ends. Day 12 Released from custody still sick =No PIW and no entitlement to SSP as has spent some time in legal custody for all or part of that day.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 234 of 314 Day 13-17 Still sick (can be continuing illness or new illness) and unable to work and meets qualifying conditions = has formed PIW which links to the PIW on day 10 (the last day of sickness before being taken into custody) so entitled to SSP for all qualifying days from day 13.

In a nutshell there is no entitlement to Statutory Sick Pay for any days spent in legal custody.

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Statutory Sick Pay: manually calculate your employee’s payments 14 October 2016

Clarification has been added to SSP guidance on the section 'overpaid/underpaid earnings during the relevant period'.

The revised text reads as follows:

Overpaid/underpaid earnings during the relevant period

AWE are always based on all earnings actually paid to the employee within the relevant period, regardless of any over or underpaid wages in that period. Where over or under payments of wages occur within the relevant period, they are treated in the same way as all other earnings paid in that period for calculating AWE.

If incorrect earnings have been paid, which would produce a situation that worked to the disadvantage of either the employer or employee, and there is documentary evidence of an agreement between both parties as to the actual earnings that should have been paid, you should use the earnings agreed to calculate an employee’s AWE.

Where there is no evidence of an agreement, you should calculate the AWE using the earnings actually paid SSP guidance for manually calculating an employee’s payments

Statutory Sick Pay: manually calculate your employee’s payments

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Statutory Maternity Leave and Child Care Vouchers 14 October 2016

In light of the Peninsula appeal, HMRC is considering what guidance is required for employers.

There is legal authority that whether an employer must provide CCVs to a person participating in a salary sacrifice scheme in respect of a period when they are on family leave, depends on the terms of the contract of employment. In the Peninsula case, the contract said that an employee on maternity leave would not continue to receive CCVs. The judgment is only of direct relevance in dealing with similar contractual exclusions.

Employers are free to continue making payments into a salary sacrifice scheme to buy CCVs on behalf of an employee on family leave if they wish.

Use of CCVs that employees already have is not affected by the judgment.”

This information was published in the Employer Bulletin: October 2016.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 235 of 314 Pensions

Automatic Enrolment

Automatic enrolment thresholds 2016-17 30 March 2016

The 2016-17 automatic enrolment thresholds have been approved by parliament and come into effect from 6 April 2016. Only the upper level of qualifying earnings has changed.

The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2016 comes into force on 6 April 2016.

The lower level of qualifying earnings and the earnings trigger remain the same as 2015-16, only the upper level of qualifying earnings has changed with an increase to the annual threshold to £43,000.

2016-2017 Annual threshold

Lower level of qualifying earnings £5,824 Earnings trigger for automatic enrolment £10,000 Upper level of qualifying earnings £43,000

Values by pay reference period 2016-2017 1 week Fortnight 4 weeks 1 month 1 quarter Bi-annual Lower level of qualifying earnings £112 £224 £448 £486 £1,456 £2,912 Earnings trigger for automatic enrolment £192 £384 £768 £833 £2,499 £4,998 Upper level of qualifying earnings £827 £1,654 £3,308 £3,583 £10,750 £21,500

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Automatic enrolment: alternative quality requirements for defined benefit and hybrid pension schemes 30 March 2016

From 6 April 2016, contracting-out will end. Employers will no longer be able to use the existence of a contracting-out certificate as evidence that their scheme satisfies the relevant quality requirement.

Guidance has been published by the Department for Work and Pensions (DWP) on the alternative tests of scheme quality for defined benefits and hybrid pension schemes used for automatic enrolment.

This guidance is primarily for employers’ advisers, who have been asked to determine whether a defined benefits scheme or the defined benefits element of a hybrid pension scheme is a qualifying scheme for automatic enrolment.

However, employers may find the guidance helpful. The law requires employers to automatically enrol their workers into a scheme of sufficient quality. From 6 April 2016, contracting-out will end. Employers will no longer be able to use the existence of a contracting-out certificate as evidence that their scheme satisfies the relevant quality requirement.

Scheme quality must instead be demonstrated by comparing the scheme against the test scheme standard, as set out in the legislation and guidance below or by applying one or more of the alternative quality requirements set out in the legislation and to which this guidance relates.

Automatic enrolment: Guidance on the alternative quality requirements for defined benefits pension schemes and the defined benefits element of hybrid pension schemes

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Automatic enrolment Q and A for business advisers 7 April 2016

Do you have any questions you’d like to ask about automatic enrolment? Experts from The Pensions Regulator will be online and ready to answer your questions on 26 April.

The Pensions Regulator (TPR) is running another LinkedIn Q&A on Tuesday 26 April from 10 - 11am where they will take general questions from business advisers about auto enrolment.

In order to participate, you will need to register to join the regulator’s LinkedIn group prior to the Q&A and post a question the same way as you would usually start a discussion. For more information, visit TPR’s events page

You Tube videos The Regulator has produced a number of short videos aimed at business advisers and employers to communicate key auto enrolment messages. They are available on their You Tube Channel.

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Business Advisers - do you have a question about automatic enrolment? 12 April 2016

If so then The Pensions Regulator (TPR) will be online and ready to answer your questions from 10 to 11 am on Tuesday 26 April.

Using their LinkedIn group, the TPR automatic enrolment experts will be available to answer any questions that you may have on the subject of automatic enrolment. This session is aimed at:

 Accountants  Bookkeepers  payroll professionals  independent financial advisers (IFAs)  employee benefit consultants (EBCs)  actuaries  other advisers

If you would like to be involved in this session Automatic enrolment for business advisers: Online Q and A and are available on Tuesday 26 April 2016 between 10 and 11 am you will need to join the TPR LinkedIn group before the session starts and post a question in the same way as you would usually start a discussion.

To join The Pensions Regulator Group go to LinkedIn/Groups and search for The Pensions Regulator.

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Who needs to complete a Declaration of Compliance? 15 April 2016

All employers with one or more staff have a legal requirement to complete a Declaration of Compliance. Even if they do not have any staff to put into a pension, they must complete the declaration to confirm they have met their automatic enrolment duties.

Through the months of May, June, July and August more than 100,000 small employers and their business advisers will complete and submit a Declaration of Compliance to The Pensions Regulator (TPR).

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What you need to know about helping your clients to complete their Declaration of Compliance

All employers have workplace pensions duties which mean they will need to automatically enrol certain staff into a pension scheme and make contributions to it. They need to assess their staff, put those that they need to into a pension scheme, and tell them about automatic enrolment. They should start planning for automatic enrolment 12 months before their staging date. This is the date their duties come into effect.

Many of your clients may ask you for help and support with their automatic enrolment duties, with insight from TPR indicating that many employers are asking their adviser to help them to complete and submit their declaration of compliance. Completing the declaration shows TPR what employers have done to meet their duties.

Who needs to complete a Declaration of Compliance? All employers with one or more staff have a legal requirement to complete a Declaration of Compliance. Even if they do not have any staff to put into a pension, they must complete the declaration to confirm they have met their duties.

When does it need to be completed by? Each employer has a declaration of compliance deadline which falls five months after their staging date. Their declaration of compliance needs to be completed and submitted to TPR by this deadline.

Although employers have five months to complete their declaration, we recommend they start completing it as soon as possible after their staging date. Filling in details as they go through the automatic enrolment process will help employers avoid missing their deadline.

What if postponement has been used? If postponement has been used, a declaration of compliance cannot be completed until after the postponement period has ended. However, don’t leave filling in the details until then as there may be very little time between the end of the postponement period and the declaration deadline. It’s a good idea to fill in the details as you get them so that you do not risk running out of time.

Can I do this on behalf on my client? If your client has asked you to complete the declaration on their behalf, it remains the employer’s responsibility to ensure the declaration is completed on time and the information provided to us is correct. If not, they risk a fine. So, make sure there is agreement about who is completing the declaration of compliance and that the information is correct.

What if I don’t complete the declaration on time? Failure to complete your declaration on time could lead to a fine.

How can I access the Declaration of Compliance? The declaration is a secure, online form. You will need to register with Government Gateway as an employer agent before you can complete a declaration of compliance on behalf of your client.

What information do I need to complete it? If you have all the relevant information to hand it can take as little as 15 minutes to complete your client’s declaration.

Information you’ll need to complete the declaration:

 Government Gateway User ID  Letter code from TPR  Your contact details  Your relationship to the employer  Name of the employer  Employer contact details  Employer email address  Employer correspondence address  Type of pension scheme(s) used for AE (personal or occupational)  Employer pension scheme reference (EPSR)

Top tips

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 238 of 314  Make a note of all logins and passwords.  Start your declaration before your client’s staging date; you can save your progress and return at a later date.  If postponement has been used for any staff, the declaration cannot be submitted until after the postponement period has ended.  Save your declaration at regular intervals as the system will timeout after a short period of inactivity.  Remember to select ‘submit’ at the end of the form to complete the process.

Frequently Asked Questions:

Q: My client only has one member of staff and he doesn’t want to be in a pension scheme. Does a declaration still need to be completed?

A: Yes – every employer with at least one member of staff will need to complete a declaration of compliance. If only one member of staff needs to be put into a scheme, they’ll still need to be automatically enrolled before they can ask to opt out.

Q: What happens if the declaration is not completed by the deadline? Can it still be completed if it's late?

A: It is the employer’s legal duty to complete their declaration of compliance correctly and on time. If it is not completed on time, then action is likely to be taken by TPR which could lead to a fine. If you or your client is having difficulties implementing automatic enrolment or gathering the information to complete your declaration by your deadline, please contact TPR immediately.

Q: I’ve signed up for a Government Gateway ID on behalf of my client and it says I’ve enrolled, but I haven’t had to provide any information apart from a letter code and PAYE reference number – does this mean I’ve completed the declaration?

A: No it doesn't. When you successfully sign up for a Government Gateway account, you’ll receive a message confirming this. It doesn’t mean that the declaration has been completed, it just means you’ve successfully created a Government Gateway account. Once you have an account, you can then complete your client’s declaration of compliance online.

Q: Can I provide approximate figures at declaration and then confirm them at a later date? Can this information be updated after the declaration is submitted? If so, how long do I have to update it?

A: Your client is legally responsible for ensuring the information you submit is complete and correct and you will be required to confirm this on the declaration. You must not submit the declaration with inaccurate information as it’s an offence to knowingly or recklessly provide false or misleading information. If, after you complete your declaration, you find out you have mistakenly provided incorrect details, you should update them as soon as possible. You’ll need to confirm again that the information provided is correct and complete before re-submitting the declaration of compliance.

Useful links

 Checklist of information you’ll need to hand  Essential guide  Webinar  Demonstration video

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Auto escalation the next step for auto enrolment 19 April 2016

Speaking at the recent Pensions Management Institute (PMI) annual conference, the Pensions Minister Ros Altmann told delegates that the expectation is for the full auto enrolment project to complete in 2019, and then auto escalation will be looked at as a next step.

Discussing recent and forthcoming changes the Pensions Minister said:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 239 of 314 “The introduction of the flat rate state pension is a good thing - it is a more sustainable, affordable and suitable system for a society which, going forward, will be required to do much more for themselves. Something they can understand, plan for and gives them some hope of actually predicting the income they might get in retirement.

We should also remember that whilst auto enrolment has brought six million more individuals into the pensions system, we are still only a fraction of the way through it with approximately 90% of employers still to go through the process. This will bring a further three million savers into the system. Over the next four years we are expecting pension contributions to quadruple. We expect the full auto enrolment project to complete in 2019, and then we will look at auto escalation as a next step.

These kinds of numbers bring a big responsibility to those of us working in pensions. It is also important to remember that pensions isn’t just about the money, it’s about people. Whilst we must come up with solutions and systems we must also make sure we are empowering people to be able to make decisions for themselves and plan for their unique retirement needs. We want and need people to have a good experience of pensions and, ultimately, a better standard of living in retirement but we must be mindful that not everyone is equipped to make decisions and we must help them. Helping them to engage with savings and to leave the money alone, and let it continue working for them is the preferable thing to do.

It’s also going to take time to rebuild trust in pensions, it’s fair to say pensions still have a fairly negative ‘image’ in the mainstream press. By making pensions engaging and accessible we should be able to change this and motivate the public to save. I would love to see a big industry campaign that talks about ‘great pensions’. This is a really exciting time for the industry to come up with new and innovative products to meet the new demands. Yes - we need to manage expectations, yes - it won’t be easy. But this is also a very exciting new landscape.”

Altmann also updated the delegates on upcoming initiatives including a new consultation for a new pensions guidance body to address guidance and advice – this will be a merger of TPAS and Pensions Wise. There will also be a new slimmed down money guidance body, earliest expected date of April 2018. Altmann responded to delegate questions on pensions dashboards saying she would welcome the industry coming up with something suitable, with a planned expectancy of 2019. Other points of note in her speech were that next steps on pensions freedoms would be to remove the ‘Hobson’s choice’ of barriers to access pensions.

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Pensions Regulator to list GPPs open to all employers 28 April 2016

The Pensions Regulator (TPR) is to publish a list of group personal pensions (GPPs) open to any employers seeking to comply with their automatic enrolment duties.

TPR believes well-run multi-employer master trusts and GPPs are the best choice for small and micro employers preparing to meet their workplace pension duties. A list of independently reviewed master trusts which are open to all employers is already available on the employers’ section of TPR’s website.

Now GPP providers which meet similar criteria are being encouraged to apply to appear on a new list on the website, increasing the choice of well-run schemes available. The criteria for joining the GPP list have been published

The criteria for GPPs to appear on the new list are intended to mirror, as far as possible, the criteria for master trusts. Crucially, this means that not only must GPPs be open to all employers but that providers will need to confirm that their independent governance committee or governance advisory arrangement has assessed the product on offer. TPR is producing a checklist for providers to use when submitting information.

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Employers warned not to ignore automatic enrolment penalty notices 29 April 2016

While automatic enrolment compliance rates remain high, The Pensions Regulator’s latest quarterly compliance and enforcement bulletin shows that the number of Escalating Penalty Notices it issues is on the rise.

Employers who fail to heed 28-day warning notices risk a fine which increases each day. The Chartered Institute of Payroll Professionals Policy News Journal

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More than 95% of the first small employers required to put their staff into a workplace pension have now complied with the law, showing that automatic enrolment is successful for all sizes of employer.

However, although compliance rates remain high, TPR’s latest quarterly compliance and enforcement bulletin shows that the number of Escalating Penalty Notices it issues is on the rise.

An Escalating Penalty Notice (EPN) is one of the statutory powers TPR has to help maximise employer compliance with automatic enrolment duties. It specifies the date by which the employer must comply with certain actions or be subject to a fine which builds up at a daily rate.

The fine for small employers with 1 to 4 staff who fail to comply with an EPN is £50 per day and for those with 5 to 49 it is £500 per day.

Minister for Pensions, Baroness Ros Altmann, said:

“Automatic enrolment is delivering fundamental change to workplace pension saving. So far over 100,000 employers have enrolled over 6 million workers. Levels of compliance amongst employers has been consistently high and I am pleased with all the steps The Pensions Regulator has put in place to support the huge number of smaller employers who have recently begun to undertake their duties.

“The aim of automatic enrolment is to get all employers setting up pension schemes for their staff. It is most encouraging to see that even the smaller employers are managing to do this, and the proportion facing enforcement action has stayed remarkably low.”

Charles Counsell, Executive Director for automatic enrolment, said:

“Most employers comply on time and we continue to see compliance rates in the high nineties. Others need a nudge and are prompted to meet their duties when one of our notices comes through their letterbox.

It’s simply not fair for staff not to receive the pension contributions they are legally due. But failing to act also means an employer risks clocking up a significant penalty until they put things right.

Our message remains that if things aren’t going well, then talk to us; don’t ignore us.”

TPR’s press release shows headline figures from the compliance report:

 3,057 Compliance Notices issued, bringing total issued to date to 7,834.  806 Fixed Penalty Notices issued in first three months of 2016, bringing total issued since 2012 to 2,234.  96 Escalating Penalty Notices issued this quarter, bringing total issued to 127.

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Employers are hearing Workie’s message but what now? 11 May 2016

Have you seen the Workie ads and are wondering what to do now? Charles Counsell, executive director of automatic enrolment at The Pensions Regulator, outlines your next steps.

Many employers will have seen the large character Workie - calling on them not to ignore the workplace pension. They may now be wondering what to do next and what automatic enrolment will cost them.

The good news is that recent research by The Pensions Regulator shows most small and micro employers who have already met their workplace pension duties recognise the importance of workplace pensions and think that it is good for staff.

Our findings show automatic enrolment doesn’t have to be costly and that it pays not to put your head in the sand. Starting plans early leaves employers with time to research and shop around and also helps them avoid the risk of a £400 fine.

Employers should first head to our website and follow the step by step Duties Checker which tells them what to and by when. The Chartered Institute of Payroll Professionals Policy News Journal

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The Duties Checker is designed for small employers without pensions experience and makes automatic enrolment as easy as possible. I’d also recommend that employers look at our information detailing the set up costs employers might incur which will help people avoid any unnecessary expense.

Employers who have already reached their staging date – the date the law applied to them – should ensure they complete their declaration of compliance and submit it to us. This must be done within five months of their staging date. Employers are at risk of being fined if despite putting staff into a pension, they fail to submit their Declaration of Compliance.

Already more than 100,000employers have completed their workplace pensions duties and more than 6 million workers have been automatically enrolled since 2012. The Pensions Regulator is ready to help hundreds of thousands more small and micro employers join the pension revolution.

Key considerations to bear in mind

 Make sure you know what you need to do and by when – you will have duties even if you only employ one member of staff. TPR has an online duties checker which will help you with this – it takes 5 minutes to complete.  Work out the costs which may be involved in terms of time and money – it may be less than you think. TPR has information to help employers understand the one-off costs to set up automatic enrolment, as well as the ongoing cost of paying money into the scheme and managing the process.  Decide who will complete the tasks you need to undertake. While you can carry out the automatic enrolment tasks yourself, you may choose to ask your business adviser for extra support. Make sure you understand and agree which tasks you and they are doing so that nothing is missed.

Frequently asked questions from small employers

Can I use my existing scheme to automatically enrol my staff? Maybe – but you first need to find out whether it meets certain conditions that will make it a ‘qualifying scheme for automatic enrolment’. Contact your pension scheme provider to find out.

I need to find a pension scheme, but don’t know where to start Not all schemes offer the same level of services and some will charge more than others, so you should look at different schemes before you decide which is suitable for you and your staff. TPR has information on its website which can help you to choose a pension scheme, with a list of providers who can offer pensions to small employers.

I only have one staff member and their earnings fall under the threshold – do I still have to do anything? Yes, you still have legal duties to meet. For example, you will need to tell your staff about automatic enrolment and complete and submit a declaration of compliance to TPR to let them know what you have done to meet your duties. Completing TPR’s online duties checker will confirm what your duties are and when they need to be met.

The business only has directors and doesn’t employ any other staff – do I still have duties? You may be exempt from the automatic enrolment duties, but it’s important to check. If you are exempt and receiving letters from The Pensions Regulator, then you will need to tell them you are exempt. Take 5 minutes to complete TPRs online duties checker, which will confirm what you need to do.

What will happen if I don’t complete the Declaration of Compliance on time? Don’t leave your preparations to the last minute – if you don’t submit your Declaration of Compliance on time, then you risk a fine. The date this needs to be submitted will be on all letters and emails sent to you by TPR; you can also find this out by completing TPR’s online duties checker.

What to expect from The Pensions Regulator

 TPR will send you letters 12 months, 6 months, and 1 month before your staging date – the date your duties start.  It is important you nominate a contact. This is the person TPR will send communications to about what to do and when.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 242 of 314  Using the Duties Checker means employers will be sent specific information tailored for their circumstances.  Information is available on TPRs online step by step guide to help you to complete every task.  TPR produces a free, monthly ‘News by Email’ which will help you to keep up to date with news, information, tools and resources on automatic enrolment.

Useful links

 Duties checker  Step by step guide  Nominate a contact  News by email  Choosing a pension scheme  Your questions answered

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Automatic enrolment: Business as usual, just like real-time PAYE 12 May 2016

Automatic enrolment is a continuing responsibility for employers. An employer's duties do not end after their staging date.

Employers will need to:

 pay regular contributions into the pension scheme  monitor the age and earnings of their staff and enrol any eligible staff  process any requests to join or leave the scheme  keep and maintain accurate records  re-enrol eligible staff every three years into an automatic enrolment pension scheme if they’re not already active members of one.

All of this should become 'business as usual', just like real-time PAYE.

The Pensions Regulator has all the information and guidance to help you understand your clients’ ongoing duties

The Pensions Regulator also produces a free, monthly e-newsletter with useful information about automatic enrolment. April’s newsletter featured stories on the recent changes to earnings thresholds, re-enrolment, and how to complete a declaration of compliance. There’s also a regular feature which focuses on ‘Hot Topics’ that their contact centre is taking calls about.

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Costly to ignore penalty notices from The Pensions Regulator 16 May 2016

Your clients could be fined up to £500 per day if they ignore a penalty notice from The Pensions Regulator.

TPR’s recently published compliance and enforcement bulletin shows that the number of escalating penalty notices (EPN) they are sending out is on the rise

Employers with 1-4 staff who don’t comply with the EPN before the deadline set down in it, will be fined £50 per day.

The Chartered Institute of Payroll Professionals Policy News Journal

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Those who employ 5-49 staff will see their penalty build up by £500 a day.

Although more than 95% of employers are meeting their automatic enrolment duties (AE) on time, TPR are taking a tough stance with those who fail to give their staff the pension they are due.

Make sure you know what your clients need to do, and when, to help them avoid a fine

The Pensions Regulator has all the information and guidance to help you understand your clients’ ongoing duties

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Expansion of Basic PAYE Tools for auto enrolment recommended 19 May 2016

The Work and Pensions Committee has published a report on automatic enrolment which includes their recommendation that the DWP work with HMRC to expand Basic PAYE Tools to support small businesses in meeting their automatic enrolment obligations.

This Eleventh Report of Session 2015–16 says that the decision not to develop the HMRC Basic PAYE Tools (BPT) to support AE was a mistake. The BPT are trusted by small and micro employers, many of whom will not be able or willing to use commercially available software. The Pensions Regulator (TPR) has acknowledged that small and micro employers need automated support to cope with AE. Its solution has been to build an entirely separate Basic Assessment Tool that has limited functionality and cannot send information to pension providers. This risks undermining AE.

The Committee’s other conclusions and recommendations are as follows:

Automatic enrolment (AE) has so far been a tremendous success. It has resulted in more than six million people being newly enrolled into a workplace pension scheme. Rates of opting-out have been lower than expected. AE is on schedule to have a transformative effect on private pension saving, but it is now at a crucial and risky stage of its development. It is imperative that it is not undermined by other government-sponsored forms of saving. Gaps in pension law and regulation have allowed potentially unstable master trusts onto the market. Should one of these trusts collapse, there is a very real danger that ordinary scheme members could lose retirement savings. There is also a risk that faith in auto-enrolment as a whole will be undermined.

We support the Minister’s call for a Pensions Bill to introduce stronger regulation of master trusts. We recommend the Bill makes provision for The Pensions Regulator (TPR) to have power to enforce:  minimum financial and governance standards for market entry;  ongoing requirements for master trust schemes, which might include making compliance with the master trust assurance framework mandatory; and  measures to protect member assets in the event of a master trust winding up.

DWP and TPR have taken positive steps to engage with smaller employers. Communications campaigns have successfully raised awareness of AE. The priority now must be for small and micro businesses to understand their AE duties and the consequences of non-compliance.

We recommend that DWP and TPR adapt AE communications to focus on the financial consequences of non- compliance and emphasise that AE cannot be ignored. (Paragraph 30)

The Department have stated unambiguously that employers are not liable for their choice of AE pension scheme. Legal experts, however, have told us there could be grounds for legal action if employers cannot demonstrate due diligence.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 244 of 314 We recommend DWP use their response to this report to make a clear and comprehensive statement about an employer’s potential liability. DWP should also confirm where liability will fall if a scheme performs badly or fails. This would provide reassurance to small and micro-employers choosing a scheme.

For some employees, notably higher earners, saving for retirement in a Lifetime ISA may complement pension saving. Those with a limited disposable income, however, will need to weigh competing priorities and many will be faced with the option to either save in a LISA or remain in their workplace pension. Whatever the attractions of the LISA, it must not be presented as a direct alternative to AE. Savings under AE carry an employer contribution, which will not be available in the LISA. Opting out of AE to save for retirement in a LISA will leave people worse off. Government messages on this issue have been mixed. While the DWP has been very clear that the LISA is not a pension product, the Treasury has proffered an alternative view.

We recommend the Government develop a communications campaign that highlights the differences between the LISA and workplace pensions. It should make it clear that the LISA is not a pension and that, for employees who have been automatically enrolled, any decision to opt-out is likely to result in a worse outcome for their retirement. The Government should also conduct urgent research on any effect of the LISA on pension saving through AE. The findings of this research should be reported in time for the 2016 Autumn Statement. We will review that evidence before the introduction of the LISA.

Any further changes to AE should be implemented after the critical phase, due to complete in 2018, when small and micro employers must comply with their duties. The 2017 review will be an ideal opportunity to consider the future of AE and we welcome the Minister’s invitation to engage with it. (Paragraph 62)

We recommend that as part of its 2017 review of AE, the Government considers:

 removing the lower qualifying earnings band for contributions and lowering the earnings trigger threshold in order to bring more low paid people, including many more women, into AE;  mechanisms for automatically enrolling self-employed workers, including how the income tax self-assessment system might be used;  approaches to increasing contributions beyond the statutory minimum of 8% of qualifying earnings, including mandatory increases in employee and employer contribution rates and means of encouraging greater voluntary contributions;  steps necessary to create a single, comprehensive pensions dashboard by 2019 and the degree of Government intervention necessary to deliver on its pledge.

Read the full report - Eleventh Report of Session 2015–16.

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Updated automatic enrolment detailed guidance 31 May 2016

The Pension Regulator’s detailed guidance has recently been updated to include the changes which came into force on 6 April 2016.

Changes include the new thresholds, changes relating to worker exceptions (including the new employer option to not automatically enrol a director) - and changes to the timings for completing the re-declaration of compliance when carrying out cyclical re-enrolment.

Follow this link to download all of the guidance.

Do you know?

 Group personal pension schemes open to all employers can now apply to appear on TPR AE list  More employers are approaching their re-enrolment date. What does this involve?

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 245 of 314 Auto enrolment regulations update with extended Q&A 31 May 2016

Register now for The Pension Regulator’s webinar on 30 June. The focus will be April 2016 regulation changes and a longer Q & A to answer more of your questions.

The webinar will also provide you with the latest automatic enrolment compliance and enforcement facts and figures.

The latest compliance and enforcement bulletin includes two case studies:

1. An employer in the restaurant sector who had not paid their £400 fixed penalty fine was issued with an escalating penalty notice. However, because they contacted TPR on receipt of the escalating penalty notice, they avoided paying further penalties because they put things right by the specified deadline.

2. An employer in the healthcare sector informed TPR that they had a problem with their provider who would not offer a qualifying scheme. However, as the employer only became aware of this after their staging date and no scheme had been put in place, they ended up paying contributions backdated to the staging date. This case shows the potential consequences of not allowing sufficient time to prepare.

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Aviva launches pre-review of automatic enrolment 15 June 2016

Aviva, the largest provider of workplace pensions in the UK, has announced it is to start an in depth pre-review of auto- enrolment in advance of the government’s own review in 2017.

The study will consider the impact of AE since launch, the current position and the future of the retirement savings programme as employers and employees approach the first increase in minimum contribution levels. Aviva offers workplace pensions to firms of all sizes, from large corporates to micro-businesses and continues to be actively involved in the AE market as hundreds of thousands of smaller companies begin to approach their staging dates.

The Pre-Review will include a series of events with policy and industry experts, policymakers, employers, and advisers. It will also build on consumer research and analysis Aviva has been carrying out since 2013 in the Working Lives Report.

The Aviva study will cover a range of topics, including:

 Whether AE should be expanded to cover new groups of people (including the self-employed)  Given the crucial role of employers; what their experiences are and what would help them next  Whether total minimum contributions should be increased beyond 8% and how the industry can engage consumers and employers to contribute more than the minimum.

Andy Curran, Managing Director, Corporate and Business Solutions at Aviva, said:

“Most people would agree that auto-enrolment has been a great success in getting more people to start saving for their retirement, and our own research shows that around two thirds of employers and employees agree with AE. But we can’t be complacent if we are going to succeed in getting people to save smarter for their retirement. We have to recognise that the amount people are saving is still very low and engagement with pension saving is non-existent for some.

There is a real risk that auto-enrolment has made some people believe the job is done when it comes to preparing for retirement, but in reality it is just the start. By carrying out this in-depth Pre-Review I hope we can take lessons from the story so far to make the future of retirement saving in this country a real success.”

Read more about the pre-review from Aviva.

Back to Contents The Chartered Institute of Payroll Professionals Policy News Journal

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Automatic enrolment and small employers 16 June 2016

The Pensions Regulator is highlighting that even if you employ only one member of staff, who is employed on a temporary basis, who earns under the qualifying earnings threshold of £10,000, and who does not need to be automatically enrolled into a pension scheme, you will still have automatic enrolment duties that you need to meet.

“Nobody to put into a pension scheme? You still have duties...” says The Pensions Regulator:

You will probably have seen the large character ‘Workie’ calling on small employers and telling them not to ignore the workplace pension. You may now be wondering what to do next. It’s important that you are aware of what your duties are and when you need to meet them by – as you may incur a fine if you do not comply with the law on time.

Look out for a letter The Pensions Regulator writes to all employers to alert them to their duties 12 months before their staging date. The staging date is when your legal duties start. Go to TPR’s website and take 5 minutes to complete the online Duties Checker. This will help you understand how the law applies to you and what duties you have to do and by when – and to avoid the risk of a fine.

Are you an employer? You are an employer if there is a contract of employment – whether this is written or verbal between you and those who work for you. Even if someone who works for you considers themselves self employed, you may still have employer duties.

While deciding if someone is a worker may be clear-cut in many circumstances, it can be more difficult in others. A person may be a classified as a worker if they meet a number of criteria including:

 whether you expect that person to personally carry out work for you,  if you provide what they need to carry out the work (for example tools) ,  if you bear financial cost for faulty work.

Once you have decided who is a worker for automatic enrolment purposes, you must then check what your duties will involve and if any of them must be put into a pension scheme.

If you decide you are not an employer (e.g. you are a sole director company with no other staff) and so you do not have duties you should use the Duties Checker to let TPR know this is the case.

If you do not have any workers to automatically enrol in to a pension, you still need to write to them to tell them about automatic enrolment and how it applies to them. Template letters that you can use are available on TPRs website.

Complete and submit a declaration of compliance Whether or not you have workers who must be put into a pension, you need to complete a declaration of compliance and submit it to The Pensions Regulator to let them know you have met your duties. The declaration of compliance shows TPR what you have done to meet your duties and must be completed within five months of your staging date – if you don’t do this on time, you may incur a fine.

Bringing your staging date forward If you don’t have anyone who needs to be put into a pension scheme, you can bring your staging date forward to any date, so that you can meet your duties at a time that suits you.

You will need to tell TPR either on or before your new staging date and you’ll need to provide all of the information below:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 247 of 314  Your PAYE reference - found on letters you have received from TPR about automatic enrolment.  Your letter code - a 10 digit reference that appears on all correspondence from TPR about automatic enrolment.  Your current staging date and your new staging date.  Employer’s name, address (including postcode) and email address.  If you have one, your Companies House registration number or equivalent, eg registered charity number, VAT registration number or industrial and provident society number.

Complete your declaration of compliance at the same time You can choose to complete your declaration of compliance at the same time as you bring your staging date forward. Completing your declaration early means you can get this task out of the way and don’t need to think about it anymore. If you decide not to do this, you must complete your declaration within five months after your new staging date.

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Automatic enrolment declaration of compliance 22 June 2016

If you are completing a declaration of compliance for a client, find out what information you need to provide to The Pensions Regulator and when you need to do it.

Your client must provide information to TPR to show how they have met their automatic enrolment duties. This means completing a declaration of compliance within five months of your client’s staging date. If this is not submitted in time, then they could be fined.

It is a legal duty to complete the declaration of compliance correctly and on time. If you’re having difficulties with the automatic enrolment process or with gathering the right information to complete a declaration of compliance by the specified deadline, contact TPR without delay for assistance.

TPR’s website has a useful page of automatic enrolment declaration questions.

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Bring your client’s staging date forward 23 June 2016

The government has added flexibility to make it easier for employers who do not have staff that they must put into a pension scheme to bring forward their staging date without the need to have a pension scheme ready.

If you have clients who want to bring their staging date forward The Pensions Regulator (TPR) has made a change to help simplify the process. The requirement for employers to give TPR a month’s notice if they want to bring forward their staging date has now been removed. They will still need to let TPR know they’re doing it, but it can now be at any point on or before their new staging date.

It is worth noting though, that employers who do have staff to automatically enrol need to agree the new date with the pension provider first, and the staging date will still need to be the first of the month.

However, employers without anyone to automatically enrol can now bring forward their staging date to any date they choose. They can also declare their compliance at the same time, so their duties are completed.

These employers no longer have to set up a pension scheme – unless a worker asks to join one, or if they subsequently have staff to automatically enrol.

Find out more about bringing your client’s staging date forward.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 248 of 314 Corporate groups, ownership and staging dates 27 June 2016

An update from The Pensions Regulator reiterates that ownership is not relevant to automatic enrolment duties; you should not aggregate a corporate group and treat the group as a single employer, just because they might have a common ownership.

Each separate company / legal entity is responsible for the automatic enrolment duties for all of the staff that it has the employment (or service) contracts with – and is referred to as the ‘employer’. If a company does not hold these contracts then it is not their ‘employer’.

I. If the company existed and had workers on 1 April 2012, then its staging date will be determined by the PAYE reference(s) it was using as at 1 April 2012 – and, if using more than one PAYE, the earliest staging date would apply. After 1 April 2012, any change to the PAYE schemes being used will have no effect on the staging date.

II. If the company existed and had workers on 1 April 2012, and did not have or was not using a PAYE scheme, then its staging date will be 1 April 2017. If you start to use a PAYE after 1 April 2012, this will have no effect on the staging date.

III. If the company did not exist or had no workers on 1 April 2012, then its staging date is determined by the date PAYE is first payable in respect of any of its workers – it is considered a “new employer” and will stage at some point from May 2017 onwards.

IV. If the company did not exist or had no workers on 1 April 2012, and does not have and has not used a PAYE, then its staging date will be 1 April 2017.

Try out TPR’s new FAQ pages where the most commonly asked questions are answered and you can search for a specific question in the ‘Ask us a question’ section.

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Automatic enrolment webinar with extended Q&A 29 June 2016

Register now for The Pension Regulator’s webinar on 30 June. The focus will be April 2016 regulation changes and a longer Q & A to answer more of your questions.

The webinar will also provide you with the latest automatic enrolment compliance and enforcement facts and figures.

The latest compliance and enforcement bulletin includes two case studies:

3. An employer in the restaurant sector who had not paid their £400 fixed penalty fine was issued with an escalating penalty notice. However, because they contacted TPR on receipt of the escalating penalty notice, they avoided paying further penalties because they put things right by the specified deadline.

4. An employer in the healthcare sector informed TPR that they had a problem with their provider who would not offer a qualifying scheme. However, as the employer only became aware of this after their staging date and no scheme had been put in place, they ended up paying contributions backdated to the staging date. This case shows the potential consequences of not allowing sufficient time to prepare.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 249 of 314 NEST responds on changes to scheme rules 29 June 2016

NEST (National Employment Savings Trust) has issued a response to its consultation on proposed changes to the scheme rules.

The response summarises comments received during the consultation, and NEST’s response to those comments. It announces that NEST plans to implement all but one of the changes. The changes take account of the Freedom and Choice changes and the lifting of the restrictions on NEST from April 2017.

The consultation covered various technical updates to NEST’s rules. These include:

 Updates to NEST’s rules to allow lump sums and partial lump sums to be paid as benefits as provided for by the ‘Freedom and Choice’ changes introduced in April 2015  Changes which reflect amendments Parliament has made to lift the restrictions on transfers and contributions on NEST from 2017  ‘Tidying up’ changes, for example to bring the rules into line with recent legislative changes such as the change to pension input periods.

The consultation response can be found on NEST’s website.

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Declaration of compliance report 30 June 2016

The declaration of compliance from The Pensions Regulator report now includes re-enrolment figures. Data up to the end of May 2016 has been published.

The Pensions Regulator publishes monthly information on automatic enrolment, derived from information submitted by employers when they complete their declaration of compliance. As employers have up to five months from their staging date to provide their declaration, employers who staged from February 2016 may not yet have completed the process so the figure for eligible jobholders that have been automatically enrolled is likely to be higher than that shown in the report.

As of April 2016 the declaration of compliance report now includes information about employers who have complied with their re-enrolment duties.

Headline figures from the report are:

 142,977 employers have automatically enrolled jobholders  6,299,000 jobholders enrolled into automatic enrolment pension schemes  1,743 employers have automatically re-enrolled jobholders  104,000 jobholders re-enrolled into automatic enrolment pension schemes

Read the full declaration of compliance report.

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Half of small businesses not ready to provide workplace pension 8 July 2016

New research from online business service, Geniac, has found that over half (52%) of small businesses are not confident their business will be ready to offer the auto enrolment pension scheme within the government deadline.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 250 of 314 SMEs are in danger of incurring additional costs and penalties if they do not act soon. However, recent research shows that nearly two-thirds (64%) of small business owners say that unexpected costs have caused serious business issues including: experiencing profit losses (23%); being forced to readjust growth targets (21%); and having to let staff go to free up funds (7%); demonstrating the need for businesses to ensure they receive professional advice.

Mike Galvin, co-founder of Geniac, comments, “The fact that over half of small businesses are unprepared for auto enrolment should ring alarm bells. Entrepreneurs must avoid sleepwalking up to the deadline as this could cost them dearly, particularly fledgling companies with limited budgets.

“Thousands of business owners are simply in the dark over how to handle this major administrative change, or are putting off sorting it because of the time involved. To avoid unexpected penalties, business owners should seek professional advice to get ready by the deadline.”

To find out more you can download the full research report.

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Call for evidence – NEST: evolving for the future 11 July 2016

A consultation has been published to consider whether the National Employment Savings Trust’s (NEST) remit needs to better reflect recent changes to the pensions landscape.

As part of Automatic enrolment in workplace pensions The Department for Work and Pensions (DWP) has launched a call for evidence on NEST, the government-backed provider of workplace pensions, and their future.

The consultation will consider whether the NEST remit needs to better reflect recent changes to the pensions landscape, including the introduction of the pension freedoms and the new State Pension, to meet the needs of its 3 million members. This may include providing new ways for members to access their pension savings and expanding the scheme to enable individuals, employers and other schemes to access NEST’s services.

With the introduction of automatic enrolment, there has been a move towards mass-market defined contribution pensions, and the government has made changes to how people can access their pension savings.

Attitudes towards retirement are changing – rather than a sudden event, people are beginning to view retirement as a period of transition. This means that new options are needed to adapt and appeal to meet consumers’ needs.

In undertaking this call for evidence, the government recognises the unique status of NEST in the pensions market, and that its core business will remain serving those workers and employers that are in its target market. To inform the debate, DWP has developed a series of principles to consider in weighing up proposals for change to NEST’s policy framework:

 Inclusiveness – focus on the benefits to NEST’s target market – low to moderate earners , regardless of their total pension wealth  Consumer focused – ensure employers and consumers have choice and control, and that NEST is able to meet the needs and aspirations of its members  Value for money – NEST remains a viable, low-cost, well run scheme that is stable over the long term  Sustainability – enable NEST to keep pace with the rest of industry, offering members comprehensive retirement saving solutions that helps to lock in confidence to the broader pension system.

The call for evidence NEST: evolving for the future will run for 12 weeks (closes at 5pm on 28 September 2016).

CIPP comment The Policy Team will be reading and disseminating this consultation and will involve members and the industry accordingly for your input.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 251 of 314 Automatic enrolment Compliance and Enforcement Policy 14 July 2016

A minor change has been made to The Pension Regulator’s Compliance and Enforcement Policy.

Following a recent consultation on TPR’s prosecution policy, they have removed the prosecution section from the AE C&E Policy, as the subject is now covered by a standalone policy applying to the whole of TPR’s business.

The only change to the AE C&E Strategy is a reference added to the new standalone document. The new standalone Prosecutions Policy has had the following changes made to it:

 a paragraph has been added on victims of crime  a paragraph has been added on prosecution of organisations as well as individuals  the paragraphs on the test that TPR apply in deciding whether to prosecute have been shortened and simplified  a table has been added showing all of the offences under pensions law (only those applicable to AE).

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Advisers help drive success of automatic enrolment 15 July 2016

Awareness and understanding of automatic enrolment is now almost universal amongst business advisers; recent research from The Pensions Regulator shows that more than nine out of ten are now helping clients meet their duties.

Workplace pensions are becoming business as usual across the UK, with employers confident they can comply and the majority of advisers having now been approached by employers.

The research, based on surveys carried out between February and April 2016, also shows that understanding amongst small employers saw a significant rise from 68% to 81%.

Key findings from the Regulator’s analysis of their recent employer and intermediary tracker research found:

From the employer survey:  Understanding amongst small employers saw a significant rise from 68% to 81%, and remained largely unchanged for micro employers rising from 56% to 60%.  Direct communications from TPR continued to be the main catalyst for employers to start preparing for automatic enrolment. Of those employers who stated that both TPR direct communications and advertising prompted action, nearly two thirds stated the advertising encouraged them to look again at the direct communications  The vast majority (90%) of employers continued to express confidence in future compliance with automatic enrolment (93% in autumn 2015).  The majority of employers continued to have positive perceptions of workplace pensions. However, automatic enrolment was still more likely to be perceived as a challenge among micro employers than among small employers.

From the intermediaries’ survey:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 252 of 314  Awareness and understanding of automatic enrolment is now almost universal amongst business advisers - and more than nine out of ten are now helping clients meet their duties.  Workplace pensions are becoming business as usual across the UK, with employers confident they can comply and the majority of advisers having now been approached by employers.  Between 84-94% of all intermediary types had been approached by clients regarding automatic enrolment services; this contact was perceived to be mostly prompted by direct communications from the regulator.  Familiarity with the regulator remained at a high level this wave for all intermediary types and the regulator’s website remains popular – 90% of intermediaries had visited the TPR website.  Most intermediaries either had faced, or expected to face, challenges when responding to clients and offering automatic enrolment services. Around half of accountants, bookkeepers and payroll administrators continued to feel ‘partially’ able to answer clients’ queries.  There remained significant differences in the specific types of services offered by intermediary types.

This is the second survey in a row that advisers have shown such high levels of understanding and activity and as a result this will be TPR’s last intermediaries’ awareness survey, however they will continue to work closely with professional bodies and closely monitor the impact of their communications to advisers.

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Delay in automatic enrolment contribution rises confirmed 19 July 2016

Legislation has been laid before Parliament which confirms that the next two phases of minimum contribution rate increases will be aligned to the tax years.

As previously announced in the Spending Review and Autumn Statement 2015, to simplify the administration of automatic enrolment for the smallest employers in particular, the next two phases of minimum contribution rate increases will be aligned to the tax years. Instead of increases taking place in October, they will now occur in April of the following year.

Legislation which comes into force on 1 October 2016, The Employers’ Duties (Implementation) (Amendment) Regulations 2016, confirms the delay to the next two scheduled increases in automatic enrolment minimum contribution rates. Under the current timetable minimum level contributions are scheduled to rise from 2% to 5% in October 2017, and from 5% to 8% in October 2018. These increases will now take effect in April 2018 and April 2019.

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Automatic enrolment: Do you know how and when to use postponement? 19 July 2016

According to The Pensions Regulator (TPR) business advisers are not clear about when to best use postponement and what actions need to be taken.

Research by TPR has shown that there is now almost universal understanding among business advisers of the tasks that need to be carried out for employers to comply with their automatic enrolment duties. An area which continues to prompt questions from advisers is postponement – a useful tool for employers, especially those who employ temporary or seasonal workers.

Key points

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 253 of 314  An employer can temporarily postpone the assessment of workers for automatic enrolment purposes for up to three months.  Postponement can be used for all of the employer’s staff or just some of them.  If your client postpones from their staging date, the staging date does not change.  If your client chooses to postpone from their staging date, they still have duties (eg they must write to tell the staff who will be postponed, within six weeks of their staging date).  The declaration of compliance date does not change – this remains as 5 months after their staging date.  Postponement cannot be used with re-enrolment. If the staff meet the criteria to be enrolled on the re-enrolment date, then re-enrolment must take effect from that date.

Why would an employer use postponement?

One of the main reasons your clients might decide to postpone the assessment of their workers is if they have temporary or short-term staff who they know will stop working for them within three months. For example, seasonal fruit pickers.

Using postponement can also be helpful when assessing those staff whose earnings would usually fall below the earnings threshold, but where an increase such as a bonus might temporarily take their earnings over the trigger level.

If your clients apply a probationary period to new starters, then it can be helpful to use postponement to delay assessing these individuals until after their probationary period is passed (assuming it is not longer than three months).

Your clients might also choose to use postponement in order to align automatic enrolment with their other business processes. For example, if your client’s staging date falls in the middle of a pay period, it may be helpful to postpone to the beginning of the next pay period.

When can postponement be used?

Your client can postpone automatic enrolment from:  their staging date  a staff member’s first day of employment  the date a staff member first becomes eligible for automatic enrolment.

If your client postpones from their staging date, it doesn’t change their staging date.

Your client can postpone for up to three months. They can postpone as many or as few staff as they like and the postponement period doesn’t have to be the same length for everyone.

Note that staff can choose to opt in to your client’s pension scheme during the postponement period. More information on what to do if this happens can be found on TPRs website.

What action to take?

An employer can postpone an individual, some, or all, of their staff. If they do, they must write to these staff within six weeks of the date that postponement starts, to tell them:

 that their assessment has been postponed  the end of postponement date, and  that they have the right to opt in or join a pension anytime.

TPR have a sample postponement letter on their website that can be used to write to staff.

There’s no need to tell TPR that a client has decided to use postponement. And remember – the declaration of compliance date will not change.

What happens at the end of the postponement period?

On the last day of the postponement period, your client will need to know whether each staff member, whose assessment they’ve postponed, is eligible to be automatically enrolled – if they still work for them.

If they are eligible, your client must put them into a pension straight away. You cannot postpone again. This is true even if they postponed for less than the three months allowed.

However, if any are not eligible, then they will need to be monitored every pay cycle from then on, to see if they become eligible in the future. If they do become eligible, you could then apply postponement again in respect of them.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 254 of 314 Common postponement questions

Can we use postponement more than once?

Yes, but only for staff who are assessed as not eligible to be automatically enrolled on the last day of the postponement period. Where a member of staff is eligible to be enrolled, you cannot postpone again and you must put them in a pension scheme (as explained above).

If a member of staff asks to join my pension during the postponement period, when do I start paying money into the pension?

If any member of staff writes asking to join a pension, you need to assess what they have earned and how old they are – in the pay period when you receive the notice that they want to join.

Further information

 Automatic enrolment postponement  Automatic enrolment detailed guidance

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High compliance rates underpin success of automatic enrolment 28 July 2016

Two thirds of all employees are now active members of a pension scheme, compared with just 47% in 2012.

Automatic enrolment continues to bring more people into workplace pensions with pension saving again becoming the norm, according to The Pensions Regulator’s (TPR) Automatic Enrolment Commentary & Analysis 2016.

TPR’s fourth annual report shows how automatic enrolment continues to help turn around the historic decline in pension provision. Two thirds of all employees are now active members of a pension scheme, compared with just 47% in 2012.

Compliance rates amongst the first group of small and micro employers to undergo automatic enrolment are above 95% - demonstrating the effectiveness of TPR’s communications to employers including ‘nudge’ letters and emails, awareness-raising with trade associations and business networks, and a national advertising campaign in partnership with the Department for Work and Pensions.

Charles Counsell Executive Director for Automatic Enrolment said;

“Our key challenge in the past year has been to engage hundreds of thousands of small and micro employers and to help them prepare for automatic enrolment.

We needed to target these employers in new and innovative ways. The hard work and commitment of the many organisations who support employers – from trade bodies to employer representative bodies - has made a huge difference.

The compliance rates achieved have been consistently at the top of our expectations and the savings landscape has been transformed. But we know the job is not yet done and there are still significant challenges ahead.”

The majority of employers left to stage (57%) will be micro employers (employing 1-4 people), and of this sub-total, just over a third (34%) will employ just one person.

A redesigned website, emails and letters were part of a package of communications designed to make it as easy as possible for these employers to comply with the law.

In the report, TPR also updates its forecast of the numbers of employers due to stage in the next two years. There is little change in the number of employers forecast to have workers that they will need to place into a pension scheme. This remains up to 950,000.

However, the overall number of employers expected to have duties has been revised down to between 1.32m and 1.46m. This includes employers who will not need to put workers into a pension scheme but will still have other duties, such as declaring compliance, or providing workers with information. The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 255 of 314

The revision is largely as a result of TPR identifying a large number of single person directors (SPDs) in the summer 2017 stages. The duties do not apply to SPDs, although this may change if they take on other workers.

TPR identified these employers after obtaining access to real-time information (RTI) data from HMRC, and also as a result of direct feedback from employers written to about AE. TPR intends to publish an updated forecast annually.

Other key points from the report include:

 The number of employers using DC schemes for AE has risen from 86% to 93%. Of those who chose to put their staff into a DC trust scheme, 98% chose a master trust, up from 94% the previous year.  Around half of workers who have been put into a pension have been automatically enrolled into a master trust. (3 million).  97% of workers put into a master trust are in one with master trust assurance.  There continue to be high levels of awareness among small (95%) and micro (79%) employers due to stage in 2016 and 2017. This increases the closer they are to staging.  From 16 October to 31 March 2016 185,107 employers used the new Duties Checker tool on TPR’s website.  As of March 31, 13,484 of those who completed the declaration brought forward their automatic enrolment duties.

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The Pensions Regulator update 2 August 2016

The Pensions Regulator has a number of updates for business advisers including dates for upcoming events.

Your clients’ automatic enrolment (AE) questions answered

We’ve just launched a new section on our website where you and your clients can find information on the most commonly asked AE questions. Have a look at it here. The questions are based on the calls we get from employers, so you can see what your clients want to know about. We’ll keep adding to this section as we get more questions in – you can also let us know what you’d like to see featured in this section by emailing us.

Regulation updates – watch our webinar

Make sure you keep up to date with the regulation changes that have been made this year by watching this recording of our recent business adviser webinar. A record number of you signed up to watch our AE experts answer your questions and bring you up to speed on the latest news. We’ll be running another one soon, so watch out for the registration details in a future News-by-email

How many of your clients have six months to go?

This month, we’re writing to over 95,000 small and micro employers with less than six months to go until their staging date to tell them it’s time to choose a pension scheme. Lower paid staff only get tax relief from the government in certain types of pension scheme, so this is one of things you’ll need to consider if you’re helping your clients choose a scheme. Find out more.

September events in Edinburgh and Nottingham

Please join us this September for one of our half day business adviser events, where you can find out about the latest regulation changes and how you can help your clients comply with their legal duties. We’re offering morning and afternoon sessions on 6 September in Edinburgh and 14 September in Nottingham. Register for either event now.

Join our expert panel for a live online Q&A

Our popular LinkedIn Q&A session is back! Please join us from 10 – 11am on 9 August where you can ask us about any aspect of automatic enrolment. Last time we answered questions on topics including re-enrolment communications, Limited Liability Partnerships and postponement. In order to participate, you’ll need to join our LinkedIn group before the Q&A and post a question in the same way as you would start a discussion.

Stat of the month: 12,000

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 256 of 314 It’s time for 12,000 large employers to re-enrol their staff this year. Re-enrolment happens every three years and it’s important to plan ahead. Find out what you need to do.

New Code of Practice for DC schemes

The Pensions Regulator’s new code of practice for defined contribution (DC) pension schemes, which sets out the standards that pension trustees need to meet to comply with legislation came into force on 28 July 2016. The code, which applies to all schemes offering money purchase benefits, is supported by a series of 'how to' guides that provide more detail on how trustees can meet those standards in practice. TPR has also produced a tool to help trustees to assess their scheme against the standards in the code, so that they can identify areas requiring improvement.

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Automatic enrolment hits 200,000 employer landmark 10 August 2016

The Pensions Regulator has published their monthly declaration of compliance report which shows that more than 6.5 million workers have begun saving after being put into a pension by their employer and more than 200,000 employers have completed their automatic enrolment duties.

More than three times as many small and micro employers (over 156,000) have now complied compared to all large and medium employers put together (over 44,000). More than 960,000 employees of small and micro employers have been enrolled.

This month’s Declaration of Compliance report shows that by the end of July, more than 6.5 million workers had begun saving after being put into a pension by their employer.

Read TPR’s press release with comments from Richard Harrington, Minister for Pensions and Charles Counsell, Executive Director for Automatic Enrolment.

All employers have legal duties and can use the Duties Checker on TPR’s website to quickly understand exactly what they need to do.

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Automatic enrolment: Don’t let your clients’ holiday plans risk a fine 11 August 2016

If your client's declaration of compliance deadline is 31 August, you can help them to avoid a fine by starting the declaration as soon as possible and ensuring that it’s completed on time.

Note that Monday 29 August is a Bank Holiday.

It is important that your client completes a declaration of compliance and submits it to The Pensions Regulator so that they know what actions have been taken to meet their duties. This needs to be done within 5 months of your client's staging date. If you are performing some of the tasks on their behalf, then make sure you agree with your client who will complete the declaration.

The Pensions Regulator produces a declaration checklist to help gather all the information needed to complete the declaration.

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Re-enrolment guidance for employers revamped 25 August 2016

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 257 of 314 The Pensions Regulator has launched new online content giving guidance to larger employers on their re-enrolment duties.

An introductory page provides an initial overview of the steps, along with timings of when employers should aim to complete these steps. The overview page also includes ‘The essential guide to re-enrolment and re-declaration’, which is available to download and provides employers with a cut down version of the online content if they require a quick reference guide.

The new online content is composed of 4 main steps:

1. Choose your re-enrolment date 2. Assess your staff 3. Write to staff that you have re-enrolled 4. Complete your re-declaration of compliance

TPR are also actively encouraging employers to keep them up to date with their contact details.

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Would you like The Pensions Regulator to speak at an event? 25 August 2016

If you would like The Pensions Regulator to come to your event, free of charge, and speak about your chosen elements of automatic enrolment, you just need to complete an online speaker request form.

The industry liaison team at The Pensions Regulator regularly speak at events across the UK. The focus tends to be on the main employer duties for automatic enrolment (including the new regulations from April 2016), however TPR will cover a range of other subjects relating to the legislation such as:

 Re-enrolment (cyclical and immediate)  Compliance & enforcement  Myths and misunderstandings quiz  Providing AE services as a non-regulated business adviser  The employer journey, including completing the duties checker  Choosing a pension scheme and factors to consider, including tax relief  Sector specific events, for example, for care professionals.

If you would like TPR to come and speak at an event, please complete the online speaker request form.

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Revised guidance on choosing a pension scheme 26 August 2016

The Pensions Regulator has revised their web content on choosing a pension scheme to make the information more accessible to small and micro employers for their automatic enrolment duties.

TPR research shows that a major concern for small and, especially, micro employers, is making the right choice of pension for their staff. So TPR has redesigned web pages in the online step by step guide to automatic enrolment, to help small and micro employers quickly navigate to the key information that they need.

The key elements of the revised design are as follows.

On the main Choose a Pension Scheme page:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 258 of 314  Reducing the volume of content to allow better navigation – most supporting content is now on the ‘what to look for in a scheme’ child page  Highlighting some key considerations – including tax relief, but signposting to content on the child page that supports this  Clearly signposting those pension providers that have said they are open to all employers, including GPPs and Master Trusts. This list will continue to grow as more providers ask to be included/gain master trust assurance, and will be regularly randomised.

On the child page What to look for in a scheme

 Content is presented in a more sequential manner – to give more guidance on key considerations  Tax relief content is simplified – including a table to show which pension schemes offer which type of tax relief  Revised content on costs and charges.

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Pensions Regulator hosts free business adviser events 30 August 2016

Join The Pensions Regulator (TPR) in September for one of their half day business adviser events, where you can find out about the latest regulation changes and how you can help your clients comply with their automatic enrolment legal duties.

At the seminars you’ll learn about the tasks employers need to complete to meet their legal duties. There will be a panel of automatic enrolment experts who will take you through the basics, as well as some of the areas business advisers have told TPR they find more challenging. These include:

 When and how to use postponement  Your role in choosing a scheme for your client  Duties for sole director companies.

Following feedback from previous events, TPR are also including information on re-enrolment, so wherever your clients are in the auto enrolment journey, experts will be able to help you support them.

TPR are offering morning and afternoon sessions on 6 September in Edinburgh and 14 September in Nottingham.

Follow this link to register for either event.

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Extended refresher webinar - plus LinkedIn Q&A 13 September 2016

Join The Pensions Regulator webinar on 6 October 2016 where they will be covering the basics of automatic enrolment, followed by re-enrolment duties. Benefit from the interactive Q&A with an expert panel throughout.

Register here to join TPR on Thursday 6 October from 14:00 to 15:15 where they will be covering the basics of Automatic Enrolment (AE) for everyone; a possible refresher for those who’ve been working on AE for their clients for a while?

This will be followed by the latest updates, including a brief overview of re-enrolment duties, compliance figures, and new online information and guidance that will help you and your clients. TPR has interactive Q&A sessions with their expert panel throughout.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 259 of 314 TPR is also hosting another LinkedIn session on 11 October from 10-11am, where they will take questions on any aspect of the AE process. To join in, you’ll need to register to join TPR's LinkedIn group before the Q&A and post a question in the same way as you would start a discussion.

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Automatic enrolment: Postponement and seasonal workers 15 September 2016

The Pensions Regulator has produced two new animated tutorials and other tools for employers on the more complex areas covering postponement and seasonal workers.

An employer may have seasonal peaks they wish to avoid, as automatic re-enrolment may result in an influx of new pension scheme members along with the associated communication activities.

For cyclical re-enrolment purposes an employer may choose their date from any date that falls within a six month window, starting three months before the third anniversary of their original staging date and ending three months from that anniversary. In this way the employer has the flexibility to avoid certain fluctuations.

Bear in mind that postponement is not available for an employer to use at automatic re-enrolment. You can only postpone automatic enrolment from:  your staging date  a staff member’s first day of employment  the date a staff member first meets the age and earnings criteria to be put into a pension scheme that you also pay into.

Full details are available on TPR’s website for:

 Postponement; and  Seasonal workers.

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NEST: evolving for the future 22 September 2016

The closing date for responses to this consultation has been extended to 5 October 2016.

Since the establishment of the National Employment Savings Trust (NEST), the pensions landscape has changed. With the introduction of automatic enrolment, there has been a move towards mass-market defined contribution pensions, and the government has made changes to how people can access their pension savings.

This call for evidence seeks views on how NEST might evolve to respond to the changing pension landscape. This consultation is aimed at:

 pensions industry bodies and professionals  trustees and scheme managers  employers and representative organisations

NEST: Evolving for the future – Fairness, simplicity and confidence

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 260 of 314 How business advisers can help clients to choose a pension scheme for auto enrolment 22 September 2016

Research from The Pensions Regulator shows that while some employers are confident and willing to choose a workplace pension scheme themselves, many will seek help and support from their business adviser.

Choosing a workplace pension scheme is something that many small and micro employers will need to think about when automatically enrolling their staff. They will need to either set up a new scheme or check their existing scheme meets certain criteria.

The Pensions Regulator has provided a useful article for business advisers, to help you to understand what you can do to help your clients – either by researching and recommending a scheme yourself, or by making them aware of the considerations to take into account when choosing a scheme, and telling them where to go for more information.

You can support your clients in choosing a pension scheme in a number of ways:

 provide factual information, for example you could identify the pension schemes available and provide a comparison of the schemes’ investment funds, charges and services  recommend a specific pension scheme for automatic enrolment  refer your client to another adviser – you can use websites such as the Money Advice Service retirement adviser directory, which contains advisers who can help employers choose a pension scheme for automatic enrolment.

I am not registered with the FCA – can I still advise my client on which scheme to use?

You can recommend a specific pension scheme to your client so long as you are providing this advice in their capacity as an employer rather than an individual – providing an individual with investment advice will need the appropriate authorisation from the Financial Conduct Authority.

It may not always be clear whether an employer is seeking advice as an employer or an individual, for example if your client is thinking about joining the scheme themselves. You may want to specify in your letter of engagement that any advice you provide to a client is provided in their capacity as an employer – and not as an individual.

If you belong to a professional body they will have a set of ethical standards that you should refer to, which may include that you have sufficient knowledge and experience to offer automatic enrolment services. You should also check to make sure that any automatic enrolment work that you carry out is covered by your professional indemnity insurance.

What considerations should I/my clients take into account when choosing a scheme?

Using an existing pension scheme Check with those running your client’s pension scheme to see whether they can use it for automatic enrolment. If your client can't use their scheme, they'll need to choose a new one that meets the requirements for automatic enrolment. It’s important to look at different schemes to weigh up the different features offered before deciding which is suitable for your client and their staff. You need to think about whether the scheme will accept all your client’s staff, how much it will cost and whether it will work with your client’s payroll software.

Choosing a new scheme Employers are increasingly using schemes run by large, specialist providers that are designed to be used by many different employers. These include 'master trusts' that are run by a board of trustees and 'group personal pensions' that are run by financial service companies, for example insurance companies and investment managers. TPR has a list of schemes on its website which have said that they are open to all employers and which have either had their pension schemes independently reviewed or are regulated by the Financial Conduct Authority.

Tax treatment You should be aware that different schemes apply different tax relief arrangement – relief at source, or net pay arrangement. If your client has staff who don’t pay income tax, it's important to check that the scheme uses ‘relief at source’ as they would still get tax relief from the government. However, some schemes using other tax relief methods may have lower member charges. So your client should consider carefully what is right for their staff. More information about tax relief in pension schemes can be found on TPR’s website – www.tpr.gov.uk/scheme

Investment options Any scheme used for automatic enrolment must have a ‘default investment arrangement’. This is where contributions will be placed, as staff cannot choose their own investments when automatically enrolled (but they can make a choice The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 261 of 314 after). Charges paid out of member savings in default investment arrangements must be no higher than 0.75% a year of the member’s fund. You may also need to consider whether the scheme offers investment options that suit the particular needs of your client, such as ethical funds or funds that comply with Sharia law.

Compatibility with payroll software While payroll software can’t choose a scheme on your client’s behalf, it’s important to know that some may be more compatible with certain pension schemes than others. Payroll software can also help with other automatic enrolment tasks. For example, it is likely to be able to help identify who must be put into a pension scheme. Payroll software can also help calculate contributions and manage ongoing duties.

Additional services Pension schemes may offer extra services, such as working out who needs to be put into a pension scheme, processing requests to join the scheme or helping with ongoing duties. Your client will need to write to staff individually to explain how automatic enrolment applies to them, including how tax relief works. Some pension schemes may offer to do this on their behalf. If the scheme doesn’t do this, we have letter templates which you/your clients can use. Payroll software may also offer this service. If English isn’t the first language of all your client’s staff, you may also want to check whether the scheme can provide communications in other languages.

How much is setting up a pension scheme likely to cost?

You should ask the scheme provider what charges your client and their staff will pay. Different providers charge in different ways, for example an ongoing monthly charge or a one-off up-front charge for the life of the pension scheme. Some schemes may also have an exit fee for employers who change pension schemes. Pension scheme members pay charges to cover the cost of managing their savings. Some schemes may have different charges for different members. For example, some schemes may have lower charges for low paid staff, which may mean that these staff pay less for their pension, even if the scheme uses net pay arrangements for tax relief. You may want to help your client weigh up the costs and charges against the level of services that the scheme will provide. Some services may make automatic enrolment easier for your client over the long term.

TPR recommends employers have a pension scheme in place six months before their staging date Taking the time beforehand to research and compare different costs and service levels will help ensure your client chooses a scheme that is right for them and for their staff.

Useful links

 Business advisers – choosing a pension scheme for clients  Your role in helping clients choose a scheme  What to consider when choosing a scheme  Find a new pension scheme for clients 

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New essential guide to re-enrolment 26 September 2016

For those of you starting to think about re-enrolment, The Pensions Regulator has improved their online guidance and published a new essential guide to re-enrolment.

Your re-enrolment duties must be carried out approximately three years after your automatic enrolment staging date.

Your duties will vary depending on whether you identify that you have staff to re-enrol, or whether you have no staff to re-enrol. Either way, you will need to complete a re-declaration of compliance to tell the Regulator how you have met your duties.

Remember, re-enrolment and re-declaration is your legal duty and if you don't act you could be fined.

The new essential guide to re-enrolment takes you through everything you need to know, from choosing your re- enrolment date to completing your re-declaration of compliance.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 262 of 314

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Extended auto enrolment refresher webinar with Q&A 3 October 2016

The Pensions Regulator is hosting a free webinar at 2pm on Thursday 6 October. The session will include the latest updates, a brief overview of re-enrolment duties, compliance figures, new online information and guidance and two Q&A sessions with an expert panel.

Help your clients meet their automatic enrolment duties on time and register here for the free webinar aimed at accountants, bookkeepers, payroll professionals and other business advisers. TPR will be covering the basics of AE for everyone – and as a refresher for those who’ve been working on AE for their clients for a while.

You will be able to access the webinar page at 13:30 (GMT) on 6 October 2016, 30 minutes before the start of the event.

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LinkedIn live Q&A on automatic enrolment 6 October 2016

Business advisers can join The Pensions Regulator on their LinkedIn group at 10am on Tuesday 11 October.

Experts from The Pensions Regulator will be online and ready to answer your automatic enrolment questions. The Q&A will run on Tuesday 11 October from 10-11am. If you'd like to participate, make sure you join the LinkedIn group before the session starts and post a question in the same way as you would usually start a discussion.

For more information, visit The Pensions Regulator’s events page

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Pension revolution: Self-employed risk being 'left behind' 7 October 2016

October marks four years since auto enrolment was introduced in the UK. So far over 6.5 million people have been enrolled into a workplace pension, with an opt-out rate of less than 10 per cent.

While millions of workers are saving for their future, new analysis from NEST shows that the UK’s self-employed workforce is at risk of being left behind. Data shows that of the 4.5 million self-employed workers in the UK, only 765,000 are currently saving into a pension. Not only are they missing out on tax relief and investment returns, but they risk being left behind and not meeting their aspirations for retirement.

NEST’s calculations show that an automatically enrolled 22-year-old on average earnings of £22,900 could achieve a pension pot of around £150,000 by the time they reach retirement age. With millions of workers changing their retirement prospects through auto enrolment, people that work for themselves are at risk of being left behind.

Commenting, Debbie Gupta, executive director of corporate services at NEST, said:

“Auto enrolment has started a pension revolution, reversing the decline in pension saving and giving millions an opportunity to save for their retirement. It’s great to see the difference it’s making. In the last four years over 6.5 million workers have started saving for their future. However, there’s a risk that millions of self-employed workers are getting left behind.

“Saving a little bit each month can soon add up, particularly when you add on tax relief and investment returns. Pension savings, combined with the state pension can make a real difference to retirement. We all want to carry on The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 263 of 314 doing the things we love - whether that’s going out for dinner, trips to the cinema or maybe even a week in the sun. Having a pension could go a long way to helping achieve those aspirations.”

Malcolm McCurrach, self-employed owner of New Wave Images UK based in Scotland, said:

“I know that saving for my retirement is important, vital in fact. And if I don’t prioritise it, who will? I’ll admit, my wife did give me a little bit of a nudge to get a self-employment pension set up, and I’m glad she did. I have a direct debit paying into my NEST pension every month. I find it really flexible because I have the choice whether to dial it up or down as my cashflow changes. Generally though, I put in the same amount each month and feel peace-of-mind that I am setting aside something for my future.”

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Invitation to agents and payroll bureaux to participate in auto enrolment project 14 October 2016

The CIPP is working with LP Auto Enrolment Solutions on a project to help agents assess the accuracy of the AE processes they have undertaken on behalf of their clients.

For example this could mean the accuracy of when assessments have been performed as well as the deductions that have been made from salary each pay reference period.

This may be of interest to you if you have automatically enrolled a client with particularly challenging or complex circumstances and you are not sure if you have undertaken all the processes correctly, or simply if you would like to reassure yourself that you have the correct processes in place as you continue to support clients in the future.

There will be a small cost to participants of £50 +VAT for each company you would like to check as well as an additional fee of 25 pence per employee per month for each month that has passed since the official staging date. This fee is to cover the resource needed to perform the necessary checks of your data and provide you with a report which outlines any errors found. Following your completed assessments you will also be given an opportunity to discuss any error report produced to establish how these can be addressed. This is included within the costs detailed above, however any subsequent discussion may incur further costs.

This is a confidential service so you can remain anonymous to the CIPP if you prefer and the CIPP will not have access to any individual agent data.

If you would like to take advantage of this opportunity and take part in this project, or would like more information about what it entails please call 01173 709 770 and ask to speak to the Auto Enrolment Policy Department.

This project will take place during October 2016 and we would envisage results being available by the end of November at the latest, however please discuss any pressing timescales with the Auto Enrolment Policy Department in advance of confirming your desire to participate in the project.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 264 of 314 General Pensions News

Guaranteed Minimum Pension (GMP) Checker 6 April 2016

From 6 April 2016 the Guaranteed Minimum Pension (GMP) Checker will be available to all Pension Scheme administrators via GOV.UK to obtain GMP calculations, contributions and earnings information in respect of individual members of their Pension Scheme.

The GMP Checker (formerly the GMP Micro-Service) has been developed to replace the CA1629 - statements for individuals who reach State Pension age on or after 6 April 2016. These statements are no longer being issued.

The latest Countdown bulletin from The National Insurance Services to Pensions Industry (NISPI) provides information about the new Guaranteed Minimum Pension (GMP) Checker.

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Should Government consider introducing compulsion in pensions? 8 April 2016

This was one of the questions asked in a survey from Professional Pensions. Almost two thirds of the industry replied that the Government should contemplate introducing a rate of compulsion into the pensions system.

People will not save enough unless government forces them to according to 61% of Pensions Buzz's 109 respondents. It was argued this is only way to ensure the pension system works properly as there is a genuine risk of low contributions. A third disagreed and argued any coercion went against freedom and choice and the remaining 6% were undecided.

Another question in the survey asked if the Government should auto-escalate contributions for staff over and above already planned increases. 59% replied yes, for all employees and 23% replied yes, for all employees over the age of 40. The remaining 18% said the Government should not auto-escalate higher contributions, suggesting to wait for people to get completely used to the rates after phasing finishes.

The end of contracting-out was also covered in the research where just under two thirds believe defined benefit (DB) members are not ready to pay the increased national insurance (NI) contributions resulting from the end of contracting out. Some blamed the Department for Work and Pensions for the debacle while others said it was the responsibility of schemes. One observation was that the lack of communication was down to trustees and employers both thinking it was the job of the other to tell members.

Just 12% believed DB members are ready to payer higher NI contributions. Around a quarter were undecided

CIPP comment

The Policy Team ran a poll in January/February of this year asking the payroll profession if they are aware that FPS submissions will be rejected in 2016-17 if contracted-out categories are used. We received 90 responses, with these findings:

 18% said software is ready now  36% said software will be ready  Just 6% were not aware  40% said they are aware now due to seeing our poll.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 265 of 314 Countdown bulletin 16 April 2016 14 April 2016

The second issue for April 2016 of the Countdown Bulletin – issue 16 has been published to provide information about the ending of Contracting-out.

This Bulletin – Issue 16 includes a number of updates, including:

Statement of Pensions Liability - CA1629, CA1633, CA1635, CA1637 and CA1931 – confirming that CA1629 statements are no longer issued to PSAs for individuals who reach the state pension age on or after 6 April 2016. To replace the CA1629 statement Guaranteed Minimum Pension (GMP) Checker has been developed that will allow pension scheme administrators (PSAs) to obtain GMP calculations as and when you need them.

The 'GMP Checker' (formerly known as the GMP Micro Service) availability From the 6 April 2016 the GMP checker has been made available to all PSAs to obtain GMP calculations and contributions and earnings information in respect of individual members of their Pension Scheme. During the testing phase with a small number of schemes it was established not all PSAs had easy access to their Pension Scheme Administrator Identification Details (PSAID) and therefore it has been decided to extend the enrolment details allowed to access the GMP checker.

To access the service you will need to populate the user id and password fields. This field will currently accept the id and associated password for PSAID and your associated password. From 6 April 2016 access has also been available by using Practitioner Identification Details (PID) and the associated password.

If you are having difficulty accessing the service please contact Online Services Helpdesk on 0300 200 3600.

Other subjects covered in this issue include:

• Tracking Contracted-out Rights after April 2016 • Scheme Reconciliation Service (SRS) • Information for employers with a Contracted-out scheme • National Insurance Categories from 6 April 2016

The first of the April Countdown Bulletins was published on the 5 April – issue 15 and included details about:

• Statements CA1629 • The “Guaranteed Minimum Pension (GMP) Checker” formerly known as the GMP Micro Service availability from 6 April 2016, and • Enrolment problems – GMP calculation needed

If you would like to be added to the mailing list to receive the Countdown Bulletins directly, please email please send your details (name, company and email address) to the mailbox [email protected].

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Registered Pension Schemes Manual (RPSM) 18 April 2016

The Registered Pension Schemes Manual (RPSM) is now obsolete and has been withdrawn.

The RPSM provides detailed and technical tax guidance for pension scheme professionals and members.

The Pensions Tax Manual (PTM) replaced the RPSM from 2015.

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The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 266 of 314 New Pension Tracing Service website launched 11 May 2016

A new DWP website has been launched by the Pension Tracing Service to help people find their lost pension savings.

There is currently an estimated £400 million in unclaimed pension savings. This is money people have previously saved for their retirement, and the new website will better help people to locate their hard-earned savings.

The wider pension reforms are creating a dynamic market where people have greater freedom and flexibility over their savings, and the DWP expect the reforms will increase demand for the Pension Tracing Service.

Minister for Pensions, Baroness Ros Altmann said:

“People have had on average 11 jobs during their working life which can mean they have as many work place pensions to keep track of.

The new DWP online Pension Tracing Service helps reunite people with their lost pensions, giving details of providers to help people track them down.

I’d encourage anyone who thinks they may be missing out on any savings to use the free online service.”

The new service is simple to use and provides trace results immediately. Individuals enter their former employers’ details into the online database and are provided with contact details for pension schemes they may have paid into. The service is free to use and enables people to search a database of more than 320,000 pension scheme administrators.

The new website has been tested with users with 83% either satisfied or very satisfied with the service they received. There were 169,000 tracing requests in 2015/16 (this covers the online service, agent referred, telephony and postal channels). Over the past 10 years there has been a 436% increase in tracing requests.

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Pension schemes newsletter 78 18 May 2016

The latest newsletter published by HMRC includes clarification about modified reporting requirements for the annual allowance taper.

Other topics covered in Newsletter 78 are:

 Pension flexibility statistics  Secondary annuities - tax framework  Double taxation – certificate of residence requests  Registration statistics  Lifetime allowance  Contacting Pension Schemes Services  Payment date of uncrystallised funds pension lump sums (UFPLS)  Pension flexibility - reporting of non-taxable death benefits through RTI  Serious ill-health lump sums

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Countdown bulletin 17 24 May 2016

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 267 of 314 The National Insurance Services to Pensions Industry (NISPI) has published their latest countdown bulletin which provides information about the ending of Contracting-out.

Issue 17 of the Countdown bulletin has a number of updates, including:

Schemes Ceasing to Contract-out As advised in Countdown Bulletin 14, Schemes that cease to contract-out prior to 6 April 2016 need to notify HMRC of the event. Recent CRM contact with scheme administrators has highlighted that a number of schemes have ceased but HMRC has not been informed.

To help HMRC with their planning, it would be really useful to notify them of these cessations as soon as possible by completing form APSS155A and sending it to:

HMRC - Pension Schemes Services Fitzroy House Castle Meadow Road Nottingham NG2 1BD

Scheme Cessation In recent Countdown Bulletins and at the Pension Conference held last year, NISPI advised that they were looking at ways to improve the Scheme Cessation process in readiness for December 2018.

Once a scheme has reconciled their membership via the Scheme Cessation process, HMRC will request Method of Preservations (MOP’s) for all members. Where the scheme fails to notify HMRC of the MOP’s within 6 weeks then they will record a MOP of “preserved in scheme” and close the file.

Possible Pension Forums in September We are currently considering whether to hold more Pension Forums in September. We would like to discuss with you the ‘Closure scan’ which is due to take place in December. The scan will close off open periods of Contracting-out using the Scheme Contracted-out Number that has been provided by employers on their Full Payment Submissions during 2014 to 2015 and 2015 to 2016. However before we finalise arrangements we would like to know what else you want to discuss at these forums. This is your opportunity to inform the agenda so please send your thoughts on topics to Pension Forums.

Other subjects covered in issue 17 of the Countdown bulletin include the Guaranteed Minimum Pension (GMP) Checker, GMP Increments, the Scheme Reconciliation Service (SRS) and a DWP update.

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New Pensions Bill should protect savers and build on success so far 27 May 2016

The Pensions and Lifetime Savings Association (PLSA) says the new Pensions Bill is an opportunity for the government to secure the success of automatic enrolment and pension freedoms and lay down a sure foundation for a long-term savings policy in the UK to protect savers.

The new Pensions Bill was announced in the recent Queen’s Speech. The PLSA has laid down five ways that the government can make it a Pensions Bill for savers:

Ensure stable pensions policy by establishing an Independent Retirement Savings Commission A commission will help ensure savers’ long-term interests are at the heart of pensions policy and rebuild savers’ belief that they can save for their retirements today, confident the goal posts won’t be moved radically tomorrow.

Safeguard savers from scams by removing transfer requirement on trustees The Pensions Bill should ensure that any scheme receiving a transfer would have to be listed on a registry of legitimate transfer schemes maintained by the Pensions Regulator Help savers make good decisions under pension freedoms by empowering trustees.

Help savers make good decisions under pension freedoms by empowering trustees The Pensions Bill should give trustees and providers powers to help savers spot good value products that are likely to work for them by signposting scheme members to products with a Retirement Quality Mark.

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cipp.org.uk Page 268 of 314 Ensure all savers in Master Trusts are protected by improving regulation The Pensions Bill should grant power to the regulator to make sure all Master Trusts have strong financial backing and competent trustees.

Help defined benefit schemes by simplifying administration and GMP conversion The Pensions Bill should amend the Pension Schemes Act 1993 and clarify the legal process for conversion of GMPs to scheme benefits.

Joanne Segars, Chief Executive, Pensions and Lifetime Savings, said:

“Thanks to automatic enrolment, over six million people are saving in a workplace pension today who were not six years ago and pension freedoms have given people a sense of autonomy and possibility about how they can use their pension savings - but there is still work to do.

For the millions of people saving through automatic enrolment we must make sure their money is working hard for them and is secure in strong and high quality schemes. For many savers who now want to make use of their hard- earned savings it seems pension freedoms bring as many questions as answers – and savers will be looking to schemes and providers for help.

This Pensions Bill is an opportunity for the Government to secure the success of automatic enrolment and pension freedoms. As importantly, it should lay down a sure foundation for a long-term savings policy in the UK and establish a pension commission.”

Click here for further details on the PLSA’s recommendations.

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Pension Finder Dashboard project 31 May 2016

The Money Advice Service (MAS) and Association of British Insurers (ABI) on behalf of the Open Identity Exchange (OIX)* have published a report on the latest phase of the Pension Finder Dashboard project. This is a key milestone in achieving the Government’s vision for pensions dashboards by 2019.

The Pension Finder Dashboard alpha project working group, a collaboration of 14 organisations, recommended that the dashboard could initially be available in one location, however approved finance industry websites and apps should also be able to host it to maximise consumer engagement in the future.

This dashboard will bring together information about a person’s pension savings in to one single place. This will enable people to take control of their retirement savings and transform engagement with their pensions.

This recommendation was based on consumer research carried out to validate the idea of a Pensions Dashboard, and test the consumer concepts such as: consent to find all pensions, share data, and forecasting future income. Respondents were positive about the proposal and thought it might make them more proactive in managing their pensions, seeking financial advice and increasing pension contributions.

The next phase of the alpha project involves developing a prototype dashboard and continuing to work on architecture and governance.

Caroline Rookes, Chief Executive of the Money Advice Service, said:

“Pension provision has changed significantly over recent years and it is more important than ever that individuals make good decisions so their money lasts for the full length of their retirement. We know that online banking has empowered people to engage with their money more regularly. We hope that being able to keep track of their pension savings in a single digital place will ensure that people are fully informed and can make decisions about their future savings in a similar way.

It is vital that consumers remain at the heart of this project. It will also be important for industry, consumer bodies and Government to continue to collaborate and maintain momentum for this project to ensure consumers can access their pensions data by 2019.”

The full white paper report can be found here.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 269 of 314 Back to Contents

Pensions Minister calls for exit charges cap across all pensions 1 June 2016

Proposals to prevent people in occupational schemes facing exit charges for accessing their pensions early have been launched by ministers.

The changes proposed in the consultation will give people in occupational pension schemes access to pension freedoms without the prospect of high penalty charges and will ensure greater consistency across the pensions landscape.

Minister for Pensions, Baroness Ros Altmann said:

“These changes are about giving everyone who has worked and saved hard for their retirement a fair deal by removing the final barriers to the pension freedoms. I encourage the industry and all those with an interest to contribute to this debate.

I urge people to continue to work hard, plan and save for their future, and we will continue to reform the pension system so that it delivers for them.

The Department for Work and Pensions (DWP) will engage with industry on the proposals to introduce a cap for occupational pension schemes. The consultation will build on past government consultations and considers what action is required to ensure equality of treatment for members of occupational pension schemes.”

Economic Secretary to the Treasury Harriett Baldwin said:

“The government are delivering the most far-reaching changes to pensions in a generation. Over 230,000 people took advantage of our pensions freedoms in the first year by accessing £4.3 billion flexibly from their pension pots.

Today’s consultation signals our continued commitment to ensuring that pensions freedoms work fairly for people in practice and that hard-working individuals who have taken out occupational schemes are not disadvantaged.

The intention is that any cap should apply across both occupational and personal pension schemes.”

The consultation Capping early exit charges for members of occupational pension schemes will run for 12 weeks until 16 August 2016.

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Do you pay in to the Pension Protection Fund levy? 2 June 2016

If so you may have a view that you want to share as a result of the various options, set out within the consultation paper, which considers the potential government help available for the British Steel Pension Scheme as a part of a wider package of government support for UK Steel, steel workers and affected localities.

Whilst it is expected that comments and feedback will be forthcoming as a result of the public consultation on British Steel Pension Scheme from those who live or work in Port Talbot, work for Tata Steel UK, in the British steel industry more generally or are members of the scheme. It is also hoped that comments will be provided from those who are connected with occupational pension schemes or employers paying the Pension Protection Fund levy for schemes that they sponsor, or more widely from anyone with a general interest in pensions.

The purpose of the consultation

 seeks views on the regulatory options Government are considering;  invites views from the pensions industry about the proposals; and  seeks evidence on how the any measures can be best brought into effect.

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cipp.org.uk Page 270 of 314 Scope of consultation

This consultation applies to England, Wales and Scotland.

The consultation period began on 26 May 2016 and will run until 23 June 2016. Any submissions received after that date may not be taken into account.

Full details of the British Steel Pensions Scheme consultation paper can be found along with a two page summary factsheet at GOV.UK.

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Spread the word and make sure we can all spot a pension scam 6 June 2016

Citizens Advice recently published research that shows that nine in ten people miss common warning signs of a pensions scam and that as many as 10.9 million consumers have received unsolicited contact about their pension in the last year.

Gillian Guy, chief executive of Citizens Advice said:

“Fraudsters have shifted their tactics to rob people of a retirement income.

“It’s difficult for consumers to stay ahead of pension scams as they evolve. Many scammers use professional looking websites and leaflets to fool their victims into signing up to free pensions advice or cold call with offers of unusually high investment returns.

“Before considering any kind of pension offer, you should check the Financial Conduct Authority’s website to make sure the company is legitimate. If you are worried that you may have been targeted by scammers you can get help and support from Citizens Advice. “If you are over 50, Pension Wise guidance can equip you with the knowledge of what to look out for to avoid falling victim to scams.”

The Citizens Advice Too good to be true report is available to read in full at the Citizens Advice website.

Do you know the top ten signs of a pensions scam?

The Pensions Regulator provides a ten step guide for individuals to help them to spot a scam as well as advice and information for business advisers and trustees to help them protect their clients and scheme members.

 Be wary of cold calls and unsolicited texts or emails  Check everything for yourself  Make sure your adviser is on the Financial Conduct Authority approved register  Check the FCA's list of known scams  Steer clear of overseas investment deals  Don't fall for 'guaranteed' returns or professional looking websites or brochures  Don't be rushed into a decision  If you're aged 50 or over and have a DC pension, talk to Pension Wise  Ask The Pensions Advisory Service for help if you have doubts  Contact your provider and call Action Fraud if you've already signed and think you've been scammed

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Pension scheme administrators operating relief at source 8 June 2016

Guidance has been updated to reflect the two year easement for claiming relief at source at the rest of the UK basic rate and not the Scottish Rate of Income Tax until April 2018.

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 271 of 314 Updated guidance:

Scottish taxpayers As a pension scheme administrator you don’t need to do anything differently at the moment for Scottish taxpayers. You should continue to claim relief at source at the UK basic rate for all members. Until April 2018, any adjustments that might be needed will be made by HMRC through Self Assessment or through PAYE coding.

Registered pension scheme administrators and pension providers will have to make changes to their IT systems before April 2018, to enable them to claim relief at source at the correct rate from April 2018 onwards.

An article from HMRC Employer Bulletin 56 provided this update in October 2015:

Pension schemes operating relief at source

The Government has agreed that from April 2016 until April 2018, Registered Pension Scheme Administrators (RPSAs) can continue to claim relief at source (RAS) at the rest of the UK basic rate for all scheme members, irrespective of any difference between the Scottish and the rest of the UK basic rates. This is to allow time to prepare your systems. However we would expect you to inform your members about the implications of the Scottish Rate of Income Tax and its impact on RAS.

If the Scottish Government choose to vary the Scottish Rate of Income Tax for the tax years beginning 6 April 2016 or 6 April 2017, HMRC will reconcile any difference in RAS for Scottish taxpayers by adjusting their tax liability through the Self-Assessment process or through PAYE coding.

For the tax year beginning 6 April 2018 onwards, HMRC will notify RPSAs of the rate of RAS to apply for both Scottish scheme members and those in the rest of the UK, enabling RPSAs to claim RAS at the correct rate.

Scottish rate news page

See HMRC’s Scottish Rate of Income Tax news page for all information relating to the implementation of the Scottish Rate of Income Tax.

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DC code and how to guides positive development says PASA 13 June 2016

The Pensions Administration Standards Association (PASA), has responded to The Pensions Regulator’s (TPR) DC code and ‘how to guides’ declaring them hugely positive for pensions administration.

In November 2015, TPR published a new draft Code of Practice on the governance and administration of defined contribution (DC) trust-based pension schemes. TPR has now published a series of ‘how to guides’ setting out more practical guidance for trustees on how they can satisfy their legal obligations and the standards that TPR expects.

Sara Cook, Director at PASA, commented: “We believe the Code should be wholeheartedly welcomed by those working in pension administration. It is particularly useful for trustees assessing their schemes and is actually more far reaching than new legal requirements relating to governance and administration.”

Key aspects in relation to administration are:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 272 of 314  Greater prominence at trustee meetings.  Accurate and more frequent record-keeping reporting to evidence that work is being carried out properly.  Expectation that contributions are invested within three working days of receipt and completion of a reconciliation  Consultation on the potential introduction of mandatory or recommended maximum timescale for completing DC transfer values.  Requirement that the Chair’s statement provides evidence on how the scheme represents good value for members.  Encouraging trustees to establish whether their administrator has been accredited, and that this should be subject to review on a more frequent basis.

Cook continued: “This new code is good news for administration, providing the groundwork for lots of positive development in the future. It is particularly gratifying that not only is TPR’s approach within its guides perfectly aligned with our own approach in that it focuses on outcomes, specifically member outcomes, but also that PASA accreditation has been given as a specific example of independent accreditation. This clearly demonstrates how important the PASA accreditation has become and that “good administration is the bedrock of a well-run plan.”

PASAs full response to the guide can be found here

The draft Code is expected to replace the existing DC Code from mid-2016.

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Creating a pensions dashboard 17 June 2016

A white paper has been published which reports on the progress of the project ‘creating a pensions dashboard’ which is set to be available to consumers by 2019.

The white paper looks at progress so far and discusses the key challenges that have been identified, explores some solutions and provides recommendations for the next phase of the project.

Background

In 2015 a discovery project (OIX, 2015) with participants from industry, consumer bodies and government was undertaken to address the problem of ‘lost pension pots’.

Previous modelling commissioned by the Department for Work and Pensions (DWP) in 2010 shows that on average, individuals will work for 11 employers during their working life, meaning that going forward many individuals will acquire multiple pension pots.

That earlier project tested the hypothesis that “consumers will take action and make informed choices when they are provided with information and data about their pension savings.” The findings demonstrated that matching people with their defined-contribution pension pots and presenting the results in a dashboard were important to consumers and could lead to changed behaviour when engaging with pensions.

Out of this work was born the next phase of the project or the ‘Alpha Phase’ as it has become known.

Alpha Phase

The Alpha Phase officially started in February 2016 with 14 organisations representing the views of consumers, the financial services industry and the government. This phase concentrated on aggregating a comprehensive picture of people’s accumulated pension savings including defined-benefit pensions and defined-contribution pensions alongside the State Pension. The core project focused on the following areas: consumer journeys; consumer research; architecture and data standards; and policy and governance.

The Pensions Dashboard Model

One of foundation blocks of the project was creating a definition for a Pensions Dashboard. The Pensions Dashboard is a free-to-consumer online resource that enables people to find and check their pension savings. The resource comprises three core components:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 273 of 314

 Digital Identity (ID): The identification technology that verifies the user’s identity before they can access their data.  Dashboard User Interface (UI): the set of screens, menus and commands through which the user views their information and may carry out tasks based on it.  Pension Finder Service (PFS): The technology that facilitates finding an individual’s pension savings, collects information from pension providers (and DWP for State Pension) and delivers it to the User Interface.

There are three options for the way a Dashboard User Interface can be provided to consumers. The identified options are:

 Option 1: single destination model. There would be a single Dashboard User Interface and this would be accessed through one source which could be a consumer guidance brand.  Option 2: white-labelled model. Again, there would be a single Dashboard User Interface, but this could be white-labelled and accessed through multiple financial services brands (such as banks, pension providers, financial advisers, fintech startups and not-for-profit organisations).  Option 3: federated model. This would allow for multiple Dashboard User Interfaces, so that each provider could customise the interface and user experience to suit its own customers.

Recommendations and Next Steps

Consumer research has suggested that consumers value the option of a single destination dashboard above the others for reasons of trust, assurance with their data and simplicity in a complex subject area. Building a single- destination dashboard also offers the benefits of a more controlled environment in which to develop and test a high profile product containing sensitive data, allowing risks to be managed and reputational damage (particularly in terms of data protection issues) to be avoided.

At the same time, the benefits of making the Pensions Dashboard available through other financial organisations where consumers are already engaging in financial matters cannot be ignored, especially as this could have greater reach when trying to engage the population in their retirement planning. With this in mind, the recommended approach is initially to build a single-destination dashboard that is, nevertheless, capable of, and technically ready to, be white- labelled through approved industry websites (such as pension providers), once the complete Pensions Dashboard service has been fully tested from a security and quality assurance perspective.

In terms of the Pension Finder Service, the practicalities of starting with a single Pension Finder Service outweigh the potential innovation benefits of multiple Pension Finder Services. However, the architecture will be future-proofed to enable evolution to support other models, including multiple dashboards, should demand arise.

The Project is now moving into a second phase of Alpha to build an end-to-end prototype of a Pensions Dashboard service and to develop the cross-organisational governance structure. The intention is to maintain and build momentum, delivering a first alpha service which is iterated and improved through a private and then public beta in 2017 before becoming a ‘live’ service.

Further details are set out in the Creating a Pensions Dashboard Whitepaper - May 2016.

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Expectations in retirement are unrealistic for many 1 July 2016

New research from NEST reveals that millions of people have unrealistic expectations about their retirement income.

The findings show that most people expect their retirement income to be high in relation to their current income, yet most people are not saving enough to match their expectations.

The figures show that:

The Chartered Institute of Payroll Professionals Policy News Journal

cipp.org.uk Page 274 of 314  6 in 10 (60 per cent) expect to require an annual income of 50 to 100 per cent, or above, of their current income. Yet the current pension replacement rate in the UK is just 29 per cent.  Low earners (earning £10,000-£15,000) can’t envisage living on much less than they do now, so more of them are targeting 100 per cent of their current income levels than people in other income brackets  Two thirds of people are not confident that their income in retirement will cover their needs  17 per cent don’t know how much they’ll need

Helen Dean, CEO of NEST said,

“There isn’t a simple answer to how much is ‘enough’ in retirement. We often do this by working out a percentage of each individual’s final earnings. We call this a replacement rate. But our recent work suggests that this can be too much of a blunt instrument. What an individual needs in later life will depend on things like income levels during working life, whether housing costs have to be taken into account, whether there’s potential income from a partner and aspirations for later life. It’s worrying that many consumers seem to have unrealistic expectations about their retirement income. Many are simply not saving enough to match their expectations.

Auto enrolment gives people a big helping hand – not only to get into the savings habit but also by boosting their pots with employer contributions and tax relief. However, we need to start thinking about how to help people think about the next steps once they’re in - what are their aspirations and likely needs in retirement and how can saving in a pension help them get there?”

How much is enough? is one of the key questions to be tackled at the NEST Insight conference this week. The event marks the launch of the new NEST Insight unit, which will work in partnership with other organisations and academics to tackle the big challenges facing the DC generation of savers.