Download M - Chiene + Tait

Chiene + Tait Charity & Education
Seminar
Practical Changes Facing the Sector
Kenneth McDowell
Head of Chiene + Tait Charities & Education Group
PAYE Real Time Information
Neil Cameron
Overview
Why
system
brought
in?
How you
can plan
for RTI
How will
all work
going
forward?
When is it
happening?
What
happens
just now?
3
Introduction
 PAYE largely unchanged since 1944
 Changes to process and reporting
 RTI – provision of information electronically
to HMRC each time an employee is paid
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Why is RTI being brought in?
 Accurate and up to date information to
HMRC on employees
 Improve UK tax system and welfare systems
 Make the PAYE process simpler
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Why is RTI being brought in?
Universal
Credit (DWP
System)
RTI
Information
6
Timetable
March 2013
April 2012
300
Employers
250,000
Employers
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Current process
Payroll is calculated and
processed
Employees are paid
Monthly/ quarterly payment sent
to HMRC
By 19 May Employer Annual
Return form is issued to HMRC
By 31 May form P60 is provided
to each employee
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How will RTI work?
 Net payment to employee as normal
 At same time RTI data issued to HMRC
 Employer submit RTI to HMRC on payment
frequency
9
Difference in old and new payroll processes
 Full Payment Submission (FPS) to HMRC on/ before each pay
date
 FPS includes starter info, eliminate the current in-year P45/ P46
filing requirements
 Leaver information included in the FPS submission
 Will also remove the current in-year filing requirement for P45
forms
 Leavers will still receive their hard copy P45 form as present
 Employer Annual Return forms for current tax year – final
submission to HMRC
 P11d process will remain the same
 Final FPS will include current P35 checklist and P11d statement
 Employees continue to receive P60 forms
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Submission channels
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Data capture
Ensure employee data is correct and complete
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Full name
Date of birth
National
Insurance
Number
Gender
Address
Indication of
contractual
hours
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M
M
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Mandatory
Data cleansing
80% of data quality errors are caused by 3 data items
NI Number, Name, and DOB
National
Insurance
Number
Name
Date of
Birth
• Over 3,000 returns with the
number AB123456
• At least 2,000 with made up
names
•
40 people are apparently over 200
years old
13
Process change
Review
• Employee data
• Your recruitment and payroll processes
• Details for your current employees
Check
• Any gaps and inaccuracies
Correct
• Correct information as soon as an employee joins
Capture
• Help available from software provider, agent or HMRC
Make use
14
Action plan
Update or acquire software, or use a payroll
provider
• Ensure employee data is complete and
correct
Change your procedures and inform your staff
• Register for PAYE Online
Align HMRC’s data with yours
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Penalties
Late returns
Inaccurate
returns
Late
payments
Underpayments
Penalties
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RTI Webinar




Real Time Information – Are You Ready?
12 March
12.30 – 13.15
[email protected]
Carol Flockhart
Business Support
Partner
Neil Cameron
Payroll Manager
.
.
17
Workplace Pension Reform
Gordon Birrell
Chiene + Tait Financial Planning Ltd
Agenda
 Background to reform
 Auto enrolment
 New employer duties
 The choices
 Funding considerations
 The need to plan ahead
19
State spending on pensioners
2006/7
£84.6 Billion
Source: Pension Policy Institute
2035/36
£189.1 Billion
(estimated)
20
Statistics
 60% of workers are NOT saving enough or anything for
retirement
 80% of small businesses employing fewer than 250
employees do not offer a workplace pension scheme,
affecting around 7.7 million workers
 People are living longer
 Working population is shrinking
21
What is Auto Enrolment ?
“Auto-enrolment is the term used that will mean
workers are automatically enrolled into their
employers qualifying pension scheme without
any active decision on their part”.
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Why Join
 State pension insufficient
 Employer contributes
 Full tax relief on contributions
 Tax free growth and tax free lump sum
 Trivial amounts as a lump sum
 Independent from state pension
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Why Join
£100 pm into ISA
Total paid in
£30,000
Assumed 5% growth
£59,551
£100 pm into pension
Grossed up to £125 pm
Employer matches £125 pm
Total paid in
£75,000
Assumed 5% growth
£148,878
*term assumed to be 25 years
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New Employer Duties
The Pensions Act 2008 Section 3(2)
“The employer must make prescribed
arrangements by which the jobholder
becomes an active member of an automatic
enrolment scheme….”
25
Employer duties
Employers must:
 Have a suitable qualifying pension scheme
 Provide information to eligible and non eligible jobholders
 Auto enrol and re-enrol eligible members
 Make pension contributions for eligible workers
 Deduct payments from workers
 Enrol other employees at request
 Register scheme and meet Regulator reporting requirements
 Record Keeping
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Employer duties
Employers must NOT:
 Offer advice
 Discourage membership
 Encourage opt outs
 Give jobholders the opt out form
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Compliance - The Pension Regulator




Formal notice
Fixed penalties
Escalating daily penalty
Imprisonment – up to two years
 New employment laws
Important to get things right……
28
The basics
 Your staging date
 Assess your workforce
 Review current arrangements
 Staff communication
 Auto enrol, register and on-going compliance
29
Staging Dates
 Staggered – largest employers first
 40 + staging dates based on PAYE records
 Majority between January 2014 – April 2017
 One year advance notice
 Check online –
 ‘staging dates auto enrolment’
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Eligibility
Automatically enrolled:
 Aged 22 and under State Pension Age
 Work or ordinarily work in the UK
 Include part time/contract workers
 Have earnings above £9,440 for 2013/2014
 Those who are not eligible can choose to opt in
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Opting out
 Employees can opt out
 Re-enrolled after three years
 Forms cannot be provided by employer
 Fines of up to £50,000 for coercing employees
 Reporting requirements to the Regulator
32
Qualifying workplace pension scheme
“QWPS”
8% Qualifying earnings minimum
Of which
3% Qualifying earnings Employer minimum
(Qualifying earnings - £5,668 to £41,450 for 2013/14)
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Self certified options – After phasing
Three acceptable definitions
Minimum 9% of pensionable pay (4% employer)
(pensionable pay must be at least basic pay)
Or
Minimum 8% of pensionable pay (3% employer) provided at
least 85% of total pay is pensionable
Or
Minimum 7% of pensionable pay (3% employer), provided that
total pay is pensionable
34
Contribution phasing – Certified route
Duration
Employer minimum
Employee Minimum
Total
Staging to 30/09/2017
1%
1%
2%
01/10/2017 to
30/09/2018
2%
3%
5%
01/10/2018 onwards
3%
5%
8%
A false sense of security………
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Review existing pension provision

Fit for purpose

Default funds and life styling

Structure and charges

Paper free entry

Eligibility

Waiting periods

Definitions of pay
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Types of pension scheme
Defined Benefit
N.E.S.T
Defined Contribution
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Choice of scheme provision
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National Employment Savings Trust
“NEST”




Simple
Uses qualified earnings
Useful for Seasonal and Temps
Set up by Government
x
x
x
x
x
Expensive
Administration not proven
Investment return
Contributions capped
Cannot transfer
39
Private Provision - QWPS
 Proven Administration (links to NEST)
 More cost effective
 Greater investment choice
 Greater individual employee control
 Greater provision to Independent Advice
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Defined benefit schemes

Deficit funding

Options to cap and reduce liabilities

Auto enrolment impact
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The Pensions Trust
 Issues with Growth Series
 Cap increasing liabilities
 Reduce or eliminate deficit
 Avoid crystallised debt
 Better alternatives for employers and employees
 Take INDEPENDENT advice
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Who pays ?
Financial and Administrative Impact :
Possible outcomes:
 Reduce spend / Staff numbers
 Increase turnover or income to cover costs
 Reduce Salaries – (Employment law)
 Plan ahead
43
Forward Planning - Funding
 Salary negotiations
 Pension in exchange of pay rise
 Meet minimum requirements in time
Avoid perception of additional tax on pay…..
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Salary Sacrifice
 More efficient
 Employer national insurance savings
 Employee income tax and national insurance savings
 Option to increase pension contribution or employer windfall
 Other benefits still at pre sacrifice levels
Bear in mind the drawbacks…..seek advice
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Summary
 Don’t leave until the last minute
 Establish costs and resource
 Good communication is key
 Seek advice
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Chiene + Tait Financial Planning Ltd
Independent advice to Employers
 Assess options and employer readiness
 Provide most appropriate solutions
 Implement and promote benefits to staff
 On-going advice to employer and employees
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Chiene + Tait Financial Planning Ltd
is authorised and regulated
by the Financial Services Authority.
This presentation is for information purposes
only and is based on our understanding of
current legislation which may change.
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Current accounting and regulatory
developments
Euan Morrison
Current developments
 Financial reporting
environment
 Restricted Fund
Reorganisation Regulations
 Scottish Charity Register and OSCR online
filing
50
Financial reporting environment
Existing UK framework – all entities
 IFRS
 UK GAAP
 FRSSE
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Financial reporting environment
Existing UK framework – all entities
 IFRS
 UK GAAP
FRSME
 FRSSE
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Financial reporting environment
Existing UK framework – all entities
 IFRS
 UK GAAP
FRSME
FRS102
 FRSSE
53
Financial reporting environment
FRS102 proposals
 Replaces all existing SSAPs, FRSs, UITF
Abstracts
 Introduces reduced disclosure framework
 Proposed effective date – periods
commencing on or after 1 January 2015
54
Financial reporting environment
Draft FRS102
 Specific “Public Benefit Entity”
(PBE) requirements
 Other matters not
specific to PBEs
SORP – Accounting and reporting by charities
– to be updated based on draft FRS 102
55
Financial reporting environment
Application to charities – from 1 January 2015
 Larger – FRS102 and revised SORP
 Small – FRSSE and revised SORP
 But, smaller charities will need to be
“cognisant” of FRS102 applicable to PBEs
56
Financial reporting environment
Issues from FRS102
 Pension deficit recovery plan payments
 Funding commitments
 “Non-exchange” transactions
 Timing
57
Restricted Funds Reorganisation
 Existing funds limited
in the extent they can
be utilised
 New regulations from November 2012
 Can change the purpose for which the
fund/s may be used; or
 Change or remove the conditions imposed
58
Restricted Funds Reorganisation
One or more of the following conditions
a) Purposes
1. Fulfilled as far as possible
2. No longer be given effect to
3. Ceased to be charitable purposes
4. Ceased in any other way to provide a suitable
and effective method of using the funds
b) Provide a use for only part of its property
59
Restricted Funds Reorganisation
Application form
 Why proposed reorganisation makes
better use of resources and outcome
 Balance and recent application of funds
 Explain why wishes of donor cannot be
ascertained
60
Restricted Funds Reorganisation
• Publicity requirements
Type
“Large”
“Small”
“Very small”
Gross
annual
income
Property value
(includes cash and
investments)
Requirement
>£100,000
Or
>£1,000,000
Notice on OSCR website
and advert in press
<£100,000
or
<£1,000,000
Notice on OSCR website
or
No land, buildings,
shares in private
companies
OSCR has discretion not to
publish
<£1,000
• “Very Small” - “Simplified procedure”
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The Charity Register
Selected information publicly available on
OSCR’s website
 Details of the charity’s operations including
constitution and purposes
 Objects of the charity
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The Charity Register
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Charity Register - Financial Information
• Bar chart of income and expenditure levels
• Income and expenditure pie chart > £250,000
64
Charity Register - Financial Information
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Charity Register - Return Information
Filing history of annual returns and
accounts
66
Charity Register - Return Information
• As soon as deadline passed Charity
Register entry highlighted in red
•
67
Charity Annual Filing Requirements
• “Annual Return”
• “Supplementary Monitoring Return”
• larger charities (those with gross income
over £25,000)
• Signed accounts
• OSCR online from July 2012
68
“Exception Reporting”
32 “triggers” – list on OSCR website
 Sudden growth or contraction
 Possible failure to apply funds for charitable
purposes
 Poor liquidity, low reserves, threats to
viability
 Fundraising issues
 Transactions with trustees
69
“Exception Reporting”
Online options:
1. Complete a narrative text box;
2. Send an email to OSCR with an
explanation within 14 days;
3. State that it is explained within the Trustees
Annual Report; or
4. State that OSCR has previously been
provided with an explanation
70
Summary
 Plan for financial reporting
changes
 Opportunity of Restricted Fund
Reorganisation Regulations
 Keeping up to date - Scottish Charity
Register and OSCR online filing
71
Questions?
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