SD Worx Payroll Question Time - October 2024

This PQT came at a perfect time as the recent UK budget has just been announced, with changes coming into effect in April 2025 that impact employers. 

Join Nick Day, Simon Parsons, Karen Thomson, Mathew Akrigg and Andy Nicholls as they discuss all things payroll & HR and how the budget will impact businesses. 

Sign up for future Payroll Question Time webinars and watch on-demand previous episodes on the SD Worx website!

Follow SD Worx UK on LinkedIn, Facebook, Twitter/X and YouTube.

Register for the SD Worx email newsletter for monthly essential updates, free guides, industry insights, webinar invitations and more!

Transcript

0:03

Hello everyone and welcome to today's special Halloween edition of Payroll Question Time.

0:09

We have entered the witching hour and we are delighted to bring you this rather frightening first budget to everyone, especially for employers, where of course we know that Chancellor Rachel Rees presented a budget that included 40 billion in tax increases to support the NHS and public services with key measures such as the rise in basic capital gains tax and a freeze on inheritance tax thresholds extended to 2030.

0:32

We've seen increases in minimum wage, national insurance changes, the abolition of non-dom tax regimes, and more.

0:39

And we will, of course, be discussing all of these budget tricks and treats during today's show.

0:44

We're also going to be talking about the Employment Rights Bill 2024.

0:47

I know we've covered some of that before, but I know there's still many questions out there on social channels.

0:52

So we're going to be exploring those in more detail today as well.

0:54

So whether you're a zombie, witch, ghost, or ghoul, or panel member, today is a special episode and we're going to be getting into all of these questions during today's show.

1:03

Of course, if you have any questions yourselves, there's an opportunity for you to ask them. So please do so. Put them in my question box.

1:10

I will try and ask the questions in real time to our panel members.

1:13

So it doesn't matter what that question is. It does not need to be related to the employment bill or the budget.

1:20

It can be about anything you like.

1:21

If you're struggling with something in your payroll operation right put it in the questions box and we'll get to those during today's show in real time.

1:27

There will be two polls today as well and we want to hear your thoughts and opinions.

1:32

We're going to be producing some polls in addition to that.

1:35

We'll get the panel members, sorry, to talk about those polls in real time as well and give you some feedback.

1:39

If I'm sounding a little bit jittery, I'm a slightly jet lagged. This is my bedtime.

1:43

I got back from Arizona yesterday and it's usually eight hours behind.

1:47

I've just realized that I'm repeating myself. So we're also going to be recording this session.

1:51

There's going to be a at the end of this session. That bit's really important.

1:54

That's your opportunity to tell us what you want us to talk about in a future episode.

1:59

So again, if there's something topic-wise we haven't covered yet that you want us to cover, that's your chance to let us know what that is.

2:06

And finally, of course, I need to read you all our disclaimer, which just says the presentation does not provide definitive answers to individual queries and in some places takes views on matters which are uncertain.

2:18

It is not intended to be relied upon in any specific context or as a substitute for seeking advice, legal or otherwise, on a specific circumstance as each case may be different.

2:28

Right, if you don't know me, my name is Nick Day. I'm the host of the payroll podcast.

2:32

I'm the CEO of JGA Recruitment Group, which is a leading payroll specialist recruitment firm.

2:36

I've been working in the payroll industry now for over 22 years, love this show, love the world of payroll, very passionate about raising the profile of the sector.

2:45

And we've got a great panel that join me so I'm going to introduce them as we go starting from my left to right Simon Parsons.

2:53

Yeah good afternoon everyone it's great to be with you again on this Halloween event we've been going a number of years now so it seems incredible that we've got this together and yesterday was very interesting so Simon Parsons Director of UK Compliance Strategies at SD Works also very active in social media sit on a number of panels along with Karen's there as well.

3:20

Richard George who's normally with us is on some of those panels and will give you answers to some of your questions today. Fantastic and next Karen Thompson.

3:31

Good afternoon everybody, delighted to be here on this ghoulish day, that's how it feels anyway.

3:37

I'm Karen Thompson, I'm partner and head of payroll at Armstrong Watson Accountancy.

3:43

Our head office is in Carlisle. I live in Cumbria, right on the English-Scottish borders.

3:51

And like Simon said, I do sit on some forums, part of the Reward 300, and I'm proud to say I'm a chartered member of the Institute. Amazing. And Andy, who is our Regulators or Pensions Specialist.

4:01

So again, if you've got any questions about pensions, please do put them in the questions box, we'll tackle those as we go as well. So, Andy Nicholls, can you introduce yourself?

4:08

Hi everyone.

4:09

Yes, we work for the regulator and obviously a vast knowledge of pensions, particularly automatic enrolment, and what a wonderful budget we had.

4:19

I don't think word wonderful is probably right, but anyway we'll find out more as we get into this.

4:26

Definitely not from my perspective. Anyway, Matthew, you can introduce yourself please.

4:31

Hi, thank you very much.

4:32

So I'm Matthew Akrig, Policy and Research Officer at the Chartered Institute of Payroll Professionals. So definitely been a busy, busy day or so for me.

4:40

I think in addition to the, to the caveat that Nick said in the previous slide, I think we might need to say that any political opinions are that of our own and not of our representative organisations as well.

4:51

Just to be, just to be clear, the CIPP is a politically neutral organisation.

4:56

But very looking forward to diving into this budget and seeing how people, what people's reactions are to the announcements.

5:06

Very well put, Matthew, you're absolutely right.

5:09

So let's talk about today's discussion topics then.

5:11

We're gonna be talking, of course, about the budget 2024, the tricks and the cheats, including national insurance changes and how these may affect business costs.

5:19

We're of course gonna be talking about the Employment Rights Bill 2024 as well.

5:23

So what employers need to know, the rights to guaranteed hours, sick pay reform, civil and criminal offences and more.

5:29

So stay tuned for that.

5:30

We're gonna then delving into expenses claims, increase evidence requirements involved.

5:35

Tax avoidance, a little bit of a name and shame list, which is growing, something we've been covering during the different episodes of PQT over the previous months. A little bit of the latest from what the SDWorks Academy is offering.

5:46

So for those who have payroll teams that really want to be up skilled in various areas of payroll, that's your opportunity to find out what's coming up in the SDWorks Academy.

5:53

And if we have time at the end, there'll be some hot topics and Q &A as well.

5:57

So let's jump into the most important bit of today, bit everyone wants to find out more about, which of course is the budget, the tricks and treats in store for UK businesses.

6:05

Let's start with Matthew today, because as you mentioned, an unbiased member of the CIPP is a great place to start when we talk about the tricks and treats and what's in store.

6:14

So Matthew, for the first time, I'm going to ask you to take the floor and just give us a brief overview of what we're going to be discussing today. Yeah, no problem.

6:21

So I suppose the biggest announcement is going to be those national insurance changes.

6:26

So we're seeing Employers' national insurance go up to 15%, but we're also seeing the secondary threshold come down to 5 ,000 pounds.

6:35

So kind of a double hit there on the employers' national insurance.

6:39

Now for small businesses, a little bit of relief, but it's only gonna be very small businesses that sort of benefit from it.

6:47

The employment allowance is going up to 10 ,500 pounds.

6:52

But on top of that, and I'm not sure this was communicated within the budget speech.

6:56

So if you only listen to it, you might have missed this.

6:59

The employment allowance threshold.

7:00

So for claiming it, you need to have those employer NICs of over 100 ,000 pounds that's being removed as well.

7:07

So basically most companies will be able to apply for that employment allowance.

7:13

Now with that double hit of the NICs is going to cost.

7:17

So with just the reduction and the increase in the percentage every worker who earned over that 9 ,100 or was over that allowance, it's going to cost people an extra £615, I think is the 15% of that sort of threshold change.

7:34

So that's the starting point for how much it's going to cost people for employing people.

7:41

On top of that, the government has accepted in full the Low Pay Commission's recommendations on the national living wage and national minimum wage rates and that is 6.7% on the national living wage and 16.3% on that 18 to 20 year old bracket.

7:57

Now they did say previously that they're going to start making headway on getting rid of that discriminatory age band and they've certainly made good on that promise but what it does mean is that if you've got a workforce of a large number of young workers, so we're hit very hard by these changes and very much need to think about how you plan for your employment budget going forward.

8:28

On top of that, let me just scan to my notes, there's loads of other things.

8:32

If you've got umbrella companies, PAYE obligations are shifting to the recruitment business. So it's shifting who has the responsibility for PAYE.

8:44

The interest rate on unpaid tax percentage is being uplifted.

8:50

Interestingly though, the repayment rate that HMRC will pay you if they owe you tax is not being uplifted.

8:56

Make of that what you will.

8:58

I'll leave that there on the table.

9:01

We've got confirmation that mandating of payrolling of benefits is going ahead in April, 2026.

9:08

However, beneficial loans and accommodation is not going to be included.

9:13

those can remain reportable via a P11D.

9:19

HMRC is getting some new compliance staff and some debt management staff, so I'm sure they're happy about that.

9:26

In addition, we know the new car tax rates for 28, 29 and 29.30.

9:33

The van benefit charge and the van fuel benefit charge are both being operated by CPI.

9:39

Obviously, Nick mentioned the non-DOMS tax status and the triple lock is being maintained.

9:47

So WhistleSock tore through a load of things that are beneficial or relevant to payroll.

9:52

Obviously, there's so much more in the detail there, so maybe we can pick up on a few of those.

9:58

Well, so I think you've given us a great overview.

9:59

Let me come over to you, Simon, then.

10:00

How much of this was expected and how much perhaps is a little bit of a surprise, a bit of a trick or a treat if you like.

10:08

And how does this impact payroll, what else do we need to know based on that excellent overview? Yeah, sure.

10:15

Fortunately, there's no immediate packs.

10:17

So, for the past impacts, for the past couple of years, we've had a January or a November change. This has all changed for April 2025. So, nothing changes in the short term.

10:28

I guess you could say that's only six months away.

10:31

Of course, the increase in employers' national insurance on the current levels you're paying is an increase of 8.7 percent plus the amounts that Matthews talked about so they was at 615 pounds or thereabouts that you mentioned because of course the rates dropping from 9 ,000 something for the secondary threshold down to 5 ,000 pounds per annum so you'll have another cohort of people as well that may be captured in the part-timers this will be big hit for maybe those single director companies that used to only pay themselves at the secondary threshold.

11:12

Their earnings have just dropped significantly down because that's the point they start paying national insurance contributions.

11:19

And of course, they won't qualify for benefits if they drop it down either because your earnings have to reach the lower earnings limit.

11:28

The surprise aspect, because it wasn't part of the announcement, but it's been released in of the tables and information to the software development community is that the lower earnings limit has risen to £125 for week. It's not significant change.

11:44

That's £2 more than it was and that is expected to trickle through to other things.

11:49

So to qualify for SMP, SSP in the short term, et cetera, the earnings trigger will be £125 from 6th of April, not 123 that it was. So yeah, it's quite an impact. How much of that was a surprise?

12:07

Privately? The employer's national insurance change was not a surprise.

12:13

To be honest, maybe because there were some things on the grapevine, some of the other aspects were muted, I wasn't aware of through any sort of communicated channels, but was of fear.

12:30

So, we haven't got employers' national insurance on employer national insurance contributions.

12:36

So, that probably means that salary sacrifice may be increasing in popularity to get the 15% extra NIC savings, because salary sacrifice schemes aren't really about saving employees, is it?

12:51

It's about saving the employer's national insurance.

12:54

Maybe I've been a bit tongue in cheek cynical there. So, we'll see what happens.

12:59

If it had been that you had to pay employer's national insurance on employer contributions to pension schemes, I think we'd have found that most salary sacrifice schemes would have closed.

13:10

Equally, there were some other things that were certainly muted around in the press and social media about various impacts that haven't fruition.

13:23

So the limits of a thousand, hundred thousand pounds is it, or whatever, for tax-free pensions, withdrawals, etc. Maybe we'll come back to that one later.

13:34

So on the announcements actually made, Nick, personally not overly too much.

13:40

I was probably expecting them, but was sworn to silence but pleased that some of the other elements haven't gone ahead that were being quite heavily touted in the press.

13:53

I imagine Karen coming to you, your phone must have been ringing off the hook because obviously you do client payrolls for lots of smaller employers, they're going to be impacted by many of these changes.

14:02

So one of the things that you need to be mindful of if you're managing a bureau payroll, lots of those that listen in will have bureau payroll similar to yourselves and probably having the phone ringing just as much to see how this handles and how do we get prepared for these changes?

14:14

As Simon said, we've got a few months, which is nice and something we don't always get, but even so, there's things we need to be mindful of and need to prepare for.

14:22

So, yeah, tell us about how that impacts the world of bureau paywall in particular.

14:26

So, I'll sort of talk from bureau bit from an accountancy firm perspective, because the clients, most, if they take our own, if we live, you know, I'm in Cumbria, our head office is in Cumbria, We've got a huge farming community here, lots and lots of small family-owned businesses who, to be frank, are indeed workers, regardless of what our Prime Minister seems to have determined workers are. They've had a massive hit.

14:57

Taking what Simon says, the 8.1%, when we looked at the national insurance changes in contribution in real terms, you are looking somewhere between nine and 10% for these businesses, then put in that national minimum wage.

15:10

Of course, don't forget, when it comes to salary sacrifice, none of those people will be able to benefit from it anyway, so neither will the employer, because of course, you can't take people below national minimum wage even for pensions. Obviously, director-only payrolls, as Simon said.

15:27

Some this, as Simon alluded to, might have been aware of without public domain, but nevertheless to the communities that have heard this budget and then since trying to digest the Red Book, there are some significant impacts on businesses, particularly the smaller ones.

15:45

Yes, as Matthew said, we have got the employment allowance increase in 10 ,500.

15:50

I can tell you from feedback from small businesses, certainly with ourselves, that means diddly squat to them, to be perfectly Frank. I agree that it's a bit like, what was it one person said to me?

16:02

She giveth and she taketh, if you're going to go down that road. But she taketh more, was one comment.

16:10

The community, certainly an accountancy firm with those kind of businesses, they're not happy at all. Hospitality was already struggling.

16:22

With the national wage rises, with those, looking at the apprenticeship, because of course I forget that's another area, that's going to be looking at reform.

16:31

Some of the questions that I've had, as you can imagine, as you put it, Nick, the phone's been ringing off the hook.

16:37

My ears are sore from wearing these and talking to people, but they're saying, well, what do we do with apprentices now?

16:45

One, the rate of it, and I'm not going to have any view on whether it's a good rate or a bad rate as far as national minimum wage goes on the number.

16:53

I'm looking at it from business impact when you're looking at that and the same, but then they're going to change the apprenticeship levy. It's like, well, where's my differentiator?

17:02

If I take on an apprentice and when I looked at this, it's, what, 14.7, if you base that on 37.5 hours a week, that's the annual salary.

17:10

They've got somebody else who, if you take, it's 24.2 if you're on the living wage and doing the same hours a week.

17:17

They're trying to find ways of, well, if I do the apprenticeship and it's now only going to be six months, what actual skill set will they come away with?

17:26

The statistics in the report, the statement showed that Level 2 apprentices, for example, there's a poorer take-up.

17:35

That's probably because, certainly in my experience, they all want Level 3 and above.

17:38

If you go to professional services, they're looking for 5, 6 and 7, and of course, they're looking at perhaps taking that out of scope for apprentices. All of a sudden, it's that way they go.

17:49

Now they're also reviewing not just because of the rates of pay, but also is it worth my bother going down an apprenticeship, because what actually will I get from those people at the end? It's bigger than the numbers. I suppose we're going with that.

18:05

Yeah, so Company Carta, it's obviously P11D. Again, take an accountancy firm.

18:10

We don't give services for free. If you want your P11D produced by a firm, you will be charged.

18:17

The same if you payrolling of benefits put through your payroll, you will be charged, most likely, and somewhere in the middle of all that, there will be advice, which won't likely come from payroll, it will come from tax advisors.

18:32

Again, you're looking at if you're going to put costs on business, if they've got to do a P11D because they have accommodation and beneficial loans, and they've got to payroll, they could end up with a double whammy, because they can put it payroll for loans and accommodation, but then there will also be a cost for the reconciliation and amendments that would need done at year end.

18:52

So I think, you know, I'm not really, I'm always a glass, almost overflowing on this occasion.

19:00

Unfortunately, my glass seems to have a crack in it, which is leaking out. So that's a view without going into a political view, of course.

19:13

Well, I'm probably in a similar boat, but I'm one of those small employers you talk about and it's, it is a hit. So I'm part of a small entrepreneurs group as well.

19:20

So most of the people in my WhatsApp group is about 300 members and they all have full employees between 15 and 30.

19:25

I think the average cost is going to cost is roughly one employee in terms of an average salary for those businesses and then I change it.

19:32

And my, our concern as a small entrepreneurs is that, you know, if it's an employee that you can either no longer hire them because you have to re-budget for that or potentially have to let somebody go in order to accommodate the increases.

19:43

So it's going to be interesting from a recruitment perspective, trying to be non-political, to see how this actually impacts the world of recruitment and staffing and the smaller organisations and whether they can continue to go ahead with their scaling plans and actually improving employment for others or whether they need to scale back to accommodate the changes.

20:01

So, you know, lots of unknowns at the moment and lots of, as you say, cracks in glasses appearing as we try and budget for 2025.

20:09

But obviously there's an impact on pensions as well, Andy. So what do we need to know from a pensions perspective?

20:15

Well, I think the we've already mentioned the Sarah Sacrifice side of things.

20:19

So there may be more schemes or more employers might decide to put a Sarah Sacrifice process in place, in which case, if that is you as an employee, you need to speak to the pension scheme to make sure that you can have Sarah Sacrifice.

20:33

Obviously, you need to take into account legal advice to set up a Sarah sacrifice agreement, communicate with employees, and all those sort of things.

20:41

So it's not just a simple, there it is, it's all done, but obviously it is something which is quite common.

20:48

So your pension scheme, et cetera, your advisors should know how to do that relatively easily.

20:55

I think the other thing which may come up more maybe is that you can sacrifice on bonuses.

21:03

So if you had a bonus scheme, and then maybe that will come into more play.

21:08

Obviously, if you do do that, then you need the individual who's getting a bonus needs to let the employer know and the pension scheme in effect in advance of the amount being known.

21:20

So, and then of course you need to decide how much you're gonna get, you're gonna put into the pension scheme.

21:28

And then you got to consider whether or not that amount on top of your normal contributions, employees and employers is going to exceed the annual allowance, 60 ,000 a year, or lifetime allowance, although obviously the government didn't announce in the budget did anything about lifetime allowance, annual allowance.

21:46

So that's interesting as to that's still keeping as it is.

21:51

We'll see if anything happens in future budgets, I guess, in terms of that, because I think at one point, Labour was saying they were going to put the lifetime allowance back in place, which is the maximum amount you can put into a pension, or your pension schemes, just over a million pounds, but it was taken away.

22:06

That limit doesn't exist at the moment.

22:08

As such, people who've got that limit applied to them, they need to decide if they want to exceed or not exceed and they would take specialist advice.

22:17

You don't need to worry about it from a payroll perspective.

22:21

I think so, those other thoughts for me would be, supposing you have got people who have paid more than the maximum into the scheme.

22:33

So in other words, they've already got the maximum in, then they're getting the cash allowance.

22:38

So you as an employer decide to give them the equivalent of the employer contribution in terms of an allowance.

22:44

Obviously then that allowance now will have 15% and I own it rather than the 13.8% more.

22:50

So all the costs go up.

22:52

Wait and see in terms of low earnings limit, obviously that's gone up.

22:56

Well, I think it's 1.6%, that's more of a one, as you say to £1.25.

23:00

the automatic enrollment low threshold is still 120, didn't go up with a previous increase in the low earnings limit.

23:07

Do you repeat decide what will happen with that?

23:10

Obviously the intention, which is no mention about automatic enrollment changes coming in to reduce the lower earnings threshold to nil, that's still silent.

23:19

And I wonder, given the increase in national insurance for employers, whether or not that has been pushed further back because you can't then all of a sudden increase for those employers who've got a qualified earning scheme, the employer contribution by the fact that the lower threshold has gone to nil.

23:38

So it'd be interesting to hear when we get to find out when it's consulted upon when the timing of those 2017 automatic enrollment changes will happen.

23:50

Originally, and presumably still true, mid 2020s, which is next year, I guess.

24:01

The other thing, which is more of a personal thing, I think, but particularly for pension schemes as significance is the inheritance tax changes for pensions, there's a technical consultation on inheritance tax on pensions, liability reporting and payment.

24:18

And that will apply to DC and DB.

24:21

So, if you're receiving a DB pension scheme, for instance, at the moment, and if you were to die within the first five years, normally the remaining part of five years' worth of contributions that would have been paid to the individual who died would be paid to the estate as a lump sum, or a death benefit lump sum, and so things like that.

24:44

They will be being consulted on to see what the outcome of that consultation will be until 2027, 28 before it's all known, but those sort of lump sums will be considered for inheritance tax.

25:00

I mean, not everyone will be affected by inheritance tax, but perhaps if you're in the South London, property prices are significant, therefore you could breach the inheritance tax limit. So there'll be a lot of thought. So watch out to see how pension schemes react to that.

25:15

And please feed in if you're linked to a pension, then perhaps you can feed into that consultation, but it could impact scheme design and everything else could be impacted by that.

25:26

Of course there's also been an increase in capital gains tax as well, hasn't there, so for those which could impact your earnings, your income and everything else as well, which was quite a big increase I thought from 10 to 18 percent for those that are trying to, you know, make their earnings in different ways.

25:41

And we've had a question that's come in from Mark, it says it might be a bit of a employer is now paying MI contributions for employees, starting at earnings of 5k per year.

25:55

Does this raise questions about whether employees should qualify for the benefits currently linked to the LEL from this level of earnings, as the LEL is currently over 6k per year?

26:07

Anne, I see you nodding, maybe I'll come to you for that.

26:11

Was that myself?

26:12

I mean, ultimately, you're quite right, but then again, and the reason I'm going to be, I don't know, because you're right, as far as the rules go now, you know, the listener is right.

26:23

But if you then look at, when we go onto the Employments Bill later on, the statutory sick pay, the fact that somebody's not contributed to the social security system means nothing because they'll still potentially get sick pay. So that's why, yes, you're right.

26:38

Normally, if you've not met those, you wouldn't get benefits.

26:42

But I've got a sneaky, sneaky suspicion that somehow or other the people won't actually be impacted.

26:49

But we'll have to wait and because that's just the SSP part, whether they do anything in the benefits system itself of course they are going to take people out of the ESA aren't they and put them into Universal credits a year earlier or two years earlier than they're originally planned so I think it would be interesting to see but ordinarily if they don't meet the lower earnings limit they don't normally qualify for benefits is my understanding.

27:15

Yeah I think we're seeing more of a split between national insurance being a signifier of qualifying for things.

27:26

Like Karen said, SSP, we're kind of stripping that away from it.

27:30

We've now got this disparity between when you reach the lower earnings limit and when you actually start paying national insurance.

27:36

And I think partly part of that potentially is we call it national insurance, but actually there's not a huge amount of understanding as to where that money goes and what that it does, it's sort of split between the NHS and the National Insurance Fund, which predominantly pays for the state pension, but also other benefits come out of there as well.

27:56

And I think the further we go and we start messing around and tinkering with the National Insurance System, the more disassociated those things become, so that you can't necessarily say I've paid NI, therefore I qualify for this, because they're kind of two completely separate things. Okay, cool.

28:17

So, Matthew, while I've got you, obviously, you've heard some of the other reviews and you gave us a great whistle stop tool at the start.

28:22

Anything you'd like to add and have a chance to reflect on how it's impacted and the other panelists' views and comments, or shall we move into our first pop?

28:31

Yeah, I think just really mirroring what Simon said, looks like it's really going to incentivise people to do salary sacrifice in sort of stark contrast to the rumours that could completely decimated salary sacrifice.

28:47

And important to note that, you know, trying to not step on the political too much here, but there have been no tax rises for workers.

28:57

However, we're increasing employment costs, which does mean that companies are going to seek to recoup those employment costs somewhere.

29:05

So it's either going to come out of wage growth or an increase in cost of goods and services.

29:11

So at the end of the day there are going to be some fairly macro economic shifts that happen because of this.

29:19

It's not just as simple as tinkering a little percentage on an employer national insurance contribution.

29:26

So there's a lot of complex things that can come out of this and we just need to wait and see how it all levels out.

29:31

But definitely the outlook for businesses and small businesses not looking great at the moment.

29:37

Sure. Well, let's jump into our first part, but this is quite interesting.

29:40

Obviously from an recruitment standpoint, we've seen a lot of salaries increase, which has been great in the payroll world because I think finally, payroll positions have started to get the salaries that they deserve and it's been appreciated a lot more.

29:50

But we also know that employers have raised salaries across the board to try and tackle inflation and the higher costs of living.

29:56

Many employers have kind of stretched their budgets to make sure that they are keeping a happy workforce.

30:00

So the question now is, will these national insurance contribution increases lead to pay rise freezes as a result because they're already stretched.

30:08

So here's a little bit of a choice for you.

30:10

Yes, likely, possibly, but undecided, or no, we can manage the increase without a freeze.

30:16

Perhaps we're waiting for those results to come in because I think it's one that does need a little bit of consideration.

30:20

I want to get your view on this one, Simon. What do you think?

30:25

Yeah, it's very difficult to tell, but potentially I think yes.

30:27

And does this play on recruitment, as you mentioned earlier, Nick, that affects the school-leaving age people?

30:37

So will there be the jobs for them to come into as recruitment maybe pulls back? But I think potentially, yes, a business will look at its profitability.

30:48

The other challenge is whether this affects inflation or will they look to actually increase prices because there's also the commitment to keep the inflation rate around the 2% level by the government as well.

31:00

So I think there's some interesting contradictions in play that we'll have to see how it works out.

31:06

I guess the counter argument to that is of course the economy is all going to go whizzy now and we're all going to go brilliant and make lots of money so actually the money is there to cover it but oh look there's another pig that flew past the window sorry just distracted me. It's interesting times. It is interesting times.

31:27

I've read an interesting report on Investec. I'm going to read a little bit out here because it's not mine.

31:31

This is a report you can find published by Wrathbones.

31:34

We just said, as inflation has reduced the value of a pound, more people have crept into higher bands as wages increased to keep up with the rising cost of living. And they put a chart on their report.

31:44

But it says, as you can see from the chart below, the initial 150 ,000 threshold for additional rate tax was implemented in 2010 would be the of 225 ,000 today.

31:54

The return to inflation uplifts for thresholds is welcome, but there's a long way to go to rebuild them.

31:59

And I think there is a long way to go to get, you know, inflation has been challenging for everybody, and I think there's gonna be some interesting times ahead.

32:05

But let's see what the poll results say.

32:08

I think I'll come to yourself, Karen, and maybe Matthew as well, to get two opinions on these results.

32:13

I'll start with you, Karen, let's see what we've got here.

32:15

For those listening in audio only, I'll try and read them out as well, but I can't see them at the minute.

32:23

So, we've got results as 24% saying yes, likely, 66% saying possibly, but undecided, and 11% no, we can manage the increase without a freeze. Let me come to you first on this one, Karen.

32:37

I'm not surprised by the undecided.

32:39

I think the reason for that is people are still, businesses are digesting it.

32:43

Certainly, the calls that we've had, I mean, we're going to be looking at how we can help clients with forecasting.

32:49

That seems to be what they're doing at the moment, is looking at everything that they...

32:55

Bear in mind that, and I know Simon says six months to April, but most businesses, when they're looking at their plans, will do two, three years ahead. What were they going to invest in?

33:05

What were they going to do this? And so forth.

33:09

I'm not surprised by the undecided, but what it concerns me is once it has been digested and those forecasts have been done, is whether that's then going to shift into that, yes, likely box.

33:22

Sure. Anything you'd like to add to that, Matthew?

33:25

Yeah, I think I'd mirror what Karen said there.

33:27

I think the undecided is a mixture of uncertainty of how these things are actually going to play out and just lack of data.

33:37

One of the things that we found when we did some research around the national living wage rates and our sort of response to the Low Pay Commission was that people don't necessarily know where to find the information to work out what future national minimum wage rates could be because it's always pegged at that trying to be two thirds of median hourly income.

33:59

But where is that data?

34:01

And, you know, unless you're very familiar with the Office for National Statistics stuff, it's very hard to actually figure that out and almost double check their work.

34:09

With their remit now, including the cost of living within there, it becomes a little bit more complex to work out those rates.

34:17

So I think there's some uncertainty around that as trying to work that out.

34:21

So kind of transferring that understanding to this, I think companies need that time, like Karen said, to digest, to do their own modelling and work out what this actually means for their own workforce before making big decisions on what that means for recruitment.

34:38

Well, what I've got you, Matthew, I've had a question come in here, I'd like to stay with you for the moment with this one, it's not something that I've seen, but you're well more in the know than me, it comes in from Karen, it says, I've heard that the public sector would be exempt from the NI increase, is that true?

34:53

Not that I am aware, the NI increases in this extra funding from the budget will likely in the large part go towards funding public sector, public sector pay and growth within public sector so they will be benefiting from this but as far as I'm aware there's nothing that specifically carves out any exemptions as far as tax or NI is concerned with workers in the public sector. Okay good to know if anyone knows anything different please let us know.

35:23

Let's we're going to jump into the next part of the show in just a moment I've got one question that's coming I'm not sure Emma if we can answer this because we are supposed to be unbiased as I appreciate the budget has resulted in some tough outcomes for people on the panel, but what do you think would have been a better way forward if you could have had a say in the budget decisions?

35:45

So keeping this purely from a payroll perspective perhaps, are there any changes or thoughts you think have been overlooked or any, I don't know, things you would have done differently without being too political in that response, Simon, Karen, Andy or Matthew? I'll start with you Simon.

36:02

Yeah, probably can't really say too much on there.

36:05

I know Karen and I have been discussing recently with regards to certain people who are on the, what was the Office of Simplification, etc. And they're not necessarily called out these days, are they?

36:20

And I forgot what they called. But there's an element of, I think there are things that can be done.

36:26

What we say here is a little bit difficult. Yeah, that probably applies to everybody.

36:32

If I can comment on that public sector element, Nick, there was when the employer's national insurance on pension contributions was muted, it was along with an exemption for public sector, whether that's what's being mistaken in that sort of discussion, but that doesn't relate to the employers' national insurance change itself.

36:55

So, that was-, they were kind of saying employer contributions would not be subject to-, in the rumoured predictions of what was coming, but that plan has gone.

37:06

So, there is nothing in this budget that related to national insurance on employer pension contributions.

37:13

Yeah, fine.

37:14

First, Emma, from my perspective, again, I don't want to get too political, but I just think from a small employer's perspective, it hits the small employer really, really hard, and I think that makes it difficult.

37:24

I think it will push employees into the public sector as well, which is not necessarily a bad thing if that's the way you want to go, but it is bad if you're an SME that's trying to build or actually create employment for employees and people looking for work, it makes it much harder for us to do so.

37:39

And for people that want choice, they may have less choice in terms of the employment opportunities in front of them, because it may be that the only choice is available due to these budgets become public sector-based opportunities.

37:50

So I think something we need to keep an eye on.

37:53

I don't necessarily know I'm not a politician of how things would have been done differently, but I will say it's definitely had a big, it's going to have a big impact on the SMEs in the UK that's obviously vitally important to the economy.

38:03

So that's, I don't know if that's political or not, but there's a potential prediction of how I see the recruitment world potentially changing as a result of it.

38:10

I think we'll see a lot of opportunities opening up in the public services and those people being taken from private services.

38:19

Sorry. Yeah, from it from a sort of maybe a little bit of a nerdy economic perspective, there's a lot of talk of the sort of tax burden being as high as it's ever been in the UK.

38:33

But in reality, this is the same in a lot of different places because we've got aging populations and our social security bill becoming that much bigger.

38:41

So it's not necessarily a problem that's just being seen within the UK.

38:46

It's a problem that's being seen in lots of countries across the world.

38:50

Obviously, no decision is going to be palatable to absolutely everyone.

38:54

That's probably as political as I'll get with that.

38:56

You're always going to have winners and losers.

39:00

But it's trying to find the balance and they think they found the balance and clearly on the panel, there's some disagreement with that.

39:08

Karen, shaking her head already.

39:10

I'm going to commit, yeah. I get where you're coming from, Matthew, and it's so lovely.

39:15

But if you could hear it from our client perspective, they've called it a jobs tax.

39:19

This is most definitely not balanced.

39:22

But what I was going to pick up on, if you don't mind, Nick, was what you've just said about will there be a shift to more public sector, and given my age.

39:31

When I remember, obviously I left school in the 80s, and in the 90s, I remember it being, it was far more, what's that, I can't even think of the thing I'm looking for now.

39:42

Put it this way, I wanted to work desperately for the council.

39:45

And the reason being, and I know people will be shocked because the tax code didn't have anywhere near the numbers it has now, but I think my salary in the private sector was about four and a half grand.

39:55

It wasn't payroll, by the way, guys.

39:57

It was about four and a half grand.

39:58

I got a job in the council for seven and a half.

40:02

That was the difference.

40:03

So, and, you know, without being political, but I do believe it was the same colour as we have now, that's what happened then, is it was, it was far, you got a far higher salary in the public sector, you got your DB pension, you had all these things, it was far better to get a job in the public sector council, local authorities and what have you.

40:26

So I do wonder if that is where we will see a shift, because of that they need more in sector.

40:34

The pay rises that that sector's going to get are humongous compared to the private sector, whether due or otherwise, I won't put an opinion on.

40:43

At the end of the day, what these private employers are paying for, because if you look at the numbers, and I forget the exact numbers, but it's like hundreds of millions or whatever it is that the chancellor's going to get over a period of time by what the private business can do, it's actually the cost to the extractor for the public sector is like a minus 4 million or something.

41:05

So where it's hundreds in the private, as in what they're gonna get in, it's a minus is very, very low in comparison.

41:14

So, you know, that's why the private sector in particular and the small businesses are viewing it as a jobs tax.

41:20

Yeah, yeah.

41:21

There's a couple of other questions that come in.

41:22

So I wanna run through these as well.

41:24

One is the narrowing of the differentials between the five to 6% minimum wage a national living wage, and the lowering of the average increase for everyone else in most companies is going to create a massive squeeze on average earners, and it's more of an observation. So Karen and Nodding are there. Thank you for that, Angelo.

41:41

For the relevant section, is neonatal care leave and pay going ahead?

41:47

Yes.

41:48

Yes.

41:50

Yes, that's going to be coming in April 25.

41:54

Yes, and I comment the specifications have been issued to the software developers in more detail, but it has been a bit confusing because initially the Employers' Bulletin in October mentioned the neonatal pay coming in and then the article was pulled.

42:11

So it may just be perceived that it's gone because it was there publicized and then suddenly October Bulletin it cuts.

42:19

But there three changes, I think, from memory to the October bulletin, so other things.

42:24

Another item was on RTI data being required for corporation tax and self-assessment codes being mandated from April 25. That was changed to be a voluntary thing.

42:40

There were a number of things on the October bulletin, but one of them was neonatal pay.

42:44

The Software Development and Support team have actually issued more detailed specifications within the last seven days to the software developers, so yes it's due to start.

42:54

There was some speculation before of whether it would start before because of course this relates to premature birth often, so would it affect people?

43:04

Is it related to the birth was due 6th of April but it occurred before, but I think the way it's going it's actual births from 6th of April onwards.

43:14

Right, and just another observation. I'm going to read outcomes in from Karen, just say salaries in the public sector are not currently in line with the private sector, but we do get the DB pension benefits.

43:25

I don't think that's a fair observation. I see that in the recruitment world as well. You may find that they actually start to shift as more people start to move over.

43:32

If in the public sector salaries may start to come down as a result of these NIC changes, that's all to be seen. We'll wait and find out.

43:39

but you're certainly right, as a general rule, they are definitely lower compared to the private sector, and we see that from the recruitment perspective as well.

43:46

Right, listen, let's jump on and move the conversation forward out of the budget and into Employment Rights Bill 2024.

43:53

What do employers need to know?

43:55

I'm going to come to you Simon, if you can give us the brief overview this time, and I'll come to you Matthew for your additional input, but yes, take us away.

44:03

Yeah, sure, and the autumn statement yesterday, or the autumn budget I should call it, has progressed some of these elements of what the employment rights bill is and some of their justifications.

44:16

So the main ones that come to mind that affect us in payroll are, well of course, minimum wage increase tied to inflation has happened certainly as a first stage, so that cost of living aspect is already there.

44:28

So jumping ahead to that, that's impacting from April next year and we'll get the single rate creeping in. So they've not done it in one hit.

44:37

So the initial indication that this will occur in the first 100 days is more the laying the route for it rather than actually doing it. But so the 18 and upwards rate eventually will align with the living wage.

44:52

So living wage will apply from 18 plus at some point.

44:56

The big jump percentage is to fill the gap and work its way there. So exploitative zero hours workers and contractors is being progressed.

45:06

There are open consultations and exploring what that really means.

45:10

And we do see it, we see it a lot in social media, the number of people where the flexibility has benefit to individuals to have zero hours contracts.

45:22

I've certainly experienced it with my own children, certainly whether at university, the flexibility of being able to do that work and yet get on with their studies.

45:31

However, there do seem to be employers that exploit it the other way so that you turn up or not. So it's not a right to turn it down.

45:40

And also, it's been some time, it was Vince Cable that brought in the law that removed no competing clauses on zero-hours contracts, yet there are still employers out there that try and operate it.

45:57

Whilst you're working for us, you're not allowed to work for someone else, but we're not going to give you any guaranteed hours.

46:03

So the right to guaranteed hours is potentially coming in. Sick pay is under consultation.

46:08

That started, I know that started with the CIPP, it started with the BCS Payroll Specialist Group, which I chair as well, and also the consultation is now open. So that is open.

46:21

So the thought that it will be a day one right in effect. There will be no four day PIW is the indication I think.

46:30

So it is you're off a sick, you get SSP. It will be based on the lower earnings limit to a certain extent.

46:38

So those on the lower earnings limit will get the weekly equivalent rates associated with their days, but those below, and this is what they are consulting on, is how much.

46:48

So there could be situations where people are entitled to SSP, so they get more being off sick than if they worked.

46:55

So the measures are to look at that and find ways of implementing so they don't get more, but they will get a percentage basis, and they're looking at things between, I think it's 60 to 80 per cent of that sort of capping of normal learnings, and so get involved in the consultation. Civil to criminal offences, that's just interesting.

47:23

In the Employment Rights Bill that's gone through or going through, a number of items have been changed.

47:31

Whereas before they were civil offences, so you could receive a fine, some of them have moved to be criminal offenses, so potentially directors could be imprisoned.

47:41

Not that anybody has been imprisoned for breaches of national minimum wage now, but potentially they could end up with a criminal record being placed against them.

47:50

So just be aware that the enforcement of employment rights is changing from a civil thing that doesn't really affect individuals to something that could affect individuals being taken to court and potentially, if you at the very extreme imprisoned for breaching employment rights.

48:10

And so there's this element of job security, you've got it going down the list, really here, the day one right potentially being proposed.

48:20

Certainly, all of these things are coming in, potentially in their proposals, but not immediately.

48:27

So the timetable, looking at the implementation of many of these employment Rights Bill, which are things that the Labour Party would do within 100 days of being elected, are for, oh, 2026.

48:41

So it's potentially looking at implementation points either in April 26 or October 26. Is that enough from me and you want to hear?

48:50

But certainly we've had in the press some of the keynote cases of fire and rehire, and it was interesting to the exchange in Prime Minister's question time, actually the other week, where a certain person was mentioned on the fact that the new government seems to have converted to actually applying fire and rehire into their reality. Is that too political, Matthew? I shouldn't go that way.

49:20

It's more of an observation, Simon.

49:22

More of an observation.

49:23

So yes, so I think there was an element of actually, they're going to outlaw fire and rehire but uh cabinet and Downing Street etc seem to use it quite a lot.

49:35

Indeed well actually before I come to Matthew I've had a quick question come in so let me ask this and I'll come to you Matthew while you absorb that observation just a moment ago.

49:44

If an employer does not apply average holiday pay are you saying the rules are now more strict?

49:51

Do you want me to make a comment on that?

49:54

At the moment how do you employ average have, well, holiday pay rights, the way someone enforces their rights is to raise grievance or ask the question first of your employer.

50:08

If your employer tells you to go fly a kite, then you can raise a formal grievance.

50:14

And if they still tell you to fly a kite, you take up a case with ACAS, they'll give you a number and you can potentially take that employer to an employment tribunal.

50:23

That employment tribunal will rule probably in two or three years time on your case and your case alone.

50:31

With the change in the Employment Rights Bill, we have what's called the Fair Works Agency or FWA, I think I've got the name right, being brought into play again probably in 2026, where they will operate and they'll include within their remit, similar to HMRC Policing National Minimum Wage, a new force of employment rights investigators who will come in and issue notice to the employer.

51:03

The challenge with the Fair Work Agency and the way National Minimum Wage works now is I don't have to go to ACAS, I don't have to take you to an employment tribunal, I just have to report it to an agency who will come in, it might not be very quick, but at some point will come in and they'll audit as an employer because it's been raised.

51:25

But they don't audit the complainant, they audit the employer and their workforce.

51:33

So potentially with this change in rights for holiday pay, at the moment it's a one by one case taken up with the Employment Tribunal.

51:44

With the FWA when they come in, they'll issue you with a notice and you pay it or you're fined and taken to court and it may be that the complainant doesn't have a right to anything extra.

51:59

Maybe their holiday pay was right but what they will do is they'll look at everybody else just to make sure you got it right for them as well and if you haven't, they'll make you pay it.

52:11

That's the risk of where we're with the FWA. Is that fair to say? And that expands into other things as well.

52:18

I understand that with the fine principle and maybe it's too soon.

52:23

Does that mean employers would need to pay the fine before the investigation even takes place and then there is no investigation or as in could they be paying fines even if it's all correct?

52:33

Or is there a fine only applies if it's not? The fine applies if it's not correct.

52:38

I was asking wasn't a bit like you know you if you're being guilty and you're innocent you get a reduction you pay it early you don't get the investigation.

52:45

But I'll make a suggestion and you can say it's a Simon tongue-in-cheek because you know I'm like that and I'm from Yorkshire I know from birth I don't sound like it from the accent is I suggest that 70 to 80 percent of employers holiday schemes do not comply with the working time regulations now.

53:05

Oh okay well Paula said thank you so you Matthew, you've got a broad grin on your face.

53:12

Anything you'd like to add to Simon's response and employment rights bill or anything perhaps we haven't yet considered?

53:19

Yeah, so as Simon said, the bill's been presented and just to give more of a overview of what the bill actually does is none of these things are actually given power by the bill.

53:31

The bill gives the government power to do these things, which is why you've got all sorts of different start dates all these different items.

53:41

To kind of go to the ones that we've been diving into, the right to the guaranteed hours.

53:47

It's a departure from banning zero-hour contracts, which was initially sort of mooted by the Labour government when they were attempting to get into power, to just banning those exploitative ones.

53:59

And rather than actually banning them, we're going down this different avenue of that right to the guaranteed hours.

54:06

It's important to note that once you have the right to those guaranteed hours or the employer has to offer a contract that reflects the actual hours worked by the employee, the employee doesn't have to accept them.

54:18

And that's where the sort of one-sided flexibility is removed in that if it is beneficial, as Simon was saying, university students can be very beneficial for them.

54:32

it's a sort of practice used widely within the NHS with bank staff.

54:37

If you accepted that contract then you're bound by that contract and you have to work those hours but if it's actually beneficial for you to continue on zero hours you would just not accept the contract so that's where that exploitative nature is trying to be removed there.

54:53

The actual implementation of that and the administrative burden that that's going to put on employers that have those zero hours workers We'll be in the fine detail of how you approach it but we'll have to wait and see.

55:07

As for SSP, as Simon said, the consultation is very much looking at what percentage we should be paying SSP at if you earn less than the current rate of SSP.

55:19

So within that consultation, just to clarify on what Simon said, they have given examples between 60 and 80 percent.

55:26

However, they have said that that is not any indication of government intention, that is just a representative data analysis that they've shown there.

55:36

I think I initially thought about it being aligned with, you know, like statutory maternity pay where you would use 90 percent.

55:43

They potentially feel that 90 percent is too much of a replacement rate for some of those lower earners and that it would still be too much of a burden on employers.

55:53

As we've heard today. More burdens on employers don't necessarily go down too well.

56:00

So it's trying to find that balance of what is a good enough replacement rate to help workers recover and stay off work and to encourage people to stay off work when they should be off work, but to encourage people back to work so that they don't become economically inactive.

56:15

And that's a difficult thing aligned to trade.

56:18

So that's essentially what they're trying to get a wide consensus on.

56:22

I've got a question, sorry Matthew, I thought you had something else to add, apologies.

56:28

No, I was just going to dive into the sort of Fair Work Agency but that's a big topic that we need to hear more on to be honest so I think Simon covered that fairly well.

56:38

Definitely something where I would just say make sure your processes are up to snuff and in line with the legislation because I think that's going to be a key thing if anyone gets audited.

56:50

Fantastic.

56:50

So a question for you, Karen, and I know there's going to be a potential shift from civil to criminal enforcement for, you know, minimum wage, getting things incorrect, essentially.

56:59

We know that that burden is going to fall on the employer, but I'd like to ask you, how much responsibility do you think falls on the payroll professionals then to make sure that they are providing the information back to employers if they are falling below some of these levels, if we are sort of moving into this, you know, I think potentially this is an opportunity to the profile of payroll once again but obviously with that more responsibility, you know, more power comes more responsibility if you like.

57:22

I just want to know what your take is on that shift from civil to criminal offences if they were to fall, you know, negatively if you like and what kind of responsibility do payroll people have to educate and make sure they stay above?

57:38

Well this one's always the challenge isn't it because as the title suggests it's employment rights.

57:44

I'm with you in the fact that payroll professionals, I think we can definitely aid, whether it be our employer as an in-house payroll or whether it be clients as a bureau.

57:55

However, when you're looking at minimum wage, holidays, SSP a little bit easier for payroll to look at and support with because obviously you're actually making the payments.

58:07

Again, as an agent, we don't actually know when the employee was off sick until the client tells you what it is that the employer's doing.

58:14

If the client gives you incorrect information, effectively, you're starting from a bad point in the first place.

58:20

From a client's perspective, most of this, the obligation to comply, falls with the employer.

58:28

If you're looking at a payroll department, can they assist with their employer?

58:31

I would suggest yes, but in conjunction with their HR department because minimum wage, again, what payroll see and what payroll systems do is they can look at an age and they can look at a rate.

58:46

Some may improve more to look at salaries and ours, as we heard at the CIPP conference, the complexity when it starts, you start looking into the salaries and working at national wage, you know, they change significantly.

58:58

However, that doesn't mean, of course, that the employer hasn't said to an employee contractually or otherwise, yet you need to buy your uniform or you need to do this.

59:10

The payroll team may not even know that that's happening.

59:13

It might just be that this is a deduction from net pay for some reason.

59:17

Now HR may know that.

59:19

I think we've got to be very careful when it comes to holiday pay, again, very, very difficult.

59:24

So payroll can pay it, but not necessarily can work out average earnings.

59:29

It can do all of those things on the whole.

59:31

Thanks to the furlough scheme, we've got much, much better at doing that.

59:35

But when it comes to the entitlements, when somebody takes their leave again, it falls more with HR.

59:42

So I think collaboration is going to be really important when we look at this bill, the role that payroll plays.

59:50

And I do think we have a role to play and I think we should do what we can.

59:54

but I just think let's just put that caveat should it the responsibility accountability fall to payroll I think perhaps that is the question and that's what we'd need to balance out between the two because payroll can only do so much so I think it depends on that data.

1:00:10

What's your take Simon if you're an in-house payroll professional and you said 60 to 80 percent are probably getting this wrong if they were to be audited I think was that that was percentage you gave if you were working in-house as a payroll manager and you spotted something that you thought was was incorrect. What action should they take? What's your take on this going forward?

1:00:31

It's a tough one, Nick.

1:00:32

I think it's good for them to flag, but I think as Karen's just said, the payroll is only one side of the coin.

1:00:40

So the other side is the, well actually you could say it's maybe it's a cube even because there are other sides and I've certainly experienced this practice with some employers in the past, years and years ago, where you ask them what their policies are and they'll tell you what the policies are and you say, is that what happens at the local shop then that you manage?

1:01:01

And they say, of course it is and it's sort of that I know that people turn up there 15 minutes before and they're there 20 minutes after they're paid. But of course that's contrary to the central HQ policy.

1:01:15

The FWA will not care, because they will go and visit some of those premises to find out what actually happens. Now, what the payroll manager will be aware of is what's being paid.

1:01:25

What they won't know is what the practice is.

1:01:28

And equally, I think there's a lot of confusion on what entitlement is. I'm not saying that the, well, in fact, I'll be quite clear.

1:01:35

The law is confusing, as it currently is written.

1:01:40

In relation to holiday pay, it's based on a old assumption that everybody's paid weekly and still is so it doesn't cater for monthly frequencies at all.

1:01:51

However, there's a pragmatic means to come very close to what it's actually trying to do and there's totally ignoring the regulations altogether because they're just stupid.

1:02:02

And I think the latter tends to be what people do rather than say okay well how do we get this to work in a fair way because that's the justification to the court and the judge is this is ridiculous what you're asking me to do. So we do it this way. Is that fair and reasonable?

1:02:19

And they'll make a judgment on fair and reasonable on whether that happens. So it's a difficult Nick.

1:02:26

But I think, as Karen says, the payroll manager isn't necessarily the only stakeholder here.

1:02:32

There are others.

1:02:34

But I do tend to find that when it goes wrong, the finger is pointed more towards payroll.

1:02:40

But this is about employment practice, policies and procedures, employee handbooks.

1:02:49

And often, you know me, I'll raise these sorts of things even with HR professional groups. I've got to say, sometimes I don't think they're interested.

1:02:59

However, they are one of the challenges that we have.

1:03:03

And we'll know that in the past, we've got this view HR and payroll don't really talk together very well. Increasingly these days we need to.

1:03:12

We need to understand why both work in a way and have it that it's mutually beneficial rather than the adversarial type of interaction between different areas because I think sometimes the payroll profession is told a little bit to mind its business and do what it's told except when it goes wrong, when they are required to fix it.

1:03:35

And the thing is, it's a mutual problem that needs to be resolved.

1:03:39

Hopefully, in the consultation processes of the FWA being established, and I'll plead that through Matthew and the CIPP and certainly the organization I'm involved with, is the government need to sort out the legislation so that it works for current practice.

1:03:58

You can think what civil servant is paid weekly, so why have they written the law that way?

1:04:06

And you could say that's because they wrote the law in 1940, whatever, or 1872, and they haven't bothered changing it.

1:04:13

Well, they need to change it, and they had an opportunity at the beginning of the year to do it, and they didn't.

1:04:19

They changed some other things, so they've massaged it at the edge, brought in, I can't say brought back 1207% because the Supreme Court ruled that it never existed.

1:04:31

They brought in a new 12.07% operation of holiday, rolled up holiday and holiday accrual, dependent on new rules, which don't operate the way the old.

1:04:44

Does that help?

1:04:45

I'm rambling on about other things now, Nick.

1:04:47

Oh, I think if nothing else, it really highlights the importance of cross-collaboration, cross-functional collaboration.

1:04:52

And I actually think it's the quickest way to make a profile of the industry is by collaborating, not trying to do it as a siloed function and then taking all the blame when it hits.

1:04:59

So I think you raised some really good points.

1:05:01

Let's see what the audience have to think about it then.

1:05:02

We've got a poll which runs across a similar line.

1:05:05

The question is, will the shift from civil to criminal enforcement of wage laws change your company's behavior towards payroll compliance?

1:05:13

For those in audio listening to this, perhaps on the podcast later on, we've got three answers here.

1:05:17

One is yes, we'll need to adjust processes to avoid risk.

1:05:20

Somewhat more attention to compliance, or no, we already comply fully.

1:05:25

While we're waiting for those poll results to come in, We've had a couple of more questions.

1:05:28

So I'm going to bring this back to our panel.

1:05:30

Perhaps I'll come to you for this one, Matthew.

1:05:32

Is there any talk of SSP being recoupable for employers?

1:05:38

The short answer is no.

1:05:42

The longer answer is that the CIPP are trying to push for some form of SSP reclaim, probably for smaller micro employers because simply the cost to the government would be quite considerable if it was rolled out to all employers.

1:06:03

Much more likely for people to go off sick within a work year than they are to go on any of the sort of parental statutory leaves.

1:06:11

So that's kind of one of the big reasons why it was kind of separated.

1:06:16

But we will continue to try and push for it.

1:06:19

But if you're looking for an answer on right now, The answer is probably no. Okay, fantastic.

1:06:26

Is there a date, next question sorry, is there a date confirmed for worked hours to be submitted to HMRC for salaried workers compared to contracted hours? I'd like to come to you for this one Karen.

1:06:40

So they were looking, it was due to be 2025, the latest that we have is 2026, which is why 2026 seems to be, it's going to be an interesting year for payroll and increased data to HMRC given the payrolling of benefits as well.

1:06:55

But Simon, that's the latest that I've got is 2026, but obviously we are still waiting on the technical guidance of what exactly we will need to submit.

1:07:12

And then we've had, I'm sure we lost your signal there slightly Karen at the end, but I've had a comment in from Angelo that says, thank goodness for that renewal of the 12.07% with about 17 exclamation marks. So thank you for the comment.

1:07:25

I'll go back to Emma's comment earlier as well. I think it's more complicated than people will think though, Nick.

1:07:31

Indeed. Well, as you mentioned, so many people are not getting it right.

1:07:36

But go back to Emma's comment earlier.

1:07:37

There's something we haven't mentioned today that, you know, it's not all bad news, but this did make me chuckle while I read it.

1:07:42

It said that in the budget, of course, they cut alcohol duty rates on draft products below 8.5% by volume ABVs, by 1.7%.

1:07:51

So an average ABV strength point will now be one pence less in July, so in duty.

1:07:57

So hey, it's not all bad news, a penny less.

1:08:01

But go back to Emma's question, but I would argue that maybe that's somewhere they could have added some duty and maybe help the employers a little bit.

1:08:07

But that's a personal piece.

1:08:08

But hey, it's not all bad news, one pence less for your point.

1:08:10

What can you say?

1:08:11

Listen, let's have a look at some of these poll results then, and perhaps I'll come to you, Karen, this time for your thoughts on these.

1:08:18

The first, just for those in audio only, we've got, oh I can't see the results for a second, here we go, yes we'll need to adjust processes to avoid risk 12%, somewhat more attention to compliance 45% and no we already comply fully 42% which is good to see. How are your thoughts on those results?

1:08:36

Well I think it's wonderful that so many comply fully.

1:08:41

I think I would just echo Simon's point is I would just take some time to double check that you are complying fully or rather whilst your policies and procedures may be fully compliant, that if you have sites, that some random checks are at least conducted to ensure that they are complying fully with that.

1:09:04

The only reason I say that is the firm I work for, we have multiple offices, we have ways of doing things and I can tell you, not necessarily from a payroll compliance, because obviously we do the payroll, but if you look at general compliance of X, Y and Z, not every might do things in the same way as per the company policy.

1:09:23

So I would just put a, you know, a little warning on that.

1:09:26

I think the middle one, somewhat more attention to compliance.

1:09:30

Again, I'd put that in that camp of let's just do a check, that, you know, let's not, before this all comes in and there's criminal penalties in particular, let's just make sure our house is in order while we have the time to do it.

1:09:46

Okay, great.

1:09:46

Well, let's move on to the next part of the show we've still got a few things still to get through.

1:09:51

Next session, of course, is HMRC's direction, expenses, claims and tax avoidance.

1:09:56

Simon, I'm going to come back to you on this one, it's something we've covered a lot on the show over the months and times, so back to you please, sir. Yeah, okay, that's great.

1:10:05

I'm going to cover something slightly different, but it's all relating to this as well, and Matthew mentioned it at the beginning, and that's as part of the autumn budget statements yesterday was a paper in relation to umbrellas and tax avoidance schemes.

1:10:20

So just to mention umbrellas, and I think they're affected by the employers' national insurance increase.

1:10:25

The reason is some of the statistics that were published yesterday, I hadn't realized before.

1:10:32

So the government is saying there are 700 ,000 employees under umbrella arrangements for the 22-23 tax year of which 274 ,000 were with umbrella companies operating tax avoidance schemes that are potentially unlawful.

1:10:55

So I'll just put that one because it's under the tax avoidance element.

1:10:59

That then produces with another announcement from the autumn budget yesterday, which is in the the pursue of the tax advice market registration requirements from April 2026.

1:11:13

There's a payroll profession, we need to figure out what that means and what impact it has us because we don't really have a regulatory body, although we may have a professional body, it's not a regulatory body, so how is that going to be affected or is payroll excluded from that because it was in the original scope.

1:11:30

Now the October bulletin and other announcements I think we're aware of it probably a couple of days before, Karen, is the, because it was announced certainly to the rep body group, that the expense reclaims are in effect being stopped to an extent and now a requirement of evidence.

1:11:52

So there have been a lot of reclaim agencies, which probably goes along with the tax market requirement for registration approvals, is the fact that there have been a lot of companies that have been claiming lots of expenses refunds of tax, where HMRC previously had been taking it in good faith.

1:12:14

However, a number of people actually don't have that expense or probably didn't even know that the expense was being claimed for them.

1:12:22

So this is like home layouts, cleaning uniforms, travel and business mileage in private cars, all various aspects.

1:12:31

Also, I think there's an element of the government taking a view that maybe some people have over-egged the claim on their self-assessment forms, that actually where they put that they did 20 miles, the 20 ,000 miles business travel at 45p, 10 ,000, 25p thereafter, they only actually did 11, they didn't do 20, so So, they're now asking for evidence provision, potentially for those expense claims.

1:13:02

And I think from the indication of the announcement, they could go back a little bit in time as well. So, that might just not be new claims.

1:13:11

They may actually explore some existing or prior claims that made.

1:13:15

But some of the reclaim agencies that have put in expense claims, the payments have stopped and I think that was a major activity about three weeks ago from memory.

1:13:27

So they've stopped making any reclaims and they're going back to the individuals asking them to confirm that they've made this claim and actually provide evidence that the claim is real.

1:13:38

So just to be aware of that and the next bit I guess goes back to where I started which is tax avoidance list, there are over 120 organizations that have been listed as promoting tax avoidance schemes and been named.

1:13:56

Many of them being issued with stop notices, so they shouldn't be trading any further.

1:14:00

They should have stopped their activity and certainly stopped any of the avoidance schemes.

1:14:06

The majority of those on the tax avoidance list, which has grown because earlier in the year, it reached 86, which I was astounded at, but now it's about 126, so an extra 40, and we know there are more.

1:14:22

So the guess of 274 ,000 umbrella employees in tax avoidance schemes is not complete because they haven't finished investigating the others, But it's certainly there. And widespread, it's difficult, isn't it? Because I guess we want good service from the government, NHS, etc.

1:14:48

But we don't really want to pay for it, so we'll try and avoid it, is maybe the view.

1:14:54

So you get contradictory thoughts from me today, Nick, on this one.

1:14:57

On the one hand, we don't want to pay more tax.

1:14:59

on the other hand, I'd like to be seen at A &E within an hour of being there rather than waiting six. Someone has to pay for that, I guess, is where the government would be.

1:15:12

But there seem to be a number of, in many cases, high paid individuals, but in lots of cases with the tax avoidance list growing, low paid individuals, some of them even in public sector, to be honest.

1:15:27

So there's an If you want a job with certain trusts and bank groups or this, that and the other, they'll make you go through these umbrellas which may or may not be involved in tax avoidance schemes.

1:15:41

So you'll take on a low-paid job, but you'll take home more money than if you're working full-time because you'll pay less tax than they know. How is by magic.

1:15:50

And so there is an element of watch out and be careful and if something says it's too good to be true or if you think something sounds too good to be true it probably is.

1:16:06

Now pension salary sacrifice sounds a great idea and Andy can tell us about it you've got implications of minimum wage but generally they work because they're a legitimate operation if done correctly and also pensions is on the exemption list under OPRA rules.

1:16:27

But before we've touched based on, there are other companies out there that are operating salary sacrifice schemes, promoting the fact that they work for childcare, buying shopping, buying other stuff.

1:16:41

There's an element of, they're not on the exemption list. So how do they work?

1:16:47

And so there is an element to don't believe all you're told.

1:16:50

And general principle is if someone says they're accredited by HMRC, let's be assured they're not because HMRC don't credit anything and they don't approve of any tax avoidance schemes.

1:17:02

So if they're saying this might work and take a few different matter, but if people are giving you an assurance it works when it sounds too good to be true, they're probably not really telling you the truth.

1:17:15

Have I gone over the mark there?

1:17:17

I'm going to come to Andy actually because we've got a question and actually maybe Andy can bring to light some of the pension elements you just talked about as well Simon.

1:17:23

The question comes in, it comes in from Angelo, says I imagine that salary sacrifice schemes, especially pensions, will be more under the microscope and possibly require auditing.

1:17:33

Would you have any recommendations for general tips that we can use to protect ourselves? Andy?

1:17:40

Well obviously the pension regular, for instance, has already got criminal powers.

1:17:45

So, and they've already put people in jail for fraudulent activities. So, going back to the previous slide.

1:17:55

So, therefore, it's important that as individuals, in terms of working in payroll, you know what the rules are around things so that you can make sure you are acting as a police for your employer, really.

1:18:09

But the salary sacrifice is a great thing really and if you've set it up properly everything should be fine.

1:18:17

So ensure that the pension scheme is fully involved because remember you're taking an employee contribution and the individual is going to give up part of their pay in exchange for an employer contribution so your scheme now is employer only.

1:18:33

Contributions was employee and employer and you can still be employee and employer because some people may not agree to a sacrifice or you've got people on national minimum wage so you can't actually do a sacrifice, there will be an employee contribution.

1:18:45

So it's important the scheme is fully aware of what's going on, that you set it up properly on the payroll system to speak to your payroll provider, make sure you know how this to do a sacrifice in the payroll system and then it calculates the right contribution values, it calculates the right salary sacrifice amount.

1:19:06

That maternity pay, when people are maternity leave, that desirous sacrifice treatment for the people who are maternity leave is correct.

1:19:14

So take legal advice, ensure that your employment contracts are correctly adjusted and HR is obviously going to be fully involved.

1:19:25

If you've got a pension specialist, if you're a large employee, you may have pension specialists as well.

1:19:30

So it's just making sure everyone's involved and the employees consulted with.

1:19:36

So just check.

1:19:38

So you can look at the, what does the salary sacrifice agreement look like?

1:19:44

Does it enable you to take someone out of salary sacrifice and put them on normal contributions when they go and return to leave?

1:19:50

Would that be right to do?

1:19:51

does the pension scheme get the contribution file sent over to them with not the sign of sacrifice amount in the employee column, but it's all put into the employer column along with the normal employer contribution.

1:20:09

Otherwise, that's going to cause problems with tax relief, particularly for relief for source pension schemes. So, look at our process. It is complex.

1:20:20

If it's any help to encourage you to look at everything on your payroll system regarding pensions, tax, national insurance, but from my perspective, pensions, every single, when I was working for pension regular, every single employer inspection I was involved in, which was many hundreds, no employer had it right.

1:20:46

There was always something wrong.

1:20:49

Could have been some of it was just technical.

1:20:51

It's just, could be just a word of a letter, just go and fix the wording.

1:20:55

Sometimes it cost, it was contribution calculations were wrong and you're talking about hundreds of thousands of pounds potentially in arrears for large employers going back to their staging date.

1:21:07

So, I think the key, I think Karen mentioned it, is don't think, don't assume it is right because you think it was set up right and the people might have done it right before you. Don't assume that.

1:21:26

Know and understand what the rules are around whatever it is you're putting in place. Speak to the people that know.

1:21:34

Even ask questions like you've rightly done here on these programmes and ensure it is right, you know, much better than getting the fine.

1:21:43

Absolutely right. Well, we've got seven minutes.

1:21:44

If people want to put any more questions in the box, now is the opportunity to do so.

1:21:48

Before we go to the SDWorks Academy, Karen, just quickly, is there anything else I need to add in terms of what employers need to watch out for in relation to payroll compliance?

1:21:56

I was just going to say, I agree with what Andy's just said as a Bureau, and I'm sure Simon will feel the same.

1:22:00

When you take on a new client, one of the most common compliance issues we find is we have to fix the pension.

1:22:09

Yeah, and hopefully we hope that nobody who takes any of our clients has to do this so clearly. But no, that's one of the most common.

1:22:17

All I was going to add is obviously with the expenses, it is a shame that, you know, it's always like a sledgehammer to crack a nut, but clearly it's quite a big nut.

1:22:25

Nobody wants to see deliberate fraud and what have you, or certainly no law abiding citizen, but not having the electronic methods in place prior to saying this, that's really disappointing because you've gone back to paper and post, which is, you know, if you try and post something, I think, what's the turnaround at the moment?

1:22:44

12, 13 weeks, it might be quicker for this, of course.

1:22:48

And just one thing I wanted to pick up on that I've started to notice, now this might be specific to bureau accountancy, don't get me wrong, rather than an employer, is businesses coming in from abroad.

1:23:03

Now why I'm saying that is, I mean they might not know after yesterday, it wouldn't set business, but what some of the things we've noticed is inquiries around, I want to have a payroll scheme, but they don't seem to want to set up a pay-as-you-earn scheme, so I'm thinking, well, okay, you have to. Then it's a, oh, where does your employee live?

1:23:23

Oh, I'm not quite sure, so clearly the employment rights checks, you know, the right to work isn't being done. The moment you mention pensions, we'll know I just know that they don't want to join one.

1:23:34

Do I have to do that?

1:23:35

Really, I can't say I've got to the bottom of it, but I'm just seeing a trend because I've had to actually group up with some colleagues to say, I don't think this is really for payroll to advise on because the moment you start to say, I want a payroll setup, it's then of, well, how do I do a company then? How do I do this?

1:23:54

So really for those who are in the payroll service sector and particularly accountancy is do make sure you don't cut your corners around the money laundering checks, your client checks, those kinds of things.

1:24:09

Because I'm just seeing a bigger trend of random lots of companies with one employee wanting to set up in the UK.

1:24:17

So I just throw that in just as something to watch for if that might impact you.

1:24:21

Good advice. Well, let's go into the SD Works Academy where of course there's lots more advice about all aspects of payroll if you want to get yourself or your teams skilled up in the world of payroll.

1:24:32

Lots of dates here you can see on the slide in front of you. And the next one is on the 8th of November talking about the real living wage and we get a lot of questions about on PQT.

1:24:40

The 19th November UK payroll part one income tax and national insurance, pretty relevant post budget I should think for those who want to find out more.

1:24:48

22nd November, payrolling benefits in kind, and 6th December, holiday pay, understanding entitlement, accrual pay and rolled up pay as well.

1:24:57

And of course, further sessions run in from 13th December all the way through to the 21st of February.

1:25:02

So if there's any of those subjects you can see on the slide there that you're interested in getting involved in, you can do so and find out what the course calendar, the link of which should be on your screen.

1:25:10

But what I'll do is I'll take a copy and paste of this and put it in the chat so you can sign up directly while I that, maybe Simon you can give us a brief overview of what the SD Academy is about, the kind of tutors you have and what people might experience if they were to sign up.

1:25:22

Yeah sure, so the SD Works Academy is something that was launched at the beginning of last year, it's something based on our international model because SD Works are now the biggest supplier in Europe of payroll services and we've started out with what we call our PALS, Services Apparel, HR and legal services sort of subject areas of where we get a lot of inquiry.

1:25:47

In fact, there's one on tomorrow.

1:25:48

If you did look at the academy diary, you'll probably find there's a free update from the budget yesterday that's going on tomorrow.

1:25:55

Some of these are paid for courses because they're quite specialist or involve consultancy elements as well.

1:26:00

And of course, we've got pay rolling coming in 26.

1:26:03

So as an element of if you're not pay rolling already, you need to start planning of how you're going to do that.

1:26:09

And P11Ds go. You need to start doing that through payroll. We have some very skilled trainers.

1:26:17

Some of them actually do work for the CIPP and the Payroll Centre as well, and et cetera.

1:26:24

They're independent trainers, very good at what they do. They can gear things to you.

1:26:29

These are quite, I can say, individual tailored to those that attend.

1:26:36

They can be as interactive as you want and probably deal with you. Perfect, perfect.

1:26:43

Well, there's an opportunity still, a couple of minutes left. If anyone wants to put any final questions to our panel, now's the time to do so.

1:26:48

The next PQT is going to be returning on Wednesday the 27th of November.

1:26:54

Again, you can sign up there as you have done before stworks.co.uk forward slash PQT.

1:26:59

Just a reminder, if you can't even make the session, sign up anyway, you'll still get a copy of the slides, you'll get the survey and other things sent through to post-session.

1:27:06

And of course, we do release all of the episodes on the payroll podcast as well.

1:27:10

So you can catch it in audio later if you don't manage to stay for the whole show, if you wanna share it with your colleagues, anything we've discussed there, you can hear that when it gets released.

1:27:18

But while we're waiting for the last two minutes or so, anything, I'll come back to you, Matthew.

1:27:21

I haven't heard from you for a little while.

1:27:22

I haven't come to you for the last slide or two.

1:27:25

Anything you'd like to add, any closing notes from yourself before we close today's show?

1:27:30

I think to maybe loop it right back round to the budget, I think in terms of the tax avoidance stuff, I think a lot of the non-compliant schemes that are being operated make use of essentially avoiding certain employment taxes.

1:27:48

Don't have time to get into like hybrid models and stuff like that, but essentially an increase in employment taxes means that avoiding those taxes becomes a lot more enticing.

1:28:01

So I think potentially there is a concern that an increase in the employment allowance and a increase in employer NIC costs could drive more umbrella companies to non-compliant methods.

1:28:17

So I think that's something that we definitely need to watch out for in the coming months, years.

1:28:23

Fantastic. Well, great way to close the show. We've gone full circle.

1:28:26

So thank you to all of our panel for joining us today.

1:28:28

Thank you, of course, to all of those that have joined us in the live environment, but over 100 of you join us for the entirety of today's episode.

1:28:34

So thank you ever so much to all of you.

1:28:36

Please do give us your feedback on what you'd like us to cover in future episodes.

1:28:40

We'd love to give a future PQT based on what it is that you are struggling with. So do let us know.

1:28:45

Of course, give me a huge thank you today to Simon Parsons, Karen Thompson, Andy Nichols, and Matthew Ikwik for joining us as our panel experts.

1:28:51

I've been your host.

1:28:52

My name is Nick Day, and we look forward to bringing you the next episode on the 27th of November. Happy Halloween to you all. And I look forward to speaking to you all soon.

1:29:00

Thank you.

regenerate transcript

save edits