10 payroll issues to look out for in 2016

Gary Webb looks after PR, marketing and communications for FMP Global. He has over 25 years of experience working with National Express, Halifax Bank of Scotland and Camelot (The National Lottery). Gary is also a member of the Chartered Institute of Marketing.

The Chancellor’s autumn statement certainly quickened the pulses of many payroll managers and, as a result, 2016 looks set to be another challenging year for hard pushed voluntary sector organisations.

From pension auto-enrolment and the national living wage to the potential simplification of income tax and National Insurance, we take a quick look at the top 10 issues facing payroll in 2016.

1. Big year for pension auto enrolment

2016 is (another) big year for auto-enrolment (AE), not least for the many smaller charities that must begin offering AE to their employees this year.. In addition, it has been three years since AE came into force for larger companies and 2016 sees the first triennial re-enrolment.

The surprise ‘emergency pause’ announced by the government in the autumn statement – namely that contribution rises will now be delayed from October 2016 to April 2017, will effectively reduce employee contributions. This will give respite to those voluntary organisations looking at squeezed funding in 2016.

2. SSL security accreditation changes

Internet security is changing and SHA2-SSL security accreditation will affect the way in which charities access Bacs via the Payment Services Website and Bacstel-IP. Existing smartcard, digital certificate and signing solutions will be replaced in due course by sponsoring banks with new ones which provide a higher level of security around the process for logging on, signing and submitting Bacs files.

3. National living wage

At the end of his budget speech in July 2015, Chancellor George Osborne announced that workers aged over 25 would be entitled to a ‘national living wage’ from April 2016, set at £7.20. Voluntary organisations now have to consider four different wage bands, all with different rates and relating to different age groups, including the minimum wage, (official) living wage, (new) living wage and London living wage.

4. Changes to P11D’s

Under the changes to the PAYE regulations, payrolling – namely collecting tax on benefits in real time – comes into force from tax year 2016/2017. So for P11Ds due for completion by July 2017, benefits such as medical, cars and vans will be subject to tax through the payroll.

5. Shared parental leave for grandparents

Following the introduction of shared parental leave last year, the Chancellor has unveiled a plan for shared parental leave and pay to be extended to one nominated working grandparent. The plan will involve extending the current system of shared parental leave to cover grandparents, as well as the child’s mother and father.

6. Scottish rate of income tax

Clearly this raises issues for voluntary organsiations employing staff resident in both tax areas, though the HMRC will identify who’ll be a Scottish taxpayer – employers should only use a Scottish tax code if advised by HMRC.

7. HMRC: Changes to operating procedures

HMRC is facing a massive shake-up, from the digitisation of the tax system to the closure of 137 offices, which will be replaced with 13 regional centres. The impact could be significant as the disruption occurs and customer service may suffer. If your voluntary organisation looks regularly for HMRC support and guidance it might be better to get your ship in order sooner rather than later.

8. Possible tax simplification

The Office of Tax Simplification (OTS) is continuing its push to address the complication created by running National Insurance and income tax separately – especially for small organisations. This could be good news for voluntary organisations struggling with the administrative burden.

9. Part-time season tickets

New flexible season tickets will soon be available on certain rail routes across the country, with those charity personnel who commute able to buy part time season tickets if they wish. Of course for charities who use a benefits package to attract new staff this extra layer of complexity will increase the administration burden.

10. Strategic investment in HR

With employment levels at an all-time high and voluntary organisations struggling to balance budgets and recruit key skills, 2016 is set to be a year of outsourcing, as managers look to minimise the administrative overhead and concentrate on key added value activities. Outsourcing routine HR processes including payroll, will enable over-stretched HR teams to concentrate on building the strong, committed and well skilled workforce.