Pensions Automatic Enrolment and ongoing duties – what you need to know

Every employer has automatic enrolment duties.  Automatic enrolment refers to the requirement by The Pension Regulator where UK employers are legally obliged to automatically enrol all eligible workers into a qualifying pension scheme by a specific deadline.  This specific date is called the staging date.

Where Automatic Enrolment applies, you must by law set up a qualifying pension scheme, assess your staff, put them into a workplace pension scheme if they meet certain criteria, write to them to tell them what they have done, and complete and submit a declaration of compliance with the Pensions Regulator. You must also create and maintain detailed records of correspondence with workers, workforce assessments, joiners and leavers and pension payments.

According to The Pension Regulator, to date, more than 8 million people have been automatically enrolled in a workplace pension by more than 600,000 employers. However, there are thousands more employers due to reach their duties start date by February 2018, the number of people automatically enrolled will continue to rise. Is your business one of them?

The financial penalties for breach can be severe. The Pension Regulator issues fixed penalty notices of £400 for non-compliance  and in addition levying an escalating daily penalty of between £50 {for employers with between 1- 4 staff} to £10,000 {for employers with more than 500 staff}.

To be compliant, all employers will need to review any existing pension arrangements or to design a new scheme that will suit the automatic enrolment criteria.

We can make life much easier for you with our automatic enrolment solution. As part of ourautomatic enrolment service we will review your position and advise you, to help ensure you are complying with this onerous legislation and minimise your exposure to penalties.

What if you have already completed your declaration of compliance?

An employer’s workplace pension duties do not stop with declaring compliance. You have several duties including making regular contributions into their chosen pension, monitor the age and earnings of their staff and enrol eligible staff, process any requests to join or leave the scheme, and keep and maintain accurate records. You will also need to re-enrol eligible staff into an automatic enrolment pension scheme every three years.

Furthermore contributions are being increased gradually over time. From 6 April 2018, the minimum amount employers have to pay in will be 2% of their staff’s pay, and the minimum amount your staff put in will rise to 3%. This will increase again on 6 April 2019 to 3% from employers and 5% from staff. The current minimum contribution levels are 1% from employers and 1% from staff and these rates will remain valid up to 5 April 2018.

The Pension Regulator conducts stop checks on employers across the country to make sure they are complying with their duties, it is important you are aware what your business has these checks inbuilt into your processes on an ongoing basis to ensure you comply with the law.

Our payroll service is designed to ensure employers are meeting their ongoing duties by assessing, enrolling and re- enrolling staff as necessary.

What if you are a new employer?

If you became an employer October 2016 and June 2017 your staging date will be 01 January 2018.   If you become an employer between July 2017 and September 2017, your staging date will be 01 February 2018.

For further information about Auto Enrolment visit The Pension Regulators website and more specifically the pages about ongoing duties for employers.

If you would like help knowing your staging date or meeting your Auto enrolment duties, then get in touch and we will be happy to assist. If you are one of the many employers who have successfully completed their Auto Enrolment duties, then feel free to share this article with others in your network.

Proof of self-employment income for mortgage applications – Form SA302

If you have applied for a mortgage, you will have encountered the requirement to prove your income for the lender to assess your eligibility based on your ability to pay. For self-employed people, this process has been quite challenging as mortgage lenders require proof of income via a form SA302. Form SA302 is traditionally a paper form issued by HMRC to show an overview of the individual’s tax position in a given financial year. Requesting a form SA302 from HMRC can be a lengthy process with long waiting times before getting through to them on phone and having to wait a further 2 weeks for the paper copy to arrive by post.

On the other hand, many accountants use commercial software to prepare and file self-assessment tax returns – the source of the information in a form SA302. Wouldn’t it be more efficient for self-employed individuals to contact their accountants for this information as opposed to wasting a lot of time waiting for a paper copy in the post from HMRC?

That is exactly what HMRC and the Council of Mortgage Lenders have been working on – to understand the lenders’ requirements and make necessary changes so that lenders will accept commercial software copies of the tax calculation together with a tax overview of the HMRC online account.   All the lenders who will accept self-serve copies have also agreed to be added to a list of lenders which has now been published on GOV.UK

This means that if your accountant has filed a Self-assessment return online, they will be able to print a copy of the tax calculation and/or the Tax Year Overview when it suits them rather than calling HMRC and waiting up to 2 weeks to receive a copy.

With these new changes in place, you can apply for your mortgage or additional lending in a quicker time getting you the results you seek faster.

Suggested action for self-employed individuals when applying for funding or a mortgage:

  • Make a budget and plan for how the funds will be utilised to advance your business or support an important personal goal.
  • Check if your Mortgage provider or lender is on this list of providers who accept a SA302 tax calculation.  If they are then, simply contact your accountant for your tax calculation to support the funding application. If you haven’t got an accountant or world like help with the funding application, contact us and we will be happy to help.
  • If your lender is not on the list above then you will need to contact HMRC directly to request your SA302 as they can no longer provide this information to accountants with effect from 4 September 2017

Worldwide Disclosure Facility – Letter from HMRC

HMRC has recently issued a statement regarding assets owned abroad. If you have income or assets in off shore accounts which might be liable to UK tax then you might want to take advantage of the Worldwide Disclosure Facility if your tax affairs are not up-to-date. Please read the full statement here.

The precise covering wording HMRC has prescribed by law is set out below.

‘From 2016, HM Revenue & Customs (HMRC) is getting an unprecedented amount of information about people’s overseas accounts, structures, trusts, and investments from more than 100 jurisdictions worldwide, thanks to agreements to increase global tax transparency. This gives HMRC unprecedented levels of information to check that, as in most cases, the right tax has been paid.

 If you have already declared all of your past and present income or gains to HMRC, including from overseas, you do not need to worry. But if you are in any doubt, HMRC recommends that you read the factsheet linked to this communication to help you decide now what to do next.’

As part of the ‘Automatic Exchange of Information’ under the ‘Common Reporting Standard’ that has been signed up to by many countries and that will be in operation from 2017, HMRC will be receiving and subsequently reviewing large amounts of financial data on UK taxpayers who have assets and financial interests overseas.

It will be very important for all clients who have such assets and interests overseas to ensure that any relevant income and capital gains arising from those assets and interests is correctly declared on a UK Tax Return, if penalties are to be avoided. HMRC may open an enquiry even where income and gains have been correctly declared or treated for UK tax purposes;

Where income and/or capital gains from overseas assets and financial interests have not yet been disclosed to HMRC, now will be the time to act and take advantage of the current worldwide settlement opportunity.

If you have had no overseas assets and/or financial interests, there is no need take further action.Please do not hesitate to get in touch should you require any further information.