Reply to: Salary for 2014/15

[TheCyclingProgrammer]

Another small update from FreeAgent. They have published this guide to the employers NIC allowance:

Employment Allowance - find out how the £2000 tax cut could impact you

It looks like FreeAgent do intend to support this through their payroll system from the outset (opt-in).

[Martin at NixonWilliams]

And how exactly would you implement a policy exclusion for PSC's when there is no legal definition of a PSC (i.e. they don't exist - at least not outside of HMRC's wet dreams) and there's no danger of a definition materialising anytime soon (if ever). Either Deloitte are talking complete tulip or someone is misquoting them; I'd bet on the latter.

I'm guessing you haven't read the earlier parts of this thread. The article is here:

Every business and charity to receive a £2,000 employment allowance - Employers | UK Budget 2013 | Deloitte UK

I'm unsure why you feel legal definition is required for exclusions to be in place. Many PSC's have in fact been excluded from the incentive.

[Gordon Ice]

A £10k salary is going to be the best option assuming the £2k NI incentive is available to all companies.

There is speculation that the £2k employers NI incentive will not be available to personal service companies on the basis it is designed to boost employment opportunities rather than just to save NI.

This is not something we have reason to believe yet, but Deloitte issued an article to this effect last year and so we are awaiting further clarification before advising our clients.

And how exactly would you implement a policy exclusion for PSC's when there is no legal definition of a PSC (i.e. they don't exist - at least not outside of HMRC's wet dreams) and there's no danger of a definition materialising anytime soon (if ever). Either Deloitte are talking complete tulip or someone is misquoting them; I'd bet on the latter.

[TheCyclingProgrammer]

Thanks for the update re: pensions, looks like I don't have to worry about it (I'm going to be continuing to take the same salary next year as this year rather than the full £10k anyway).

[Clare@InTouch]

In regard to auto enrolment, there's a handy start date guide here. If you're the sole director of your own company you won't be automatically enrolled.

https://www.gov.uk/auto-enrolled-into-workplace-pension

[DirtyDog]

I heard back from FreeAgent and they have told me they do plan to update their software to support this but it might not be ready by April.

One thought I've had is, if we pay £10k in salary, does this affect pension auto enrollment? The current threshold is £9440 so I assume it's tied to the personal allowance and will rise to £10k also from April? Or is auto enrollment just not applicable anyway?

Can you add a 9440 into your spreadsheet just in case?

I assume that we're no nearer to knowing the answer yet??

Edit - just going through the "Will you be automatically enrolled into a workplace pension?" page and if you are an officer of the company who is not an employee, then you won't need to auto-enrol.

Edit 2 - Even if you are an employee, if you have less than 30 employees, you don't have to enrol until 1 February 2018, by which time the whole rest of the landscape will have shifted anyway.

[TheCyclingProgrammer]

I heard back from FreeAgent and they have told me they do plan to update their software to support this but it might not be ready by April.

One thought I've had is, if we pay £10k in salary, does this affect pension auto enrollment? The current threshold is £9440 so I assume it's tied to the personal allowance and will rise to £10k also from April? Or is auto enrollment just not applicable anyway?

[TheCyclingProgrammer]

My guess would be that it needs er nic liability equal to the allowance claimed. I.e. the allowance will be capped at the amount of ers nic actually paid.

It is. It's explained in this document:

https://www.gov.uk/government/upload...A_Guidance.pdf

Basically the allowance only applies to Class 1 employer NIC and you can only claim the allowance as the liability arises on a month by month basis, until it's used up. It looks like you can claim it at the end if the year in one go as well if you haven't used the allowance throughout the year.

[ASB]

I'm guessing it means you can only claim the allowance if you actually pay enough salary to result in an employers NIC liability.

My guess would be that it needs er nic liability equal to the allowance claimed. I.e. the allowance will be capped at the amount of ers nic actually paid.

[TheCyclingProgrammer]

What does this mean:

Service companies can only claim the allowance, if you pay earnings and have an employer Class 1 NICs liability on these earnings.

Might be one to ask the accountant!

I'm guessing it means you can only claim the allowance if you actually pay enough salary to result in an employers NIC liability.

[kingcook]

What does this mean:

Service companies can only claim the allowance, if you pay earnings and have an employer Class 1 NICs liability on these earnings.

Might be one to ask the accountant!

[TheCyclingProgrammer]

I'll let update the thread if Sage (our providers) send us any information.

I will do likewise when I hear back from FreeAgent.

[Martin at NixonWilliams]

It wasn't entirely clear to me, but will this require RTI payroll software providers to update their software to support this? I've asked FreeAgent, who I use for mine. If I'm reading it right, if you're payroll software doesn't support it you can still claim the allowance separately using HMRC's basic PAYE software (but still use your existing payroll software alongside this).

I would expect the software providers to update their software accordingly. If not, it'll be yet another complication

I'll let update the thread if Sage (our providers) send us any information.

[Clare@InTouch]

It wasn't entirely clear to me, but will this require RTI payroll software providers to update their software to support this? I've asked FreeAgent, who I use for mine. If I'm reading it right, if you're payroll software doesn't support it you can still claim the allowance separately using HMRC's basic PAYE software (but still use your existing payroll software alongside this).

Software providers will need to update to show it, but they update every year for new tax codes and allowances etc anyway so it should be pretty much par for the course.

[TheCyclingProgrammer]

It wasn't entirely clear to me, but will this require RTI payroll software providers to update their software to support this? I've asked FreeAgent, who I use for mine. If I'm reading it right, if you're payroll software doesn't support it you can still claim the allowance separately using HMRC's basic PAYE software (but still use your existing payroll software alongside this).