Tag Archives: pension

Auto-Enrolment and New Employers

New Employer from 1st October 2017?

Are you thinking about employing staff for the first time?  If you are I’m sure you’ve considered registering a PAYE scheme, arranging contracts, sorting out employer liability insurance and all the other ‘normal’ things that you would expect to have to put in place.  But did you know that if you become an employer for the first time on or after 1st October 2017 then you will immediately have Auto-Enrolment Duties to comply with?

What is Auto-Enrolment?

Under the Pensions Act 2008, every employer in the UK must put certain staff into a workplace pension and contribute towards it. For any new employer from 1st October 2017 these duties apply from the first day the first member of staff starts working for you.  This is known as your ‘Duties Start Date’.

What do you have to do?

Compliance with auto-enrolment means getting to grip with several responsibilities and processes:

  • Initial and ongoing assessment of all staff to determine whether they are Eligible Jobholders, Non-Eligible Jobholders or Entitled Workers.
  • Ensuring mandatory auto enrolment correspondence is provided to all staff advising them of how auto-enrolment impacts on them.
  • Enrolling all Eligible Jobholders into a qualifying pension scheme.
  • Processing any ‘Opt-Ins’ for employees who do not qualify to be auto-enrolled but who choose to join the scheme, and any ‘Opt-Outs’ for employees who have been auto-enrolled and do not want to be part of the scheme.
  • Notifying your chosen Pension Provider of all relevant payroll data each pay period.
  • Paying the Contributions due to your Pension Provider.

Lots of information supporting you with complying with the Duties can be found at the Pensions Regulator website. And, of course, if you decide that personally dealing with the administrative side of these responsibilities yourself is not the best use of your time then please do get in touch – we are more than happy to help with any element of your Payroll and Auto-Enrolment responsibilities.

Auto Enrolment: Are You Staging in 2016?

Auto Enrolment in 2016?

We’ve all seen the Workplace Pensions adverts on TV, with lots of cheerful people happily declaring ‘We’re In’, but do you know when you as an Employer need to be ‘In’?  If you don’t know the date at which auto enrolment (AE) duties are going to be mandatory for your business then you can find out your staging date via the Pensions Regulator website.

Compliance with auto enrolment will mean several additional responsibilities and processes, including:

  • Initial and ongoing assessment of all staff to determine whether they are Eligible Jobholders, Non-Eligible Jobholders or Entitled Workers.
  • Ensuring mandatory auto enrolment correspondence is provided to all staff advising them of how auto-enrolment impacts on them.
  • Enrolling all Eligible Jobholders into a qualifying pension scheme.
  • Processing any ‘Opt-Ins’ for employees who do not qualify to be auto-enrolled but who choose to join the scheme, and any ‘Opt-Outs’ for employees who have been auto-enrolled and do not want to be part of the scheme.
  • Notifying your chosen Pension Provider of all relevant payroll data each pay period.
  • Paying the Contributions due to your Pension Provider.

The Good News

None of the above needs to be as terrifying as it may sound at first!  Taking the initial time to get the right processes in place at the beginning will really pay off in the long run:

TIP #1 – Lots of Pension Providers have the ability to undertake the assessment and correspondence obligations on your behalf, so when choosing a Provider make sure you know how many of your auto enrolment responsibilities they will help you with.

TIP #2 – Ask to see copies of the upload templates that Providers will want you to use each pay period and find out what format any information will come back to you in.  Assurances that ‘you just upload this and download that’ are sometimes not that straightforward in reality so make sure you understand the practicalities of supplying them with the information they will need.

TIP #3 – Don’t bury your head in the sand in the hope that it will all go away!  The fines for non-compliance with auto enrolment are hefty, so it is definitely worth your while being pro-active about getting everything in place.

TIP #4 – Call us!  If just the thought of auto-enrolment sends you into a panic then get in touch, we can help by talking you through the steps that you need to be taking or simply taking the whole thing off your hands altogether.

Budget 2015

Highlights

  • Income tax personal allowance to rise to £11,000 by 2017
  • Pension lifetime allowance to fall to £1m from April 2016
  • New Personal Savings Allowance from April 2016
  • New Help to Buy: ISA for first time buyers
  • Rules on annuities to be relaxed from April 2016
  • Digital tax accounts to replace annual tax returns

Budget 2015 Summary

The Chancellor’s 2015 Budget contained some important announcements and confirmed a number of changes planned for the new tax year. Following this, we have put together a Budget Summary PDF which contains the latest tax and financial information, which we trust you will find useful.

There is also a handy Tax Data Card for 2015/16, giving details of all the allowances and limits you’ll need to know. You can download both the PDFs for free via the links below:

Our summary goes into more detail on all of the points raised in the budget, aimed to give you a clearer picture of the announcements and how the changes will affect you and your business. however, as always, if there is anything you would like to discuss, please do not hesitate to contact us on 01872 271655 or via email at enquiries@kelsallsteele.co.uk

Class 2 NI (National Insurance)

NI Contributions

When you first inform H M Revenue & Customs that you are self-employed, you will automatically be registered to pay Class 2 National Insurance (NI) contributions. These are £2.75 per week for everyone over the age of 16 and under pension age, and are normally payable by Direct Debit either monthly or 6 monthly.

Small Earnings Exception

However, if your self-employed earnings (i.e. income less expenses) are less than £5,885 for the year, you can apply for a Certificate of Small Earnings Exception using form CF10 from H M Revenue & Customs. Once you have this certificate you will no longer pay Class 2 NI contributions. You can however continue to make payments even if your earnings are low. If you are not making any other NI contributions, you may want to keep paying your Class 2 NI to ensure you are still entitled to a full basic state pension when you retire. Employees earning over £153 per week will be paying Class 1 NI so if you are self-employed and also employed, you may not need to pay Class 2 NI to keep your entitlement to basic state pension.

State Pension Entitlement

The amount of state pension that you can claim when you reach retirement age is based on the National Insurance contributions you have paid. For those who will reach state pension age after 6 April 2016, 35 qualifying years of National Insurance contributions are needed to enable receipt of the full basic state pension.

Class 2 NI Credits

If you are unable to work for complete weeks at a time, or if you receive certain carer benefits, you may be able to apply for Class 2 NI credits. These credits allow you to keep the benefits that Class 2 NI provides without you actually making any payments.

NI Payments & Pension Forecast

To find out how many qualifying years of NI payments you currently have, you can apply online for your NI account from H M Revenue & Customs.

You can also apply for a state pension forecast. This forecast will be able to tell you if you need to make any additional NI contributions to ensure you are entitled to your full basic state pension.

If you would like any help in checking your NI record, or would like any further information about making NI contributions, please contact Lydia Williams on Lydia.williams@kelsallsteele.co.uk or on 01872 271655

Budget 2014

Highlights

  • Income tax personal allowance to rise to £10,500
  • Annual Investment Allowance doubled to £500,000
  • New £15,000 ISA, combining cash and stocks & shares elements
  • Retirees granted more power over their pension pot
  • Tax-free childcare of of up to £2,000 for working families
  • 10p starting rate for savings income abolished

Budget 2014 Summary

We have put together a Budget Summary report which you can download for free via the link below. There is also a handy Tax Data Card for 2014/15, detailing all the allowances and limits you’ll need to know:

Kelsall Steele Budget Report 2014Tax_Data_2014_thumb

Our summary goes into more detail on all of the points raised in the budget, aimed to give you a clearer picture of the announcements and how the changes will affect you and your business. however, as always, if there is anything you would like to discuss, please do not hesitate to contact us on 01872 271655 or via email at enquiries@kelsallsteele.co.uk

Doctors Finance: Pension Annual Allowance

The annual allowance is the maximum amount of tax free growth your pension savings can grow in one year. From 2011/12 the limit is £50,000 and it will be reduced again from April 2014 to £40,000. If you exceed the annual allowance this will need to be declared on your personal tax return and may have to pay any excess at your marginal rate of income tax which for high earners is likely to be at 40% or possibly more.

The majority of NHS pension members will not be affected by the annual allowance. However, consideration to this should be made if any of the following factors affect you:

  • Higher earner ( in excess of £100,000 per annum) with long pensionable membership;
  • Had a significant increase in membership;
  • Are purchasing added years or making additional pension contributions;
  • Had a significant pay rise e.g. on promotion;
  • Are in receipt of a clinical excellence award on or after 1 April 2011;
  • Are taking ill health retirement with an enhancement to membership; or
  • Have paid contributions to other pension savings arrangements as well as the NHS pension scheme.

It is important to remember that it is not the amount of contributions which you or your employer have paid into your pension scheme but the amount of growth in the pension benefits. This is calculated as the growth in the benefits from one year to the next taking into account inflation which is measured using the consumer price index.

If you are over the annual limit the NHS Pension Scheme will send you a personal savings statement but this is not automatically done where the annual allowance is not exceeded. If you have one or more pension provider you may need to ask each pension provider for a pension savings statement.

NHS Pensions will issue the statements

  • For the tax year 2011/12 – All pension schemes have until 6 October 2013.
  • For the tax year 2012/13 – 6 October 2013
  • For the tax year 2013/14 – 6 October 2014

Type 2 Medical Practitioners and non-GP Providers will receive a provisional pension savings statement based on provisional pensionable profit/pay provided by NHS Connecting for Health. Final statements will be provided once all the relevant information is available following completion of the annual certificates of profit/pay and once NHS Pensions have received confirmation from the Clinical Commissioning Group.

If a person has unused allowance from the previous 3 tax years it can be used to offset against an annual charge in the relevant tax year. The maximum amount that can be carried forward is £50,000 for each of the previous tax years and is calculated on the annual allowance rules.

If you’d like more information on this topic, don’t hesitate to get in touch with Lydia Williams on 01872 271655 or email lydia.williams@kelsallsteele.co.uk

Doctors Finance: The Lifetime Allowance

The Lifetime Allowance is the total amount that you can build up from all your pension savings in your lifetime without incurring a tax charge. The Government wants to encourage everyone to save enough to provide an adequate pension in retirement. However there is a tax consequence if too much is saved in a pension and the limit of £1.8m was reduced to £1.5 m from April 2012.  A further reduction to limit will take effect from 6 April 2014 to £1.25m.

If you exceed the limit lifetime allowance tax is charged on any excess over the lifetime allowance limit. The rate depends on how this excess is paid to you. If the amount over the lifetime allowance is paid as a:

  • lump sum – the rate is 55 per cent
  • pension – the rate is 25 per cent

Generally you and your scheme administrator are jointly responsible for paying the lifetime allowance charge.

Below is an illustration of if you’re in a defined benefit scheme and you take your pension before 6 April 2014/After 6 April 2014

Your pension benefits will be tested against the lifetime allowance of £1.5/£1.25 million. This level of pension saving is broadly equivalent to an annual pension of:

  • £75,000/£62,500 if you don’t take a lump sum
  • £56,250/£62,500 if you take the maximum tax free lump sum

Money purchase scheme

If you’re in a money purchase scheme it’s the value of your pension pot that is tested against the lifetime allowance at the time you take your benefits.

Your provider can provide an annual pension scheme statement which will show the value of your pension pot.

 

There are various forms of protection in place and these are noted below:

Primary protection

This gives you an enhanced lifetime allowance, which means you can have more pension savings without paying the lifetime allowance charge. If you have primary protection you can also have enhanced protection, but not fixed protection.

Fixed Protection

This fixes your lifetime allowance at £1.8 million. without paying the lifetime allowance charge. You had to apply before 6 April 2012 to get fixed protection.

You can’t have fixed protection if you have either primary or enhanced protection.

Fixed protection 2014

This will work in a similar way to the existing fixed protection regime introduced in April 2012. You will be able tofix your lifetime allowance at £1.5 million. You’ll have to apply before 6 April 2014 to get fixed protection 2014. You can’t have fixed protection 2014 if you already have primary, enhanced or fixed protection.

If you’re unsure of the value of your pension savings and don’t know whether you need fixed protection 2014 contact your scheme administrator or financial adviser.

Individual protection 2014

As well as fixed protection 2014, the Government has announced that individual protection 2014 will be available for 2014-15. The details of individual protection 2014 will be confirmed later but it is expected that:

  • A lifetime allowance equal to the value of your pension rights on 5 April 2014 – up to a maximum of £1.5 million.
  • Not affected by making further savings in to your pension scheme
  • any pension savings in excess of your lifetime allowance will be subject to a lifetime allowance charge

You’ll be able to apply for this from 6 April 2014.

You can hold both fixed protection 2014 and individual protection 2014 but you can’t apply for them at the same time.

If you’d like more information on this topic, don’t hesitate to get in touch with Lydia Williams on 01872 271655 or email lydia.williams@kelsallsteele.co.uk