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Payslip legislation changes: What do they mean for employers and employees?

Payslip legislation changes: What do they mean for employers and employees?

The law relating to providing payslips is set to change very shortly.

From April 6, new legislation, known as the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No 2) Order 2018, will come into force, making it compulsory for employers to:

  1. Provide all of their workers with itemised printed or electronic payslips.
  2. Make sure the payslips they issue state the total number of hours worked where an individual’s pay varies according to the hours that have been worked.

Employers currently have a statutory duty to provide their workers with payslips. However, from April 6, they will also be required to provide payslips to external employees, who are outside of their immediate workforce.

Who will receive payslips from April 6 who didn’t used to?

 Under the new payslip legislation, ‘workers’ are considered as being individuals who:

 “Have entered into work under a contract of employment or any other contract, whether express or implied and whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or custom of any profession or business undertaking carried on by the individual.”

‘Workers’ are classed as contractors, and other types of ‘non-employee’ workers. For instance, casual, agency, freelance, seasonal and zero-hours contract workers.

When do hours need to be included on payslips?

 If workers carry out ten hours’ work one month and then 20 the next month, their payslips will have to state the number of hours they’ve worked.

However, if a worker completes the same amount of work every month, in exactly the same amount of hours, then the number of hours do not need to be stated on their payslips.

 The hours can be shown as a single total of hours or broken down into separate figures for different types of work or different rates of pay.

Including this information on payslips means it will be easier for variable-time employees to reconcile their pay with their working hours. It will also make it more straightforward for them to establish whether they are being paid the national minimum wage by their employers.

Where do I find out more?

 HMRC has published guidance on the new legislation, which can be found here – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/764576/payslips-legislation-april-2019-additional-info-on-payslips.pdf

Alternatively, for more advice about the forthcoming payslip legislation and making sure your payroll processes are set up to accommodate the new requirements, contact us on on 01905 777600 or hello@ormerodrutter.co.uk.

Have your PAYE and VAT affairs been given a clean bill of health?

Our health checks are designed to identify and rectify any potential PAYE or VAT problems in a business before they’re uncovered by HMRC. Regardless of the sector in which you operate or the type of work you specialise in, our health checks are relevant to all businesses. They play a key role in helping ensure your business is compliant.

On-going challenge

In the case of PAYE, it’s not uncommon for businesses to not realise that their existing processes, regardless of how tried-and-trusted they might be, do not comply with the latest tax legislation. Staying on top of the intricacies of PAYE and the latest rules and regulations is an on-going challenge that can easily catch so many businesses out.

It’s precisely why health checks are so invaluable in making sure businesses don’t get stung by any nasty surprises. Our health checks concentrate on the common problem areas that HMRC tend to focus on, which include:

PAYE

  • Payroll – is everything that should be taxed actually being taxed and are processes in place to ensure to check this e.g. bonuses, vouchers.
  • Benefits in kind and P11D forms – have all benefits and expenses payments been correctly reported on P11D forms and have Class 1A/Class 1 NICs been correctly charged?
  • Expenses – has the payment or reimbursement of expenses been properly controlled and have all expenses been correctly categorised (e.g. no charging staff entertaining to client entertaining)?
  • Status – are the suppliers genuinely self-employed or do they have any regular workers (cleaners are a favourite target) who should be on the payroll?
  • Directors’ loans – if the employer is a company, have accurate directors’ loan accounts been written up so that any overdrawn balances can be appropriately dealt with?

VAT

In our experience, the most effective VAT health checks are those that, at the very least:

  • Provide businesses with peace of mind that their VAT affairs are in order prior to any HMRC VAT inspections
  • Identify potential issues and provide advice on corrective measures to avoid or reduce arrears, penalties and interest
  • Highlight any potential savings and/or cash flow benefits

It’s also worth bearing in mind here that if you are looking for somebody to review your VAT affairs, where possible, enlist the expertise of an organisation that employs former HMRC VAT inspectors. It’s something we do here at Ormerod Rutter and it gives us, and our clients, peace of mind that their books are being analysed in exactly the same way HMRC would approach them.

PAYE and VAT health checks aren’t a compulsory business requirement. However, they are a highly beneficial practice that not only make sure you haven’t got any sudden PAYE or VAT-related HMRC issues heading your way, but that you’re fully taking advantage of all of the options available to you.

For more advice or to find out more about our PAYE or VAT health checks, contact us today on hello@ormerodrutter.co.uk or 01905 777600.


DSC6529 (1)About the author

Anthony Middleton is responsible for monitoring all of Ormerod Rutter’s tax investigations and deals specifically with Corporation Tax and Income Tax enquiries. He has been a member of the team for 13 years.

 


 

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