| The 2008 Employers' CD-Rom to be launched in February will for the first time include the option to file a year-end return directly from the CD-Rom for the tax year 2007/08.
The application is designed to appeal to the smallest of employers (those with between one and nine employees at year-end), who will be able to file both the individual P14s and the P35 direct from the CD-Rom, rather than printing off the data and inputting it into PAYE Online for employers via the HM Revenue & Customs website. When an employer loads the 2008 CD-Rom there will be a facility to import its year-to-date payroll data, complete the 2007/08 tax year, and then to automatically submit forms P14 and P35 online. The payroll software industry has expressed concern about the new functionality since it was first proposed some months ago. Since launch the CD-ROM has been steadily enhanced to include online forms and calculators. Given that it was originally intended to replace paper guidance, the software industry sees the new functionality as ‘function creep’.
It is, however, good news for the small employer who has resolutely ignored the financial incentives to file online ahead of the mandatory deadline in May 2010 and who does not yet have payroll software, or at least software with an end of year online filing module.
More details of how the application will work are expected in January’s edition of Notes for Software Developers. The new functionality will initially be available for this tax year only on a trial basis. Usage rates etc will form part of a wider piece of research and consultation on the methods and take up of online filing that is due to be completed by September of this year. | Back to top | BERR (the Business, Enterprise and Regulatory Reform Department) still doesn't roll off the tongue like the DTI, but as expected they have laid regulations to amend the various rates and limits of compensation as provided for in the Employment Rights Act 1996 (ERA) and the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRC).
The need to raise limits is provided for in the Employment Relations Act 1999, where the year-on-year September Retail Prices Index (RPI) is used as the basis for change. As last September’s RPI was 3.948%, which was higher than the figure in 2006, the affected rates have to be amended by the Secretary of State.
The following increases apply where the event giving rise to the entitlement to compensation, or other amount, occurred on or after 1 February 2008. | Subject of provision | Old limit | New limit | | Minimum basic award for unfair dismissal | £4200 | £4400 | | Maximum compensation award for unfair dismissal | £60600 | £63000 | | Limit on amount of daily guarantee pay | £19.60 | £20.40 | | Maximum amount of a week's pay for calculating a basic or additional award of compensation for unfair dismissal and for redundancy payments | £310 | £330 | The expected one-off increase in the maximum amount of a week’s pay that was legislated for in the Work and Families Act 2006 has not yet materialised. | Back to top | The law of unintended consequences is one that lies lurking to trap government legislators and it reared its ugly head when HM Revenue & Customs (HMRC) decided in 2006 to harmonise the tax position in respect of ongoing non-cash benefits provided to pensioners. In the past any non-cash benefits provided as a taxable benefit to the individual while they were an employee became tax-free when they joined the pensions payroll. From April 2006, HMRC decreed that any non-cash benefits which exceeded £100 were deemed to cause the creation of an Employer-Financed Retirement Benefits Scheme (EFRBS).
As a result tax was due on the benefit (normally collected via the pensioner’s tax code) and returns were required by the employer detailing the benefits and their value. The first of these was due last July to the same deadline as employee P11Ds. Of course with no pensioner P11D equivalent, returns had to be made on a listing. Consequently there was no obvious mechanism to inform pensioners that the benefit had been reported and to prepare them for the new, and unexpected, change to their tax code going forward.
Unfortunately the legislation as drafted had the reverse effect; instead of harmonising the employee and pensioner positions it led to items that had previously been tax-free when provided to employees being drawn into a tax charge on the pensioner! HMRC announced at Budget 2007 that it would lay legislation to correct this and would backdate it to April 2006.
The legislation has now been laid as the Employer-financed Retirement Benefits (Excluded benefits for tax purposes) Regulations 2007. The additional exemptions broadly relate to:
- the continued provision of accommodation and related expenses;
- welfare counselling;
- recreational benefits;
- annual parties;
- equipment for disabled ex-employees; and will writing services.
| Back to top | The legislation that will become the Employment Act 2008 began its passage through parliament on 6 December 2007. It is expected to receive Royal Assent by the time of the summer recess in July.
It will contain provisions to implement the recommendations of the review of the statutory dispute resolution procedures that was carried out last year with the aim of simplifying the process.
Changes to the penalties for failing to pay National Minimum Wage, including tougher penalties for non-compliance and a more punitive way to calculate arrears that will make them fairer for the employees who have lost out will also be introduced.
The Act will also toughen up the compliance regime for rogue employment agencies that exploit vulnerable clients through charges for certain services. | Back to top | | | | |
