New legislation – the impact on your payroll

24 April 2019

With brand new legislation taking effect in the 2019/2020 tax year, below we summarise the key points of these and revisit some past changes. So, whether it be the new payslip legislation, Making Tax Digital, GDPR, Gender Pay Gap reporting or indeed the upcoming IR35 changes, as an employer you will be affected.

Payslip legislation – effective April 2019

From April 2019 new payslip legislation came in to effect. Two key pointers for this legislation. 

  1. In addition to employees, anyone who can be categorised as a ‘worker’ must receive a payslip. For further guidance on definitions and requirements refer to the website.
  2. Employers must provide additional information on payslips, particularly where pay varies dependant on the time worked. 

Making tax digital (MTD) – compliance required by most VAT registered businesses by April 2019

What are the changes?

For all VAT returns starting on or after either 1 April 2019 or 1 October 2019 (for ‘complex organisations’), VAT registered businesses trading over the VAT registration threshold (£85,000) will be required to keep records in digital form and submit their VAT returns using MTD compatible software.

RSM can help you on your journey to MTD compliance by means of our readiness review

IR35 – new rules effective April 2020

IR35 identifies individuals working via intermediaries who are in fact disguised employees and ensures that such an individual should be treated like an employee for tax and NIC purposes.  HMRC have proposed the following process for each party involved.

  1. The end-user must give the IR35 status determination, and if requested the reasons for reaching it, to the party they contract with and the worker. 
  2. The determination and the reasons for reaching it must then pass down the labour supply chain, before the fee payer makes the first payment, so the fee payer can be compliant.

Too early to start thinking about this? Some might say so, but when you may well need to consider reviewing your client contracts to cover the liability ownership, then it would be prudent to be ready!   

RSM has a detailed knowledge of IR35 and the proposed rules and can work with you to review current arrangements, assess the impact of potential changes and can facilitate stakeholder workshops to agree action plans.

GDPR (The General Data Protection Regulation) - enforced May 2018

€20m or 4 per cent of global annual turnover penalty for failure to comply: three key points to review;

  • What information do you have? Review the data your company holds - confirm that you need it, and ensure you have consent to retain it.  
  • How are you storing it? Article 32 of the GDPR states 'the controller and the processor shall implement appropriate technical and organisational measures to ensure a level of security appropriate to the risk'.  
  • How are you processing it? Unsecured emailed data has been noted as a key source of breaches – consider using an online portal for sharing information securely.  

Finally, ensure you have a process to report data breaches – failure to do so may result in a fine of up to €10m or 2 per cent of global annual turnover.  For further guidance, refer to our GDPR – how does this impact your payroll process? article. 

Gender pay gap reporting – compulsory since April 2017

In a recent article in the Guardian, it was said that “Inaccurate figures and a lack of sanctions risk making a “mockery” of the gender pay gap reporting system, critics have warned following an in-depth Guardian analysis of submissions.” It went further to report that “mathematically impossible” data is being filed by companies. 

The Equality and Human Rights Commission, which is responsible for enforcing the legislation is currently investigating hundreds of businesses who have yet to report. 

Avoiding the statutory requirement could result in a summary conviction, an unlimited fine and a court order to publish data. To ensure you’re compliant, start with these pointers.

  • Know your payroll - review all pay components against government legislation and ensure they are up to date.
  • Allow enough time - deadlines for reporting are always March and April each year so plan ahead – take time to ensure correct workforce and pay components are included in your snapshot reports. 
  • Consider the narrative - provide context for your reader as to why there may be a gap, showcase improvements and utilise as an effective management tool.

For further guidance, refer to our top tips for payroll tackling Gender Pay gap reporting article.

For further information about how RSM can help with minimising the risks associated with payroll processing, please contact Simon Balaam for more advice.