EVERY employer and every employee in the UK will be affected. Large employers, and their employees, are already within the system. However, there is a staged implementation of the regulations, and smaller employers and their employees will start to be affected within the next 12 months.
If you think you will not be affected then think again. Failure to comply with the regulations could lead to severe penalties. You cannot avoid this even if you are considering “opting out”. You will need to take action within certain time limits, and then repeat it regularly. Even one-man limited companies are affected. Unless the owner/director complies then he will be penalised.
And it is only a question of time before the right to opt-out is withdrawn. The General Election is in May. Most employers will not be affected until 2016 or 2017. It is highly likely that this currently voluntary tax will become compulsive within the next few years; that is what has happened elsewhere!
So, how will you be affected? The Pension Regulator has published a number of guides on-line covering the following topics:
1. When will I be affected. If you know the employment PAYE reference, which will be found on any P60, then you can find out the employers staging date by following the link http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx.
2. What employers must do at the staging date can be found at http://www.thepensionsregulator.gov.uk/employers/tools/employer-duties.aspx
3. How employers should automatically enrol their staff is explained at http://www.thepensionsregulator.gov.uk/employers/tools/automatic-enrolment.aspx
4. How much it will cost you is available at http://www.thepensionsregulator.gov.uk/employers/tools/employer-contributions.aspx
One thing is certain. There will be substantial costs involved for both employers and employees. We currently operate payrolls for over 100 clients. Whilst we are currently looking into this, the cost to employers of complying with the regulations in software costs alone seems to be in excess of £1 per month for each employee, and that is before paying into the pension!
WatkinsonBlack are pleased to advise on these as well as other matters, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us.
Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
