We have moved!

Welcome to our new home

Welcome to our new home!  G1a Stephenson, Prestwick Park, developed on the country estate of open farmland and formal gardens surrounding Prestwick Hall, right next to Newcastle Airport.  We have a vision to turn this amazing building into a truly creative space that will become our permanent home.  This is a really exciting chapter in the life of our business.   From day one, we have always had the ambition to own a huge practice and help business owners from every sector, grow and develop by giving them the tools and time to focus on what’s important to their business, by just taking away the stresses of payroll and accounts.

It’s hard to believe that just over four years ago, we were still working within Sage Software, helping customers struggle through the pitfalls and troubles that Auto-Enrolment and constant legislation changes within payroll were causing them. 

We then took the plunge to go out into the big wide world to try and help them even more, by taking payroll and Auto-Enrolment of their hands.  Turning the box room in my house into our office with nothing more than a cheap laptop and a vision to create a great business, we started the journey, and now a crazy year later, we have re-branded, changed into a limited company, got our very own home and are processing payrolls for companies the size of Sage! It’s crazy!  But, it’s not just the office at Prestwick Park that will be getting some TLC.

Following this exciting year, Chrysalis Payroll and Accounting Solutions has also launched its brand new website dedicated to our payroll and accounting outsourcing division, showing off our new image and services.

With Auto Enrolment now affecting 960,000 employers, and by 2018 every small business will have staged, we thought it would be a great time to make sure our clients are aware of the setup and services we have to offer.  With so much happening in legislation over recent years, plenty of companies are now choosing to outsource their payroll and gain help on subjects such as pensions, and we aren’t like every other payroll bureau.  Not only do we offer wide range of flexible solutions we also have training options you can take advantage of too, due to our background within this sector, we have the knowledge and expertise to offer you these services at a fraction of the cost,  and we are so excited to be right in the middle of it all, helping you to get it right.

We’ll be posting regularly to keep you up to date with the development of Prestwick Park, so pop back to see how we’re getting on.

In the meantime, here are some ‘before’ pictures.

Wish us luck!

5 frustrating things about running payroll yourself

If you run a business, you know that every month you will have to stop doing the fun stuff that you’re passionate about and do the payroll, ‘Yeah, I get to do the payroll this Friday!’ is what many a business owner will cheer!

Unless you love payroll (and run a payroll business like we do), odds are you didn’t start your business in order to manage and run one, but it’s a necessary evil that keeps that has to be done legally.

So what we thought we would do is comply a list together of the five most annoying things and publish it just as you’re about to tackle the mammoth job of processing it, just to remind you why we are here!  So here is the list, you may be able to relate to some of them.

1 – PAYE FINES

Last year, the government earned over £700 million in fines thanks to PAYE and payroll errors (you can also check out our blog about the top ten mistakes and how to avoid them to cut down on some of them costs).  Whether due to lateness or incorrect calculations, getting a fine from the government has a serious impact on a business and could potentially close down a small one.

2 – WHEN THE ONE PAYROLL EXPERT IN THE COMPANY IS ILL OR GONE ON HOLIDAY

Learning how to properly manage and process a smooth pay run is complex and time consuming. Small businesses often only have one person to do the payroll. When that vital person is off sick at a crucial payroll time, paying staff becomes very challenging and the whole payroll world can come crashing down.

This is why outsourcing has its benefits, we can take your payroll of your hands and give you the benefit of an experienced payroll department for the fraction of the cost (from £1.50 per employee) where no one will ever be off sick!

3 – DATA ENTRY

Not only is data entry tedious and unrewarding, little mistakes can lead to big problems. One mistake when inputting an employee’s bank details can lead to you accidentally paying someone else, one incorrect input of an invoice can be hours or reconciling and not knowing why.

4 – KEEPING UP WITH THE CHANGES

Constant legislation and compliance changes, plus HMRC guidelines happen regularly, more so during the government’s budget announcements, and the regular payroll year end updates. We have seen some of the biggest changes in payroll in the past few years, including auto-enrolment, RTI and the introduction of the new living wage.  These challenges businesses face in meeting theses deadlines and complying with new legal duties are a very time consuming task.

 5 – PAYROLL IS NEVER UNIFORM

Every month there is something that has changed from last month’s pay run.  Shelia has worked extra hours this weekend as it’s the little one’s birthday or yourself as a business have seen a massive drive in sales. The idea of a payroll that follows a “set and forget” policy just won’t work, especially now with the introduction of Auto Enrolment, as you will now have to constantly assess your employees each pay period.

Take the sting out of payroll by outsourcing all these little annoyances to the professionals, to us! With your payroll safe in the hands of a company you can trust, you can get back to the business of, well, running your business and doing what you love to do.  Leave the payroll to us www.chrysalispayrollandaccounts.co.uk 

Ten most common payroll mistakes

For many people managing an efficient and smooth-running payroll system is a daunting and a time consuming prospect. The responsibilities and highly administrative tasks involved, such as paying employees and filling in government forms is stressful and made worse by the constant legislative changes and HMRC guidelines.

So it’s no surprise that payroll errors are a common thing within businesses.  These errors can have a detrimental and costly effect on both staff and the employers. If your business is struggling with the demands of payroll, it can be helpful understanding what kind of mistakes are made and exactly how to avoid them.

Here is a list of 10 of the most common payroll mistakes made by businesses to be aware of.

·    Missing deadlines -  Missing filing deadlines set by HMRC can be very costly for a business. You should mark on a calendar all the necessary dates so you can be sure not to miss them.

     Depending too much on the payroll system used -  The Payroll system used can only be as good as the person using it. Ensure that all relevant data is entered correctly and efficiently, so that the system can calculate everything correctly, and also make sure you update the software each year for new legislation if it isn’t cloud based.

·    Not keeping records -  You need to keep records of Payroll according to HMRC guidelines. HMRC requires all UK businesses to maintain accurate and detailed records for the current and three previous tax years. Not complying with these guidelines can be very costly for businesses and can result in a hefty £3,000 fine

·    Not having adequate backup -  You should always back up your records so that vital information cannot be lost if an error was to occur.  Some payroll systems can do this for you automatically, but if not, always have a backup.

·    Inexperienced staff -  The person doing payroll needs to know how to do it properly. Managing payroll in-house requires highly trained personnel who have the relevant expertise, knowledge and qualifications to ensure payroll is processed accurately and on time. Inexperienced staff may be incapable of complying with current legislation such as RTI and auto-enrolment, and could make incorrect employee deductions.

·    Dealing with statutory payments -  This can be confusing if you do not understand the legislation correctly.  You can find all the information you need on gov.uk

·     Processing payroll late-  Paying your employees late will cause you and your staff a great deal of unhappiness.  It’s one of the main reasons why an employee will choose to leave a company.

·     Using the wrong tax code -  The tax code should come from the P45 or failing that a P46 should be completed but may employers will just use a code they are familiar with, meaning the employee could pay the incorrect tax which could then have a negative effect on their wages.

·    Under/ over payments to staff -  You always need to check exactly what your staff should be paid in that particular period, it’s an error which can be very costly and time consuming to correct. If these payroll processing mistakes persist, you could be seriously affecting staff morale and motivation, causing their motivation and productivity to drop.

·    Year End submission mistakes -  This is normally caused by mistakes during the year but also lack of knowledge of how to complete this process.  This process is now a lot simpler due to the introduction of RTI.

HOW TO AVOID COMMON PAYROLL ERRORS

Choose the right payroll solution

Having the right payroll solution is key to an efficiently ran payroll, make sure you choose a payroll solution that meets the size and shape of your workforce and not get sucked into purchasing costly subscriptions for software or outsourcing prices which aren’t manageable.  The key is to find a supplier who can give you a flexible and tailored solution that is right for you now, but a company that can also grow and develop with your business needs.

Hire qualified staff

If you want to run your payroll system in-house, dedicate time and resources to hiring adequately trained staff who are up to date with current legislation and have the expertise to run a smooth payroll. Regular training is also essential, as although these people may be experts when it comes to payroll, they don’t know how you calculate employees pay as every company is different.  Spend the time training them on this so no mistakes are made. If you employ an outsourced provider, ensure they can provide expert help and guidance so that you’re always on top of payroll legislation and changes, so you can still be in control.

Payroll outsourcing

Payroll outsourcing is an increasingly popular solution for any business that wants complete assurance that their payroll is being calculated correctly. At Chrysalis Payroll we specialise in providing tailored payroll outsourcing solutions, giving you the benefits of a specialised in house payroll department, at the fraction of the cost. With our expertise, software and our dedication to work with you as a company, we can ensure fast, reliable and secure payroll processing which is on time every time, and what’s better, we will even save you time and money.  Go to our Payroll Services page to find out our pricing structure and more.

Minimum Wage Increase, Are you ready?

The National Minimum Wage is set to increase on 1st October, are you ready? 

A wide range of evidence suggests that the National Minimum Wage (NMW) has been successful in raising pay for the lowest-paid workers significantly without damaging employment or the economy.

HM Revenue and Customs have recently investigated more than 700,000 employers and last year it identified £10.3 million in arrears of workers, with some big names including sports direct.  If you don't comply with this legislation you can be set to pay a penalty 200% penalty of the arrears amount.

It's important to remember that the NMW does not take over from the National Living Wage.  The National Living Wage is for workers above the age of 25, and will change in April of each year.  

Announced by the Chancellor in the 2015 Summer Budget, the introduction of the National Living Wage (NLW) will be a potential game changer: the NLW is set at a higher rate of £7.20, increasing hourly pay by 7.5 per cent and 10.8 per cent year on year. The Government aspires to raise it to 60 per cent of by 2020 making it just over £9.

Below are the new rates of the NMW set to take affect in October.

National Living Wage (25+)

From April 2016:  £7.20
1st October 2016 - April 2017:  £7.20

Adult Rate (21-24)                    

From April 2016:  £6.70
1st October 2016 - April 2017:  £6.95

Young Adult (18-20)

From April 2016:  £5.30
1st October 2016 - April 2017:  £5.55

16-17 year old 

From April 2016:  £3.87
1st October 2016 - April 2017:  £4.00

Apprentice Rate 

From April 2016:  £3.30
1st October 2016 - April 2017:  £3.40

Source. gov.uk

The costs if you ignore Auto Enrolment

What happens if you ignore Auto Enrolment?

1 in 10 businesses say they are going to ignore the new legislation surrounding work place pensions, but what really happens if you ignore your Auto Enrolment staging date?

You will be issued with an EPN (escalating penalty notice). Employers who fail to take notice of 28-day warning notices, risk this fine which increases each day.  This means that you could be potentially be fined of up to £500 per day, if you decide to ignore a penalty notice that The PensionRegulator has sent you.

More than 95% of the first small employers required to put their staff into a workplace pension have now complied with the law, showing that Automatic Enrolment is successful for all sizes of employer.  While compliance rates remain high, TPR’s latest quarterly compliance and enforcement bulletin shows that the number of Escalating Penalty Notice is on the rise.

If you have in-between 1-4 members of staff and you don’t take notice of the letters and notices sent to you before the deadline, you will be fined £50 per day. If you employ in-between 5-49 members of staff, you shall see your penalty build up by £500 per day.

My advice would be, don’t ignore these letters, make sure you keep on top of them, and know the two important dates (staging date and declaration of compliance date) and if you do get a fine, pay it as soon as possible.  Every small business is going to see a rise in administration costs due to this change, so keeping them as low as possible is the best way.

If you need help with Auto Enrolment even if its just getting jargon buster so yo know the terminology, then Chrysalis Payroll are here to help – don’t hesitate to call us for advice or assistance, you can find us at www.chrysalispayroll.co.uk/auto-enrolment,  don’t become an Auto-Enrolment Statistic, we want to help you get it right, that's why we are now offering all our Auto Enrolment solutions completely free of charge with any 12 month payroll contract.

Budget 2016

Chancellor George Osborne delivered his eight Budget to The House of Commons, reporting on ‘an economy set to grow faster than any other major advanced economy in the world’ and naming it a ‘Budget for the long term’ but warning that ‘the storm clouds are gathering again’.  The chancellor remains on course to achieve a budget additional of £10.4bn in 2019/20 declaring that the British economy is ‘fit for the future’.

Towards the end of last year, the government issued the majority of the clauses, in draft, of Finance Bill 2016.  Publication of draft Finance Bill clauses is now an established way in which tax policy is developed, communicated and legislated.

Our summary focuses on the issues likely to affect you and your business.

Business Announcements

From 1^st April 2017, 600,000 small businesses won't pay business rates due to the changes made to the system.  The government will permanently double the small business rate relief in England from 50% to 100%.  At the same time, they will raise the small business rate relief threshold in England, business with a property with a rateable value of £12,000 or less will receive 100% relief, while businesses with a rateable value between £12,000 and £15,000 will receive tapered relief.

Corporation Tax

The rate of corporation tax will reduce to 17% for the financial year commencing 1 April 2020. The planned reduction in corporation tax to 19% from 1 April 2017 remains unchanged.

Corporation tax reform of loss relief

From 1 April 2017, companies will only be able to use losses carried forward against up to 50% of their profits above £5 million. If a group, the £5 million allowance will apply per group. With respect to the current streaming rules, the use of losses arising on or after 1 April 2017 will be more flexible, so that the losses will be usable, when carried forward, against profits from other income streams or other companies within a group.

Class 2 NICs for Self Employed Persons

At present a self-employed person in business is required to pay class 2 NI contributions if their profit is over the small profits threshold.  From April 2018, class 2 NIC’s will be abolished and only class 4 NICs will be payable.

Employment allowance

This will continue into the 2016/2017 tax year, and notification is to be done the same way as previous tax years, with it being sent by RTI to the HMRC.  With this being the case, this is the biggest change that I, as an Employer noticed.  Previously if you met the specific criteria to become eligible for Employment allowance you as an Employer could reclaim up to £2000 of your employer’s national insurance bill. There are certain organisations (mainly those in the public service or supplying services to public service organisations) that cannot claim the allowance, if this applies to your organisation you can visit www.gov.uk/employment-allowance to see what can be done.

 Effective from the 6^th April 2016 this is due to increase by a further £1000, allowing employers the right to claim up to £3000.  This extra allowance will be a great help to small and micro employers, not only because of the monetary value but allowing the opportunity to grow and potentially hire new staff.

TAX

There have been some slight changes to tax codes and the bandwidths in the new year, these are as follows;

• Codes with a suffix of L will be increased by 40 points.
• Codes with a suffix of M will be increased by 44 points
• Codes with a suffix of N will be increased by 36 points
• The emergency tax code will be 1100L

All of these changes will take place in the 2016/17 tax year effective from the 6^th April unless a coding notice has been sent by the HMRC.   Unfortunately, most of the bandwidths are to remain the same apart from the basic rate, this will increase by £215.  Below is a table so it’s easier for you to see these changes.

Basic Rate (20%)	£1 to £32,000
Higher Rate (40%)	£32,001 TO £150,000
Additional Rate (45%)	£150,001 above

Scottish Rate of Income Tax (SRIT) In December, the Scottish Government chose not to vary the rate of SRIT to match that of the UK rate, therefore it will remain the same.

NIC

The only change to NIC is the Upper Earnings Limit where we can see another increase;

Lower Earnings Limit	£112 a week
Primary Threshold	£115 a week
Secondary Threshold	£156 a week
Upper Earnings Limit	£827 a week

The Biggest change to National Insurance this tax year is the government backing and promoting apprentice schemes in the UK.  With this being the case from 2016/2017 exemption to employer’s NIC for apprentices under the age of 25 is coming into effect.

This will be very similar to the NIC scheme for employees under 21 which they brought into effect last tax year, with the exemption only applying to earnings up to the upper earnings limit of £827 per week.

Statutory Payments

All the statutory rates remain the same and to qualify you still have to earn over the LEL of £112 weekly. I am a little surprised that they have stayed the same as we do normally see a slight increase each year, these are as follows;

• Statutory Sick Pay-standard rate per week £88.45
• Statutory Paternity Pay-standard rate per week £139.58
• Statutory Maternity Pay-standard rate per week £139.58

Cessation of Contracted-out National Insurance Contributions

For companies with employees in occupational pension schemes where NIC is collected through contracted out NIC tables, mainly table D.  From 6^th April 2016 these tables will no longer be in use.  With this being the case, most employees will be switched from table D to table A.  The effect this will have on your employees, will be a higher employee contribution.  This is because under table D contributions were made at 10.6% whereas table A are made at 12%.

Student Loan

There is also changes to how student loan will be calculated this year, from 6 April 2016, there are two types of student loan repayment plans; Plan 1 and Plan 2.

For any loan repayments due to start from 6 April 2016, the SL1 notification you receive from HMRC will specify which repayment plan the employee is to be on.

Payroll Benefits

If as an employer you provide benefits in kind otherwise known as BIKs to your employees, the way you report this to the HMRC is changing. Benefits in kind can be such things like; company cars and health insurance.  You can now complete a P11D for each employee who receives one of these benefits as normal, or you can now include the cash equivalent value of the benefit in payroll and deduct the required amount of tax.

If you provide benefits in kind (BIKs) to your employees, for example company cars or health insurance, the way you report this to HMRC is changing. You can either complete a form P11D for each employee who receives a BIK, or include the cash equivalent value of the benefit in the payroll and deduct the required tax.

If you wish to record your benefits through payroll instead of completing a P11D, you must register with the HMRC Payrolling Benefits in Kind online service. To be able to do this for the 2016/2017 tax year you must register with the HMRC before the 6th April 2016.

They are the changes that we believe will affect your business, there are many more issues that were addressed, any issues or concerns over these don't hesitate to contact us.

National Living Wage

As you will have no doubt seen in newspaper headlines and Government advertising billboards, which seems to be the way they get these important changes across, there will be a “new” rate of pay, which is to be known as the National Living Wage.

In April the governments new national living wage will become law.   There are a number of elements that have to be included to calculate this new change, including tax and national insurance contributions, wage advances or loans and even the type of work your employee does and your method of payment to them.

There are currently four different hourly rates of National Minimum Wage for different categories of worker:

• Standard rate for workers aged 21 or over: £6.70
• Workers aged between 18 and 20 inclusive: £5.30
• Young workers rate: £3.87
• Apprentice rate: £3.30

From the 1 April this year, a 5^th category of worker will be introduced.  If you are working and are aged 25 or over and not in the first year of an apprenticeship, you’ll legally be entitled to at least 7.20 per hour. That’s an extra fifty pence per hour in your pocket. Chancellor George Osborne has said, “The new National Living Wage is an essential part of building the higher wage, lower welfare, lower tax society that Britain needs.”  The government are determined to increase this each year and its expected by 2020 it is to be in excess of £9 per hour.

The National Living Wage is basically a change to what is already known as the National Minimum Wage.  With this being the case it’s important not confuse this change to a similarity in what is known as the Living Wage.

The living wage recommends that an employer should pay employees what they class as a suitable ‘living wage’ this means that an employee should be able to live on this wage taking into account the cost of living and inflation rates.  The current Living Wage rates are £8.25 per hour for workers across the U.K., with a higher rate of £9.40 for those in London.  Business who pay these rates to employers are able to class themselves as ‘’Living Wage Employers’.

I can understand these different options can be rather confusing for employers, as they both bear very similar names, the important one to focus on is the National Living Wage, otherwise known as NWL.

It is against the law for an employer to pay below either the national minimum wage or the national living wage (when it comes into force in April). If you’re an employer, you’ll need to make sure you’re paying your staff correctly from 1^st April 2016, as the National Living Wage will be enforced as strongly as the current National Minimum Wage.  This new change is going to be enforced strongly by the HMRC and employers can be subject to fines of up to £20,000 for each employee who has been paid incorrectly.  With these fines being of substantial monetary value, it is also a criminal offence not to pay the National Minimum Wage.

With employees from April getting this extra 50 pence in their back pockets, although it doesn’t sound like much this higher rate of pay will have an impact on businesses.  It is estimated that these costs could be in excess of £1.1 billion in the first year alone. As an employer it is important to check and ensure that your records and payroll systems are up to date, but also communicate this change to employees, so that any worker who is entitled to a higher rate of pay receives it from 1 April 2016.

If you have any questions about the National Living Wage and what it might mean for you, please get in touch with a member of our team, you can contact us by calling one of our offices which are found on our website www.chrysalispayroll.co.uk or emailing us on info@chrysalisparoll.co.uk