Do I need to complete a Declaration of Compliance?

15 Nov

Between May and August, over 100,000 small employers and their business advisers will be tackling an important task: submitting a Declaration of Compliance to The Pensions Regulator (TPR). If you're supporting clients through this process, here's what you need to know.

Why the Declaration Matters

Every employer in the UK has workplace pension duties. This means they must assess their staff, enroll those who qualify into a pension scheme, and contribute to it. The Declaration of Compliance is the formal way of showing TPR that these duties have been met.

Even if an employer doesn’t have staff to enroll, they still need to complete the declaration to confirm they've fulfilled their legal obligations. Missing this step could lead to penalties, so it’s not something to overlook.

The problem of small and lost pension pots has garnered significant attention in recent years, though many may not realize just how widespread the issue is.

According to recent research from the Pensions Policy Institute (PPI), the scale of lost pensions is substantial, as highlighted in their 2024 briefing note.

A split tax code is assigned when your tax-free personal allowance is divided between two or more sources of income, such as two jobs or a job and a pension. Here's how you can get a split tax code and how it works:

1. Understanding the Need for a Split Tax Code 

If you have multiple sources of income, such as:

   - Two or more jobs

   - A job and a pension

   - Multiple pensions

RTI REPORTING CHANGES DELAYED

• Changes Pushed to 2026: HMRC has delayed the requirement to report detailed employee hours via real-time information (RTI) until at least April 2026. This delay allows businesses time to prepare for the changes.

• New RTI Requirements: Employers will need to report actual hours worked or contracted hours for hourly paid employees.

• Self-Assessment Changes: Starting April 2025, self-employed taxpayers and company owners will need to report start/end dates of self-employment and dividends, with additional details required on self-assessment (SA) returns.

According to the latest data from the Office for National Statistics (ONS), the Consumer Price Index (CPI) inflation rate for the year leading up to July 2024 stands at 2.2%. This figure reflects a slight increase from June's annual inflation rate of 2.0%.

In the month leading up to July 2024, the monthly CPI fell by 0.2%. However, when compared to the same period in 2023, which saw a more significant decline of 0.4%, this year's smaller drop has resulted in a 0.2% net rise in yearly inflation. This modest increase has pushed the annual inflation rate slightly higher.

The Office for National Statistics (ONS) has released its August 2024 labour market data, revealing some notable trends in employment across the UK. One key finding is that wage growth has slowed to its lowest rate of increase in two years. While it is too early to draw definitive conclusions from this data, the slowdown in wage growth may be contributing to lower inflation rates. However, the Bank of England's Monetary Policy Committee has indicated that it will remain cautious with adjustments to the bank rate, reflecting the uncertain economic outlook.

Exploring the Future of Automatic Enrolment Beyond Pension Schemes

For the past decade, automatic enrolment in pension schemes has proven to be a game-changer for employee retirement savings. This success begs the question: can similar methods be applied to other areas of employee benefits?

The National Bureau for Economic Research (NBER) sought to answer this by analysing data from two large UK studies on payroll contributions for short-term savings.

Key Insights from the NBER Studies

The Living Wage Foundation has released a policy paper highlighting low pay in the adult social care sector across the UK. The report reveals that 43% of adult social care workers in England earn less than the real living wage, and 80% in London earn below the London living wage.

To address this, the Foundation recommends that the UK government:

Agents will be aware that men born after 5 April 1951 or woman born after 5 April 1953, have until 5 April 2025 to pay voluntary National Insurance contributions to make up gaps from 6 April 2006 if they are eligible. The 5 April 2025 deadline is for paying voluntary National Insurance contributions for tax years 2006 to 2007 to 2017 to 2018 (as they would otherwise have dropped out of time). 

We wanted to let you know that most of your clients can now take advantage of an enhanced online digital service which HMRC and DWP have delivered on GOV.UK or link through the HMRC app.

The Pension Regulator (TPR) has unveiled a new corporate plan for the next three years, outlining its strategies to safeguard savers' funds, encourage innovation, and enhance the pension system.

TPR plans to work towards an industry with less pension schemes, with all of them delivering good outcomes for savers. Its priorities over the next three years include:

For the 2023 to 2024 tax year, the Self Assessment threshold for customers taxed solely through PAYE will increase from £100,000 to £150,000.

Customers who submitted a 2022 to 2023 tax return showing income between £100,000 and £150,000 taxed through PAYE, and who do not meet any other Self Assessment criteria, will have received a letter confirming they do not need to complete a tax return.

The Department for Work and Pensions and the Department of Health and Social Care have issued a call for evidence to explore reforms to the fit note process in England, aiming to better support individuals with long-term health conditions in accessing work and health support. This initiative, open for feedback until 8 July, seeks insights on improving outcomes for those needing more extensive assistance beyond short-term illness recovery.

The new tax year has arrived, and employers in the UK face important responsibilities related to payroll management. Here's a comprehensive overview of what you need to know and do to stay compliant with HM Revenue and Customs (HMRC) regulations.

1. Sending Your Final Payroll Report

Ensure you had sent your employees' final payday of the tax year before or ON the 5th April. Be sure that you marked 'Yes' in the 'Final submission for year' field in your payroll software. This report should include end-of-year information for all payrolls under the same PAYE scheme.

If you missed this deadline or encounter specific circumstances (like 'Week 53' payments), you may need to correct any errors or omissions promptly to avoid penalties.

As we navigate through the ever-evolving landscape of employment regulations, it is crucial to stay informed. As of 1st April, the government has made adjustments to various employee-related allowances, with some significant changes that impact both employers and employees.

Here's a snapshot of the key changes:

Keeping you informed on crucial updates in employment regulations is at the heart of our commitment. As we transition into the new fiscal year, it's imperative to be aware of the revised compensation limits set by the government for Employment Tribunal cases.

Here are the key changes effective from 2024 to 2025:

As we usher in April, there are positive changes on the horizon for family-related payments, providing enhanced support for individuals during critical life moments. Starting this month, several key allowances have been raised to better assist those navigating family-related challenges.

**Family Related Payment Increases:**

- **SSP (Statutory Sick Pay):** Now increased to £116.75 per week.

- **SPP (Statutory Paternity Pay), SAP (Statutory Adoption Pay), Shared Parental Pay, and Bereavement Leave:** All increased to £184.03 per week.

In the intricate realm of payroll and taxation, the responsibility for submitting a tax return may not inherently lie with the employer. However, armed with this knowledge, the question arises – should employers take the initiative to communicate this information to their staff?

The government will mandate the reporting and paying of Income Tax and Class 1A National Insurance Contributions (NICs) on benefits in kind via payroll software from April 2026, building on the progress already made on the government’s ambition to fully digitalise the reporting of benefits in kind. Mandation will simplify the tax affairs of 3 million people and reduce the need for them to contact HMRC.

For those navigating the transitional period, here's the scoop on reclaiming Statutory Paternity Pay (SPP):

Single Block Scenario:

If an employee took a single block of Statutory Paternity Pay (SPPL) before 6 April 2024 (lasting 1 or 2 weeks), employers can claim repayment for that one consecutive block. Reclaiming is a breeze through your payroll software or standard procedures.

Non-Consecutive Blocks:

In the case of 2 non-consecutive SPPL blocks taken before 6 April 2024, employers can claim repayment for only one block before this date. Hold tight for the second SPP block—reimbursement will be possible once the PAYE system gets its update.