17 May 2008
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| Do you know your payroll?How can outsourcing your payroll benefit your organisation? Elaine Gibson, senior policy and research officer for the Institute of Payroll Professionals, has the answerEducation payroll is a specialist field. The professionals responsible not only have to consider general policy and legislation, but also issues relating specifically to the education sector. If your payroll is in-house you may be considering the use of an outsource provider. In making such a decision there is a lot to consider. MIND AT EASE Recently I had a conversation with the financial director of a school in North Yorkshire who outsource their payroll to the local authority for that area. From this conversation it was clear that there is piece of mind knowing that a professional organisation with experience in the education sector is responsible for not only running the general payroll for teachers and the support staff, but also the associated specialist obligations such as adhering to the teachers pension deadlines and the pending review for the implementation of the teachers pay award. Expanding on the example of the teachers pay award the School Teachers Review Body (STRB) has recommended: * 2.45 per cent increase from 1 September 2008 * Provisionally recommended a 2.3 per cent increase from 1 September 2009 * A further provisional 2.3 per cent from 1 September 2010. Further information can be found by visiting: http://www.atl.org.uk/atl_en/pay/pay_calc/teachers/pay_2008/default.asp Legislation There are many providers of payroll and pension services to choose from. It is certainly worth shopping around and if possible discussing the prospect with those that have taken that route. So what can an external organisation provide for you? Being a member of the Policy team at the Institute of Payroll Professionals (IPP) I know only too well the changes that are in the pipeline. I would like to discuss those changes; however, that would warrant a separate article so I will leave that for another time. A few examples are: * Impending mandatory in year filing of forms P45, P46 and Pensioner Notification * Large and medium employers to file in-year from 2009 * Small employers EOY from 2010 and in-year from 2011 * Changes to forms P45 and form P46 * Introduction of Date of Birth (DOB) and gender fields from April 08 * Compulsory to complete DOB and gender fields April 09 * Introduction of new stationary October 08 * Proposed penalty regime for incorrect returns to be introduced April 08. So were you aware of the above? If your payroll is currently in-house, you must have the necessary knowledge to deal with the required obligations. Unless you have time to monitor the HMRC website or are a member of a professional body such as the IPP how do you keep up to date? I cannot stress enough the need to comply with legislation; otherwise you will leave your establishment open to penalties, fines and interest that your budget may not be able to afford. An external provider would ensure that your liabilities and deadlines are met, although the underlying responsibility stays with the employer. Reporting Once the payroll is run and you push the button to submit your BACs file, that is not the end of it. You have to consider other factors such as the month end routines and the reporting requirements to both internal and external stakeholders: * Pensions * Finance * HR * Her Majesty’s Revenue and Customs (HMRC) - for payment of tax and National Insurance * Court order payments * Voluntary deductions * Contractual deductions * Student loan reporting * Not forgetting the employees and payslip distribution * P60 distribution to employees. This list is by no means exhaustive but highlights what there is to consider. Furthermore, there are the Year End obligations to consider for reporting of tax and National Insurance via the Annual Return form P35 and P14/P60 reporting. Oh, and how can I forget the benefits and expenses reporting that follows? Time and Money The title says it all. We all have budget constraints and a change in legislation such as mandatory e-filing could have a serious impact on the company coffers. Do you need to set a project in motion in order to purchase and implement third party software or could a specialist deal with this for you, as they will have the resource and IT infrastructure in place to comply on your behalf. Consider Shared Services To outsource your payroll is one thing but what about other required services such as HR? Who deals with time-consuming payroll queries and HR issues? To have access to all services in one place and one point of contact would make professional life a lot simpler though cost is a factor. Consider, however, is it worth the initial set up costs in order to reap the benefits long term? Should you choose to outsource you need to consider very carefully the service you require for your establishment. The choice is yours. Do you want a fully managed or part service? Whatever choice you make you need to be clear of what services you require, as once you have signed on the dotted line and entered into a service level agreement you will be tied in for a set period of time, often years, so it is important to get it right from the outset. Provider of Payroll Services I cannot go without mentioning the new Money Laundering regulations that were introduced as of 15 December 2007. There has been confusion over the Money Laundering Regulations and whether or not payroll services are included. The Policy and Research team at the IPP are investigating this and has spoken with HMRC, and we can confirm that all businesses providing payroll services do fall under these regulations. It is therefore important that if you provide a payroll service to clients, you must check to see if the Financial Services Authority (FSA) or a designated professional body already supervises you. If you are not already supervised for compliance with the money laundering regulations you must register with HMRC. You can find more details on the HMRC web pages: http://www.hmrc.gov.uk/mlr/bus-areas.htm The IPP will be providing further guidance on this issue and a representative from HMRC will be attending the IPP National Meeting on 6 March to explain the anti money laundering systems and processes you will need to put in place and answer any questions you may have regarding the subject. | |
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