Sage Blog

Over the last few months I’ve had the opportunity to talk to a number of Accountants about the changes to Real Time Information for payroll (RTI) and what it means to them.

So, what is Real Time Information?

Real Time Information (RTI) is a HMRC initiative to improve the accuracy of PAYE, reducing the need to send out corrections for overpayment or underpaying and the possibility of fraud.

Under RTI employers will be required to submit information electronically to HMRC on or before they pay their employees instead of just once a year.

What has been clear to me is that there is a clear divide between people who think RTI is a good thing and those that don’t but one thing for sure is that almost all see it as just another compliance aspect they need to deal with on top of  Self-Assessment, iXBRL, Financial and Payroll Year End for their clients.

Use RTI to strengthen your business

Some Accountants I’ve talked to are looking at RTI increasing the time and administration of running a payroll and considering whether they need to increase costs but could this be counterproductive in that you may trigger some clients to look elsewhere.

Other forward thinking Accountants are looking at RTI positively in turning around their viewpoint that payroll is a loss leader but a great client acquisition tool in their business today into an opportunity to drive more clients into their business.

Whatever you think and feel about RTI, there is one thing that I would recommend that you do; communicate with your clients, let them know RTI is coming, let them know what it means to them and tell them not to worry about it. With the support of both yourselves and Sage inspire confidence that we have RTI covered.

Get ready for RTI ahead of the crowd

I’m a typical male who always leaves things to the last minute, but if I had the chance to get RTI Ready before most other practices I would jump at the chance. Well, if you want to get your practice and your clients Payroll RTI Ready before April 2013 you can.

You and your clients have the fantastic opportunity to not only be RTI ready but also help shape how HMRC and Sage provide on-going help and support.

Register now

If you are interested simply click RTI Pilot Registration and we will be in contact soon.

In my next blog I will be talking more about Sage’s plans to make the transition into RTI as simple and seamless as possible, but in the meantime you can find more information about RTI and we are doing on our website at www.sage.co.uk/rti

Neilson Watts – Sage Payroll Expert

Since joining the Sage HR and Payroll team I have come to completely admire payroll professionals. I am sure we are all guilty, including myself, of forgetting, or not even really thinking about the people that make the reason we come into work a reality.

The payroll function is so much more than just ‘pushing a button’. Payroll professionals control a business’s biggest controllable cost – the salary bill – and they protect the company’s reputation by ensuring compliance with a vast range of legislation. And yet how often are they thanked or even acknowledged?

Payroll professionals are highly skilled, technical and accurate and work to probably one of the most important deadlines in an organisation. They also have to work to continuous change. This is particularly true at the moment with numerous changes on the horizon that they need to be prepared for. Including changes in legislation, shared parenting, the default retirement age, childcare vouchers, not to mention all the changes required within the organisation.  These can include annual salary increases, increasingly complex benefit packages and bonuses.

So the next time you open your payslip take a second to think about who made it happen and give them a thank you!

Share this article with your colleagues to raise the profile of the ‘unsung heroes’ in your business.

Adele Bennett, Sage HR and Payroll

Who would have thought after my first Payroll Year End some 14 years ago when I joined Sage with a 32 inch waist, perfect 20/20 vision and a full head of thick wavy hair I would be coming up to my 15^th Payroll Year End. Some might say my waist has increased an inch for each year I have been at Sage.

When I was asked to write a blog about Payroll Year End, I pondered and asked myself what has kept me interested in working all these years with our payroll software and after a little deliberation, the answer was simple….a real passion in doing what is right for our customers and keeping it simple.

However, less about me and more about giving you my top 3 tips for preparing for Payroll Year End.

Payroll Year End veteran Neilson Watts

Tip 1 – Check that you are using the right version of your software

It’s important that you’re using the correct version of the software for the 2010/2011 tax year to ensure that you have been processing using the right legislation and will be able to submit your returns electronically to HMRC.

For users of Sage Instant Payroll or Sage 50 Payroll software:

Sage Instant Payroll: Open Tools and My Instant Payroll

• Sage Instant Payroll v12.00
• Sage Instant Payroll v11.12

Sage 50 Payroll: Open Help menu and choose About

• Sage 50 Payroll 2011, v17.00, v17.01
• Sage 50 Payroll 2010 v16.01, v16.03, v16.04
• Sage 50 Payroll 2009 v15.04, v15.06, v15.07
• Sage 50 Payroll 2008 v14.07, v14.09, v14.10
• Sage 50 Payroll 2007 v13.10, v13.12, v13.13
• Sage Payroll v12.13, v12.15, v12.16
• Sage Payroll v11.16, v11.18

If you’re not using any of these versions, please email us at support@sage.com or call us on 0845 111 5555, telling us which version you’re using. If you can include your Sage serial or account number in the subject line of your email, or have it to hand if you call that really helps.

Tip 2 – Know what support is available from your Payroll solution provider

From March through to May all employers in the UK registered through a PAYE scheme will be working through their payroll year end returns to get them to the HMRC prior to 19^th May deadline as well as getting ready to start their new tax year.

Not only is it a busy time for you, it’s also a busy time for your payroll solution providers, so we would recommend that you check what support is available to you during this busy period.

At Sage we’ve prepared the following useful information and guides for you:

• Payroll Year End guide: A step-by-step guide that walks you through each process you need to undertake your Payroll Year End procedures.

• Payroll year end website: Our dedicated website contains information about how to prepare, process, reconcile and submit year end returns. There are also useful downloads, information about the status of the HMRC Gateway, the length of our telephone queue, and more.
• Ask Sage: Our Ask Sage online database contains over 1800 Sage 50 Payroll and 250 Sage Instant Payroll related questions and answers, including any known issues. You can access Ask Sage from www.sage.co.uk/pye or by visiting www.sage.co.uk/ask and enter your query into the Search text box then click Search.
• Email support: If you can’t find the answer to your query via Ask Sage, you can email us at support@sage.com. We aim to respond to all email queries within two working days. Please remember to include your Sage serial number or account number in the Subject line of your email.
• Telephone support – From Monday 28 March to Friday 27 May, we are extending our payroll technical support and customer service opening hours. During this period, you can call us on 0845 111 5555 from 8am to 6pm. And don’t forget to have your Sage 50 Payroll or Sage Instant Payroll serial number ready, as you may need to quote this when you call.

Tip 3 – Give yourself plenty of time and peace and quiet to run your Payroll Year End

Being a typical male, ordinarily I would leave everything to the last minute, but failing to prepare, you are almost certain to fail. This is probably the most important bit of advice I can offer (déjà vu with some Baz Luhrmann lyrics).

I have the concentration of a three year old, and use any interruption as an excuse not to do something I am not looking forward to, but seriously Payroll Year End is quite straightforward you just need to give yourself plenty of time and ensure where possible you remain uninterrupted.    My advice would be to block out your calendar, close down your email, take the phone of the hook and focus on getting those returns submitted with plenty of time spare.

Also remember this year is the first year HMRC have removed the statutory concession that used to allow employers to file up to 7 days after 19^th May without incurring a penalty.

Nielson Watts, Payroll Year End Veteran

Although there are a whole three months and then some for payroll departments to get their data to HMRC it always seems to arrive with alarming speed.

So what can be done to try to make sure it all goes smoothly whether it’s your first or 21st year end? Here’s some advice from our Sage HR & Payroll team.

Payroll annual update

• Find out from your payroll software supplier when, and what, is going to be released as part of their new tax year update. Our Sage HR & Payroll run a series of Payroll End of Year Seminars for their customers to ensure things go smoothly and all system enhancements and new functionality is covered. If you have the opportunity to attend anything like this we would recommend you do so. If you’re using something like Sage 50 Payroll or Sage Instant Payroll then you can keep up to date on our Payroll Year End microsite.
• Develop a set of generic test scripts for the things that you’ll need to test every year such as statutory payment rate changes (watch out for Small Employer Relief that is dropping to 103% from 104.5% for 2011/12) and tax code uplifts. It will certainly save you time in the long run and will also allow you to consider what test data you need to create to put the system through its paces.
• Update any user-defined parameters such as pay period end dates and pay days and any exception limits built into standard error reports such as those flagging that net pay has exceeded a trigger amount.

Plan now for 19 May

• Liaise internally to agree the timetable to meet the 19 May submission deadline for the P14s and P35. And remember, it is the 19 May for the first time this year. The Extra Statutory Concession that used to allow employers to file up to seven days after 19 May without incurring a penalty has been abolished.
• Depending upon the type of industry you’re in you will also need to schedule one or more supplementary payroll runs after month 12/week 52 to capture all those late adjustments that need to be reflected in the P14s and P35.

Creating the new tax year records

• Create the records for the new tax year. Depending upon the size of your payroll the cleardown and set up routine may need to run overnight. When it does it should clear down:

Statutory year to date figures:

• tax
• National Insurance contributions (NICs)
• student loans (but a marker that a loan is in force must not be deleted but must be carried forward)
• previous pay and tax for new starters during the previous tax year
• approved payroll-giving donations, and
• Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP) or Statutory Adoption Pay (SAP) paid.
• But ensure that the following statutory balances are carried forward to the new tax year:
• Statutory sick pay (SSP) weeks paid this absence, as these link up over consecutive tax years
• Keeping in Touch (KIT) days taken
• court order balances and deductions
• loan balances, and
• debts and salary advances.

And finally employer balances but not any periodic deductions, for example:

• Share Incentive Plan (SIP) deductions
• union subscriptions
• catering allowances
• medical and dental insurance
• company car allowances
• travel grants, and
• relocation or mortgage assistance

New tax codes

• HMRC will also advise you to take certain steps to get tax codes into shape for 2011/12. All the personal allowances are being uprated this year so suffix codes ending with an L, P and Y will all be uplifted by the issue to employers of a P9X instruction – there’ll no doubt be a routine to run against your employee data to effect the changes.
• Employees with D and T suffix codes and K prefix codes will have their codes changed via an individual P9(T) instruction if HMRC wants to amend their code for 2011/12.
• Remember this year there will be a lot more code changes than in previous years as HMRC have been reconciling tax years 2007/08, 2008/09 and 2009/10 and underpayments of less than £2000 will be coded out in tax year 2011/12. Some 17m codes will be issued before 6 April, and given the amount of prior year work that has gone on, employees must check their copy of the tax code (Form P2) that provides the code breakdown that is not visible to the employer. Do ensure if you have any P6 tax code instructions outstanding for 2010/11 that these are input on the employee’s records before any 2011/12 code changes are applied.   Finally ensure any week 1/month 1 markers are not brought forward as you set up the new tax year records.

Record keeping

• Bear in mind that whilst the PAYE regulations only require you to hold three tax years of data plus the current year, HMRC’s new compliance powers allow them to go back four years to assess if a compliance failure they have identified has occurred throughout that period, and six years if they discover a careless error.
• However do be ruthless, storing excessive employee data will breach the Data Protection Act, so it’s all about balance and risk.

Sage HR and Payroll team

The first topic we’ve been exploring at HR Vision is ‘Has HR become remote from the line?’ It’s been interesting watching Tanith Dodge, HR director of Marks and Spencer and Jo Hennessy, director of research, Roffey Park, discuss the issues and their experiences. No matter what your experience we hope you’ll find something that gets you thinking. And if it does, why not have your say and tell others what you think?

Paul Tooth, Sage HR and Payroll

We all know that the HR function has transformed over the past decade. It is no longer administrative but specialist and strategic. However this does mean that HR are relying on line managers to ensure employees are motivated, productive, competent and fully engaged with corporate goals. Therefore it is vital that these two functions understand each other and work together but we know this can be challenging!

So how can HR build effective relationships with line managers to ensure they are working in partnership?

Here are my top 10 tips

1.       Coaching and development

Line managers need both skills and development to execute HR responsibilities. Make sure the necessary coaching and development is in place. This will give them confidence and mean they will be happier with the extra responsibilities.

2.       Be honest

If you are introducing a new strategy or policy and it will involve a lot of line managers’ time and resources, be honest with them and ask them how they feel about it. Involving them like this will automatically make them more engaged and cooperative.

3.       Timing of communications

When you are trying to communicate with any audience, timing is vital. Don’t try to communicate with your line managers during the busiest time for the business because it is unlikely you will be heard. Pick your moments to communicate carefully.

4.       Listen and respect

It is likely that they will have different views and attitudes to certain things but this does not mean that they are less important. In order to build an effective relationship you need to listen and respect their views and take on board what they say.

5.       Equip them with the right tools

If you are relying on line managers to manage many of the day-to-day duties of people management ensure that you give them the tools and equipment to make this as easy as possible. Self-service technology can significantly reduce the administration and save line managers valuable time.

6.       Support

Make sure the HR department is there to support line managers when needed and make sure line managers know HR is there to support them!

7.       Personal performance objectives

Make people management responsibilities part of personal performance objectives as this demonstrates corporate sponsorship of HR activities as being crucial to the business.

8.       Make HR’s role and contribution clear

Explain the role of HR as a strategic partner and showcase the benefits that it can bring to the business.  Provide examples of how HR can add value to the business on a strategic level now that it has moved away from tactical activities.

9.       Recognise them as strategic partners of HR

Line managers should be recognised as strategic partners of HR and given recognition and reward for their responsibilities

10.   Give praise

If line managers have implemented a new policy successfully, engaged employees effectively, or are just are just doing a good job, make sure you tell them!

Well, that’s my top 10. What would you add to the list?

Paul Tooth, Sage HR and Payroll Team
Join our Linkedin group for more HR tips and info

Here at Sage HR and Payroll we’re working in partnership with HR magazine to produce HR Vision. HR Vision is a series of videos, in-magazine features and web content exploring key themes that will be of increasing importance in the future of work.  There will be 7 videos in total, released monthly from this month.

You’ll be able to watch interviews, read articles, post comments, have live chats, download white papers and have your say.

Each month I’ll be writing a blog around the topic, giving you my opinions, advice and experience. Look out for my first blog later this month on building effective relationships with line managers.

Paul Tooth, Sage HR and Payroll

It’s Payroll Year End and it seems to come round faster every year.  This is my 7th year end now working in the Sage Technical Support team supporting our SageCover customers, and apart from Internet submissions not a lot else has changed.  I thought it might be nice to let you hear about Payroll Year End from my point of view.

Andrew Redhead, Sage Payroll Support Team

For those of you that don’t know, Payroll Year End is an annual event where everyone who processes payroll has to send their P35 and P14 reports to the HMRC to show what they have deducted from all employees over the previous year.  All reports have to be received by the 19th of May or they will kindly send you a fine for every day it is late.

Days at Payroll Year End are much like any other except they start earlier, end later and are very busy.  Due to the longer opening hours we have people in the office from 8 in the morning till 7 at night to answer calls.  It’s very intensive, and I need a high level of concentration to make sure we support our customers to the high standards they expect and deserve.

Calls from our customers can range from an installation of the new version to make sure they are all ready for the new year or a problem with a P35 not balancing and needing to find out why.  We will also receive calls about the more standard issues for payroll like statutory maternity pay and holidays.

Throughout the day there are various things Sage do to make it go as smoothly as possible.  If we work half lunches we get a free sandwich delivered to our desk.  There is chocolate passed around to keep our energy up and the coffee machine is free for part of the day.  They may sound like little things but they all add up to make the day go smoother.

With a job based on the phone though the biggest thing that effects your day is the customers you speak to.  It’s a stressful time of year for our Sage Payroll customers and you’d expect some of them to be frustrated and annoyed, they are however not.  They are very nice to speak to and although they may mention how busy we are they seem to understand why we are so busy.  Depending on the type of call there may be time to talk about things outside of payroll.  This is always a nice change of pace and can make the day go much quicker.  On other calls there is no time for conversation so it’s just a case of entering the notes then onto the next customer.

At the end of the day it’s a case of finishing the call you are currently on before you go home.  It might be time to go home, but it’s not a matter of passing the call to colleague to finish it or ringing the customer back the next day; what matters is taking the time to help the customer no matter how long it takes.  Once you’re done and it’s off home to relax and enjoy the evening before getting up to do it all again.

For our customers I’d say don’t worry if things aren’t going smoothly for you. The important thing about Payroll Year End is to just not let it get on top of you.  Yes you’re busy, yes it can get stressful, but if you do have a problem there is someone like me at the end of the phone to help you.

Useful links:

• Visit our Payroll Year End website for updates and information
• You can find P60s, Payroll Year End training and Payroll software at the Sage Store

Andrew Redhead, Payroll Software Support Team

What’s best for you? Payroll software or outsourcing your payroll

At some time, all businesses, whatever their size, have posed this question and tried to deal with the reality of the answer.

Many businesses feel that the right option is to invest in payroll software and staff to manage the payroll in house, but many others feel that the better option is to outsource their payroll.

What are the key considerations?

Time:  Does your business have the time and expertise to take their focus away from their business so that they can deal with payroll weekly or monthly?  Payroll is a task that has natural peaks and troughs throughout the month – will filling this role internally be cost effective for your business?

Reliability: It goes without saying that your staff will require payment on time, every time.  The payroll must be accurate and must be processed when it is due regardless of holiday, sickness or any other unforeseen circumstances

Confidentiality: Payroll is probably the most sensitive subject within a business – an indiscretion can cause huge upset – can the organization be sure that sensitive information is kept confidential?

Flexibility: Changes may need to be made to payroll at any time – will the in house resource always be available to make last minute changes?

Cost: Last but by no means least, cost is a major consideration for businesses when considering outsourcing.  While it may be advantageous to have in house staff available ‘on tap’ as it were, there are costs involved in staffing this role, eg holiday/absence cover, on going training (payroll is an area that is guaranteed to have annual changes – and that’s before whoever is sitting in No 11 decides to be imaginative (remember the computer incentive scheme!), not forgetting the cost of the payroll software, support and annual updates.

We know that different customers have different needs, which is why we offer both payroll outsourcing and payroll software, so take your time to work out what solution suits you and your business the best.

Alison Godwin, Sage Outsource

Senior Business Analyst, Gary Ging, is one the many people behind our Sage 50 Payroll and Sage 50 HR software. Here he talks about the role of customer feedback in getting the product right.

Gary Ging enjoying a well earned break

By the time you are reading this our new Payroll and HR 2010 products will have just been released and the R&D team will be all sitting around and relaxing with our feet up. Actually, that won’t be true because as soon as those products are released focus switches to our Payroll Year End project – there’s no time to rest for us…

But I digress, what I wanted to talk about was a couple of new features we’ve put into our 2010 products that I think a lot of people will benefit from.

One area we’ve looked at in our Payroll product is how you deal with the statutory payments for employees, such as sick pay, maternity and paternity pay. In Payroll 2010 it’s now a simple matter of entering one or two dates and the program will immediately tell you whether or not the employee is entitled to a payment, and if so, how much, and more importantly, if they aren’t entitled then why. Our Customer Services team say that processing statutory payments is a common theme on the helpline and they think that the improvements we have made will help a lot of our customers.

One of the many new features in HR 2010 is the ability to record employee holidays as a number of hours, as opposed to days. It’s a simple, straight forward, feature but this was the number one item on our customer wishlist and improves what, I think, is an already great product.

 We really do listen to and appreciate your feedback and suggestions and while there are a lot more great new features in both products please keep on telling us what you want to see in future versions, or, and this is just as important to me, what you don’t like in the current products – just because something is the way it is now doesn’t mean we can’t change it in the future if it means it will make better.