Payroll & Expenses Group – update, thank you & welcome

The 2021 Autumn regional Payroll & Expenses Groups have now concluded.  Attendees were treated to updates galore and they shared various issues and ideas.  Thank you to all our members who joined the meetings and to our Chairs for keeping us all in line! 

A special thank you to Richard Montgomery who, after 11 years, has stood down from his role as joint-chair of the Midlands PEG.  We wish Richard all the best for his new role as Head of Tax at De Montfort.  Co-chairing with David Robinson at the Midlands PEG in the future will be Simone Worthington who is no stranger to the PEGs having attended for at least the last decade. 

We also thank Michael Stevenson who has passed the reigns of the London and the Southeast PEG region to Graham Gustard, who successfully chaired his first group in October.

For those of you who were not able to attend, highlights plus any action points for BUFDG are set out below:

• Health & Social Care Levy – there is an NIC uplift in 2022/23 of 1.25% for employees and employers to fund the healthcare sector.  This uplift will incorporate Class 1 (employer and employee), Class 1A (benefits) and Class 1B (PSA) NIC.  Universities need to review wage budgets to reflect the uplift from April 2022 and payment of Class 1A/1B due at the end of the respective tax year.  Given the high tax charge on benefits included on a PSA, recommendation that PSA’s are reviewed to ensure HEIs are only reporting taxable items. The NIC rates will return to normal in April 2023 but be replaced by the Health & Social Care Levy.  BUFDG will be running a Time to Talk session in the New Year once further details have been published

• Coronavirus Job Retention Scheme – most attendees were thrilled about the scheme’s closure at the end of September, whilst being appreciative of what it achieved.  Discussion focused on what universities should be doing to ensure that their historic claims were accurate and reduce risk relating to under/over claims.  Advisers stated that of the claims they reviewed, not one was correct and therefore the recommendation was to review the high risk areas, such as term time employees 

• National Living & Minimum Wage – from April 2022, the NLW and NMW rates increase as follows:
• National Living Wage (23+) - £9.50 from £8.91 (6.6% increase)
• 21-22 year old rate - £9.18 from £8.36 (9.8% increase)
• 18-22 year old rate - £6.83 from £6.56 (4.1% increase)
• 16-17 year old rate - £4.81 from £4.62 (4.1% increase)
• Apprentice rate - £4.81 from £4.30 (11.9% increase)
• Accommodation offset: £8.70 from £8.36 (4.1% increase)

There was discussion around the ease of which universities may breach NMW legislation by paying less than the appropriate rates.  Whilst HEIs are not fraudulently paying people less than NMW, salary sacrifice arrangements and potential deductions (e.g. clothing requirements or admin fees) could unintentionally bring about a breach.

BUFDG have also introduced two new e-learning courses, a basic and an intermediate guide to National Minimum Wage and these can be accessed on the e-learning tab.  The basic course provides a general overview of NMW regulations and common pitfalls within the HE sector, whilst the intermediate course provides more a practical understanding of the calculations involved alongside the regulations and common pitfalls

• Off-payroll workers – there was a consensus agreement at the PEGs that off payroll working and the assessment of sole traders remained a top issue for HEIs. It was agreed that BUFDG would hold annual employment status training days/half days (at a small price) to ensure university employees were adequately trained in order to meet HMRCs requirements for taking reasonable care

• Hybrid & homeworkers - there are all different hybrid arrangements amongst universities, from a 2 day onsite; 3 day offsite ratio, or a minimum of 20%, or only coming onto campus for meetings or working on campus full time. BUFDG will shortly be publishing a short guide on the tax/NIC implications for homeworking and hybrid arrangements relating to travel/subsistence and home office costs.  Equally high on the agenda is the continuing practice of working from home where home happens to be overseas, including backlash from the individuals who do not want to return to the UK (or don't tell anyone they are not in the UK).  Communication with all employees is key to ensuring a continuing dialogue to reduce the "I didn't know I'd have to pay tax if I was working from my home in [insert country of your choice]" scenarios.  BUFDG will also be putting a high level paper together setting out the issues that universities face if they find themselves in this situation

• Bursaries, stipends, honorariums, scholarships, hoojamaflips, etc – this is a highly topical subject following UKRI’s recent increase to their stipend rate to an amount in excess of a HMRC exemption for employees. BUFDG are taking two courses of action.  Firstly, they have written a guidance document for members on the tax/NIC rules for stipends (etc) which is currently with HMRC for comment and will be shared with BUFDG members as soon as possible; and secondly, they will be lobbying further for increases to the exemption and broadening the current rules to incorporate part-time students and allowing a small percentage of time spent learning in non-educational establishments