Key tax dates and deadlines for 2018/19
It is an inevitable reality that, for anyone earning a livin...
By Lynne Gowers on 23rd March 2018
If your business is employing staff, you should already have a workplace pension in place, under the automatic enrolment rules.
You also need to be aware that the minimum contributions are going up from the start of the tax year on 6th April 2018. Both employer and employee contributions are increasing, so not only do you need to be prepared to pay in a bit more, but you should make your employees aware that they will be too.
From 6th April 2018, you will be required to increase the amount of your minimum contributions into your staff’s automatic enrolment pension to at least 2% of qualifying earnings. Your employee will have to pay the shortfall needed to make up the total minimum contribution to 5% (including your contribution).
As part of the planned phasing of the workplace pension regulations, contribution levels are set to rise again on 6th April 2018, with employers paying a minimum of 3% towards the pension, and the total minimum contribution reaching 8% – with employees making up the difference, as the table below shows.
You don’t need to take any action if you do not have any employees in an auto-enrolment pension scheme or if you are already paying in more than the increased employer contributions.
Both you and your staff can choose to contribute more than the minimum amounts.
If you pay in more than your legal minimum contribution, but less than the total minimum contribution, your employees need to pay in at least enough to make up the shortfall between these amounts.
Your accountant, payroll provider or payroll software, they should automatically support the increases automatically so that the correct amounts are paid across to the pension scheme provider.
There is no legal obligation for you to inform employees of this change, but it is good practice to do so.
The pension scheme provider will also be able to help with communications – most will have a standard letter you can send out.
We have previously written about how you can factor your own company pension in to your tax planning. A company pension – tax-efficient retirement planning
However it is also worth pointing out that as an employer you can receive tax relief on the pension contributions you make for an employee. Tax relief on employer contributions is given against corporation tax as they can be deducted as a legitimate business expense.
Workplace pensions are a simple way to help people save for their future after retirement.
You can find out more about your obligations as an employer in our article Auto-enrolment for contractors or pop over to https://www.workplacepensions.gov.uk/employer/ for further information.
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