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.

What’s happening?

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. workplace pension

What you need to do

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.

Paying into a pension through your limited company

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.

More about workplace pensions

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.
Have you recently received a letter from The Pensions Regulator, urging you to “Act Now: the law on workplace pensions has changed”? Several of our clients have received this communication in recent weeks so here is what it means and what you need to do. Due to changes in the law on workplace pensions, every employer with at least one member of staff is obliged to enrol them into an appropriate workplace pension and contribute towards it. This is known as “automatic enrolment” (or “auto enrolment”). This government initiative started being rolled out in April 2012, (you may have noticed the press coverage featuring a big fluffy blue monster!) The auto enrolment process will be completed in 2018, by which time every single employer will have to provide a workplace pension for their staff. So if you have employees and haven’t already received a letter about this, you will before long. Regardless of the nature of your business, whether you are hairdresser, an architect or employ a personal care assistant, if you are employing at least one person you are classed as an employer. When you reach your staging date for auto enrolment, you will have certain legal duties.

What do I need to do?

To comply with the law on workplace pensions, it is important to understand what you need to do and by when. This will depend on your circumstances and those of your employees. Log on to The Pension Regulator’s Duties Checker. You will need your PAYE reference and your 10 digit letter code to hand, as well as the age and earnings of each individual you employ. Checking your duties in advance of your staging date means that you will have a clear idea of what is expected and will also save you from completing duties which are not relevant to you.

...but I don’t have employer duties

You can opt out of auto enrolment  if any of the following criteria apply:
  • You are a sole director company, with no other staff
  • Your company has a number of directors, none of whom has an employment contract
  • Your company has a number of directors, only one of whom has an employment contract
  • Your company has ceased trading
  • Your company has gone into liquidation
  • Your company has been dissolved
To opt out click here. If you opt out and subsequently your circumstances change so that auto enrolment duties apply to you, you must inform The Pension Regulator.  Examples would be if you take on a member of staff other than a director, or if at least two directors start working for you under contracts of employment. Also note that auto enrolment will apply if you employ your spouse and they are not a director.

Let Boox help

Your Boox client accountant will be happy to talk you through your obligations. To find out more about your obligations under auto enrolment, including advice on who you need to enrol download our free guide