SAP PY-GB: Changes in UK Payroll for the new tax year 2015/2016

The new UK tax year is getting closer and not only are there the usual start of year changes, but there are also a number of new pieces of legislation due to take effect, which will require some steps to be taken by SAP HR / SAP UK Payroll customers. Shared parental leave, transferable allowances for couples and the under-21 national insurance contribution probably being the most prominent changes. So, let’s have a quick look at this year’s changes.

SAP has provided an overview of notes required for the year end in note 2095987. While SAP recommends application of the following support package levels in this note : 81 (for ECC604), B5 (for ECC600) – which were out on the 4^th Dec. 2014, critical fixes and a mandatory Pension Autoenrolement change are contained in later support packs 83 (or B7). This pack is due out on the 22^nd Jan. 2015. However, readers should also note that one of the larger (if not largest) pieces of functionality for the new tax year, Shared Parental Leave, still shows as ‘not delivered yet’ by SAP in this note. Whether this new functionality makes it for the above support pack is currently unknown but looks improbable given the planned release date. We will have to wait for SAP to confirm when and how this is being implemented.

Let’s go through the 2015/16 note in more detail:

• Note 2086678 (SP 81/B5)  allows for the new ‘M’ and ‘N’ tax codes. This is for the new transferable tax allowance for married couples announced on December 5^th 2013
• Note 2095195 (SP 81/B5) delivers changes required for the new tax year to the EPS and FPS files. The support pack will implement the changes in the SAP HR/Payroll area, however on the file transmission/HMRC communication side (PI) side extra files need to be downloaded/implemented from the SAP marketplace to change the XI messaging content
• Notes 2091208 and 2092262 (SP 81/B5) implement necessary changes for the Local Government Pension schemes. The first note is to implement the current UK CARE scheme into NI and Scotland for the 1^st April 2015. The second note delivers two LGPS monthly reports that had been delivered in the pilots as standard
• Note 2082321 (SP 81/B5) supports the new law that no employee can have a tax deduction of more than 50% of their pay in the pay period (this previously only applied to K codes)
• Note 2092992 (SP 81/B5) is a large note that creates functionality to support the new Abolition of ER NI for EE’s under 21 years of age. It creates the new Upper Secondary Threshold (UST) and adds checks to SAP master data screens for Infotype 0069 (NI) as well as checks during payroll calculation. A program is also delivered that will allow customers to move employees to the correct new NI categories as of 6^th April 2015. This is therefore important to run before the first payroll run of the new tax year. Here is a list with the new NI categories „under specified age“:

• Note 2092226 (SP 81/B5) delivers the new Statutory Adoption Pay entitlements for Adoption Pay Periods that start on or after 5^th April 2015
• Note 2107928 (SP 83/B7) is a fix note for the NI category changes note 2092992 above
• Note 2112214 (SP 83/B7) is a fix note for the 50% tax deduction note 2082321 above. You must apply this immediately after applying, 2082312, if your peyroll period are numbered in a ways that the current tax year counts as 2015 already. Without this note, payroll will stop with the following error, because it’s trying to apply the April changes already:
  
• Note 2109001 (SP 83/B7) is the implementation of the new Teachers CARE pension scheme for April 1^st 2015. As well as changes to SAP master data data and payroll functions, a program is delivered to process the new monthly file the Teachers Pension (TP) will provide organisations
• Note 2111133 (SP 83/B7) mirrors the above Teachers CARE note 2109001 for the new Civil service CARE pension scheme which comes into effect also on the 1^st April 2015
• Note 2111416 (SP 83/B7) updated SAP for the new Pension Auto-enrolment earnings thresholds for 6^th April 2015 and therefore must be implemented before running a Payroll in SAP that includes an assessment date on or after 6^th April 2015

So, after having applied both support packages, what else should you do to have a smooth start in the new tax year?

• Watch the SAP support portal for any last minute changes, especially important this year due to the still unannounced Shared Parental Leave functionality
• Get out your usual end-of-year check-list (sure, you’ve got one?) to work through and have a discussion between the payroll and SAP team, what may need to be updated
• Make sure you are familiar with the legal changes and test them by running April payroll for some test cases in your QA system once the support packages are in
• Be extra vigilant with everything involving RTI, pension and most notably a combination of both
• If you have been exempt from using the RTI hashtag in your BACS file so far, because your bank couldn’t deal with it yet, please check with your bank now. They will probably have changed to the standard BACS format or will do so very soon and then you’ll be required to comply with the RTI standard for your BACS file.
  • Please note that some banks, most notably online banks, so far said they change to standard BACS, but actually are still using a variation of that, e.g. without header lines. We’ve seen customers struggling because of this kind of inaccurate communication.

If you need help with your end-of-year process or want it reviewed, even if it’s just a one day one-2-one coaching session, don’t hesitate to get in touch. We are happy to help, but as schedules fill up quickly, it makes sense to make appointments early.

Happy New Tax Year!

P.S.: if you haven’t submitted your personal tax for 2013/2014 yet, hurry up! Deadline is on the 31st January :-)