Auto-enrolment is a government initiative that requires all employers, whatever the size of their company, to automatically enrol all employees into a workplace pension scheme. If you are a small or medium-sized enterprise, you probably don’t have in-house payroll services to take on the burden for you, and deal with all the responsibilities involved. Failure to comply could result in your business being fined up to £2,500 per day, so it must be properly implemented.
Auto-enrolment is a complicated task and can be very time-consuming for a business to administer correctly.
At AK Tax we can shoulder the weight by implementing and running your auto-enrolment scheme for you. Let us take the stress and worry out of the process and give you the peace of mind of knowing that your business is 100% compliant.
Pension auto-enrolment means that employees are automatically enrolled into a pension scheme when they join your company, as long as they fall under the following criteria:
By law, you and your staff have to pay a minimum amount into the pension scheme, which is currently set at 8% of their earnings. Employees must pay at least 4% from their pre-tax salary, whilst employers pay at least 3%, though you can choose to pay more if you wish. The final 1% is provided by the government offering tax relief on the pension pot.
There are several steps you need to take to ensure your business is prepared for auto-enrolment:
At AK Tax we take the pressure off all of the regulatory headache by making sure your business is auto-enrolment compliant.
Employee data for an eligible employee can be uploaded if they are between 22 and State Pension age by the pay period end date of the file you are uploading. Only eligible employees are automatically enrolled but all employees aged between 16-74 have the right to opt in to a pension scheme.
New employees must be assessed to see if they are eligible on the day they start work. To be eligible for auto-enrolment, employees must be between the ages of 22 and State Pension age, earn more than £10,000 a year, be resident in the UK and not already part of a workplace pension scheme.
If your staff earn below £5,876 or between £5,876 and £10,000 annually, auto-enrolment does not apply. However, all staff members have to right opt in. The difference is that employers are not required to contribute to a pension fund for staff earning less than £5,876 but they have to contribute as normal for those earning over it.
You can delay assessing and auto-enrolling your employees for up to three months. You must write to your staff to inform them their auto-enrolment is being postponed. An example of needing to do this might be if you have short-term staff who you know will stop working for you within three months.
The staging date is the date employer duties come into effect, which means you need to have a pension scheme in place and be ready to enrol employees. You can check your staging date on The Pensions Regulator website using your PAYE reference.
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