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. New Under 25 Apprentice NI categories, new Student Loans and Court Orders, Scottish Tax and, perhaps the biggest new piece of functionality this year, Payrolling Benefits in Kind. 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 2246150. The notes contained in this overview are delivered in support package levels: 22-27 (for ECC608), 94-99 (for ECC604) and C8-D3 (for ECC600). Clients only need apply the last support pack level for each ECC level (27/99/D3) if you need to implement the Payrolling Benefits in Kind functionality for this new tax year. If you wish to use this functionality, you must register with the HMRC by 5th April 2016 – HMRC will not process registrations mid-tax year. We will look at this functionality in greater detail further down.
Let’s go through the 2016/17 tax year SAP HR notes in more detail:
Tax, RTI and NI changes
- Note 2242872 (SP 22/94/C8) delivers the changes required for the new tax year to the EPS, FPS and EYU files. The support pack will implement the changes in the SAP HR/Payroll area, however on the file transmission/HMRC communications side (PI), extra files need to be downloaded/implemented from the SAP marketplace to change the XI messaging content
- Note 2215918 (SP 22/94/C8) is a large note that delivers changes required for the new under 25 Apprentices NI Categories (G and H). A new one-off report, RPUNIAUST_IT0069, is delivered that should be run to create new IT0069 NI records from 06.04.2016 onwards, as well as new Master Data validations in Infotype 0069 screens and checks during Payroll Calculations. The note also contains changes to support the ceasing of Contracted Out NI Categories. The same one-off report is used to move employees to the appropriate non-contracted out NI categories. This note also includes legal pension related changes to the RTI FPS file, as well as necessary modifications to the RTI control report due to the above legal changes. Here are the new NI categories :
- Note 2242950 (SP 22/94/C8) contains the required splitting out of Scotland for tax calculation from the current GB solution. Scottish Tax codes will have an ‘S’ in front of the normal tax code (i.e. 1000L will be S1000L in Scotland). New tax tables in SAP are contained in this note to support this. This note also delivers a long awaited Payroll Log for the tax calculation function (GTAX), which will make it easy to quickly see how tax was calculated
- SAP Note 2246170 (SP 22/94/C8) delivers the P60 forms for 2015/16
- SAP Note 2247025 (SP 22/94/C8) delivers the same changes RTI changes as per note 2242872 (which is for XI) for HANA Cloud Integration (HCI) clients
- SAP Note 2252463 (SP 22/94/C8) is a bug fix note due to an earlier change made to how SAP holds Cumulative NI Contributions. It also fixes an issue with Directors hired mid-year that have caused incorrect NI contributions to be calculated in tax period 12
- SAP Note 2250448 (SP 24/96/D0) is a bug fix for the RTI FPS file for partner data from Infotype 0088
- SAP Note 2259574 (SP 24/96/D0) delivers wage type configuration that was supposed to be in the above note 2215918 but never made it due to ‘technical reasons’
- SAP Note 2261994 (SP 24/96/D0) is a bug fix for the note 2215918 for new NI categories G and H, and a fix for a scenario where Payroll rejected employees who were correctly maintained on NI Category X
- SAP Note 2254278 (SP 24/96/D0) contains the relevant Budget changes 2016/17 for Tax and NI bandings, Statutory payments, Scottish Earnings and Child Maintenance Arrestments, Car/Van fuel benefit and C02 Values
- SAP Note 2278870 (SP 25/97/D1) is a bug fix for the new one-off NI program RPUNIAUST_IT0069 delivered in note 2215918 for the new NI categories H and G
- SAP Note 2259800 (SP 25/97/D1) is a bug fix for the previous note 2250448
- SAP Note 2264440 (SP 25/97/D1) contains the legal change where the official Beneficial Loan Interest rate has increased from 3.00% to 3.25%, backdated to 06.04.2015
- SAP Note 2270463 (SP 25/97/D1) delivers the new P11D and P11D(b) forms for 2015/16
- SAP Note 2270516 (SP 25/97/D1) contains the new P46(car) form for 2016/17
- SAP Note 2273933 (SP 26/98/D2) is a bug fix for Multiple Employment tax calculation for Week 1 Month 1 employees
- SAP Note 2275124 (SP 26/98/D2) is a bug fix for a scenario where Apprentices under 25 could not be hired on NI categories A or H
- SAP Note 2248238 (SP 26/98/D2) is a bug fix for a number of scenarios for NI calculation in Multiple Employment payrolls
- SAP Note 2271156 (SP 26/98/D2) is a bug fix for RTI EPS file for Paternity and Parental leave data scenarios
- SAP Note 2266332 (SP 26/98/D2) delivers the legal changes for the e-filing of the P11D and a fix to the Trading Organisation Indicator field on the P11D form. The support pack will implement the changes in the SAP HR/Payroll area, however on the file transmission/HMRC communications side (PI), extra files need to be downloaded/implemented from the SAP marketplace to change the XI messaging content
Student Loans and Court Orders
- Note 2242797 (SP 22/94/C8) supports the new Student Loan ‘Plan Type 2’. All existing Student Loans are ‘Plan Type 1’ and HMRC will notify you of what plan type any new Student Loans are on the SL1 forms. A new field for the plan type has been added to the infotype 0070 screen to allow SAP to process Student Loans correctly (with all existing loans being defaulted to plan type 1)
- Note 2246589 (SP 22/94/C8) delivers changes required for the new Higher Rate DEA Court Order. Legislation changes now allow the Department of Work and Pensions to issue Direct Earnings Attachments (DEA) at a maximum of 40%, rather than the current 20%, with some exceptions. A new subtype (DEAH) for the Infotype 0070 screen has been created to support this
Payrolling Benefits in Kind
- SAP Note 2272174 (SP 27/99/D3) is the delivery of the Payrolling Benefits in Kind functionality. This is a new HMRC initiative to allow employers to tax at source most (there are exceptions – see HMRC guidance) types of employee benefits normally reported on the P11D. HMRC guidance on this initiative can be found at: https://www.gov.uk/guidance/paying-your-employees-expenses-and-benefits-through-your-payroll. NB; this note does not include the functionality for taxing the benefit relating to Company Cars or Vans – this is contained in note 2285085 – which is not yet listed in this 2016/17 overall note. To implement this new functionality; you must make customizing changes to activate the solution, flag which wage types are going to be ‘Payrolled’, and add a new function to your Payroll schema. Given that this blog is being published mid-March, that you must determine which wage types to use / configure and test, register with the HMRC by 5th April 2016 (and that the golden rules of making payroll changes are; 1) not to rush them through without adequate care and testing and 2) to not be on the ‘bleeding edge’ of new functionality), one would suggest that unless your business has started on this work earlier in the year, then it might be wise to hold off until 2017/18 tax year to activate this functionality. This would mean processing your P11d’s as per the standard process at the end of this new tax year 2016/17.
What now, SAP UK Payroll?
So, after having applied both SAP HR support packages, what else should you do to ensure a smooth start to the new tax year?
- Watch the SAP support portal for any last minute changes, important this year due to the tax calculation rewrite for Scotland and the new NI Categories
- 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 teams for 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, pensions and, most notably, a combination of both
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 with us here. We are happy to help, but as schedules fill up quickly, it makes sense to make appointments early.
Happy New Tax Year!