HMRC’s Basic PAYE Tools can cost you time and money. Aug 17, 2017Views: 1273
If you use HMRC’s Basic Paye Tools (BPT) to manage your payroll it is important to understand that this basic tool offers no functionality to cater for the needs of automatic enrolment (AE).
As an employer, there are several duties you must undertake to comply with auto enrolment. Using Basic Tools to process your workplace pension will be manual and time consuming. For example, each employee must be manually assessed to find out whether they need to be automatically enrolled.
Communications must also be manually produced and customised. The format of the auto enrolment letter is dependant on each employee’s eligibility. Other workplace pension duties include calculating contribution amounts for each employee, deducting this amount from the earnings and informing the chosen pension provider of the contribution amounts.
Employers who continue to use HMRC’s Basic PAYE Tools will be particularly vulnerable to enforcement action from The Pensions Regulator (TPR) if they fail to fully comply with their employer duties. TPR can issue fines starting from a £400 fixed amount and can eventually escalate to between £50 - £10,000 daily.
It is also important to note that Basic PAYE Tools does not allow you to produce payslips for your employees - this can lead to increased confusion when it comes to your employees understanding how auto enrolment affects them. Employees will not be able to view how much contributions are being paid into their pension pot, leading them to lean on their employer for clarification each pay period.
To avoid the risk of being fined for failing to comply with AE, The Pensions Regulator has recommended that users of HMRC’s BPT switch to low cost or free payroll software that can help with auto enrolment.
BrightPay is a payroll software that streamlines a lot of the administrative work involved with auto enrolment. Once you reach your staging date, on-screen alerts will notify you that there are auto enrolment duties to complete. Communications will be automatically produced and customised and available to print, export or email directly to your staff. Contribution rates are automatically calculated and can be viewed clearly on each employee's payslips. BrightPay will also produce contribution files for a number of pension providers and offers a direct API integration for NEST.
If you would like to see how easy BrightPay is to use, you can download our free 60 day trial. We also offer a seamless import for HMRC’s BPT users which imports your employee details within seconds.
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