Education Business

There is no doubt that payroll in the education sector is a specialist field. My intention here is to discuss various issues that will impact on such professionals. My purpose is not to provide all the answers, but to highlight related comments and concerns from the education sector.
    
The basic cogs and wheels of payroll are the same no matter the industry sector we work within; however, there are specialist areas that will impact on your sector only. Dare I mention the Local Government Pension Scheme? What about training needs and whether there is funding available? I will also mention highlights from the Chancellor’s budget announcement.
    
Prior to putting fingers to keyboard, I have had cause to speak to numerous managers within the payroll sector to find out just what payroll professionals have to deal with currently. Indeed as the Institute of Payroll Professionals (IPP) is a membership body representing this part of the employer community, we are fortunate to be in regular receipt of valuable comments and feedback on such subjects. And if you are a member of the IPP, you will frequently see us asking for feedback from our weekly news online e-bulletin or via the special interest group specific for education sector payrolls. So what are the hot topics at the moment?

Local Government Pension Scheme
The introduction of the “new look” Local Government Pension Scheme (LGPS) from 1 April seems to have provoked positive and negative comments. It has also brought with it uncertainty.
    
The new scheme rules clearly provide for employers to decide the initial allocation to one of the seven employee contribution bands. From my research it appears that there are to be many variations on a theme: if I had a pound for every time I heard the comment “re-banding”, I would be a wealthy person.
    
Basically, the employers I have spoken to have to look at the earnings bands and the part-time workers have to establish the full-time equivalent. But just what does that include? Consideration also needs to be given to contractual allowances and to establish if this forms part of the full time equivalent (FTE)?
    
There are over 80 administering authorities for the LGPS, all of who may offer slightly different advice as to how to administer the changes. This brings with it problems for the hands-on professionals who have to put the changes into practice.
    
A major concern is that there is no one piece of software available that is a one-size-fits-all solution. This means that software developers have had a challenge to produce functionality to suit the varying needs of administration.
    
The LGPS incorporates an Internal Disputes Resolution Procedure and the fear is that some employers will not be aware of this. This procedure exists in order that, should an employee dispute any point relating to the pension scheme, there is a process to deal with it. The IDRP provides for concerns to be initially raised with a named individual at the employing authority and only if the matter cannot be resolved amicably at this local level will it then be escalated to the administering authority.
    
In the context of the “new look” scheme changes, it is therefore sensible for the employing organisation to write and publish its own policy, which sets out the rules for initial allocation to bands and the circumstances, under which these will subsequently be reviewed. This should serve as a defence to any dispute. This is where variations on a theme come into it; employer discretion is permitted and there will be different written policies for each employer.

Training
When considering a specialist area such as the education sector, core knowledge and skills need to be kept up to date as they underpin any additional specialist knowledge, such as administering the LGPS. The IPP provide a wide array of training courses for payroll professionals, from short day courses right through to masters level (MSc in Business and Payroll Management).
    
Training needs vary, however, what seems to be popular are the core basic knowledge courses. For example, covering gross to net calculations and general PAYE issues, statutory payments covering SMP, SAP, SPP and SPP, and the Additional Paternity Leave and Pay (expected due date April 2010).
    
One other area is that of keeping your legislative knowledge up to date. At the IPP we deliver legislative updates in spring and autumn. This involves the IPP Policy team travelling from one end of the country to the other in an attempt to provide information on what is imminent and in the pipeline to assist employers. These meetings prove to be extremely popular.
    
What seems to be the case is that whenever a cost cutting exercise is ongoing, the training budget seems to be the first area to be hit. This is of real concern. The payroll of any organisation is the largest cost to any business and mistakes by not complying with government policy and legislation can prove very costly indeed. On that basis one does wonder about that cost cutting logic.

Budget highlights
On 12 March, the Chancellor of the Exchequer delivered his budget speech. The following points are key issues that will affect you no matter what the industry sector:

• 40 per cent tax threshold confirmed as £36,000 and is to be implemented as of 18 May. All other rates and thresholds have already been announced and are in place from week one. New tax tables will be available on the HMRC post Budget CD-ROM or from the employer orderline/website. They should be brought into use for the first payday on or after 17 May 2008. Form P7X provides details of the statutory tax code uplifts.
• Company car tax for 2010/11 confirmed as the bands reducing by 5g/km so the emissions attracting the lowest charge of 15 per cent will be 130g/km. 
• Car fuel benefit, which this month rises to £16,900, will increase based on the Retail Prices Index each tax year starting in April 2009. 
• No changes will be made to Approved Mileage Allowance Payments for 2008/9.         
• Changes may be introduced if/when payroll benefits are introduced. The childcare voucher exemption remains at £55 per week/£243 per month for 2008/9.
• The ability to pay tax by credit card will be made available from autumn 2008.
• A single penalty regime for all returns and taxes administered by HMRC, and the move to penalties based on underlying behaviour, will be effective from 1 April 2009.
• Offsetting payments and liabilities for employers across all taxes will be introduced after the Finance Act 2008 Royal Assent.
  

For more information
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