The world of education payroll can be complex. For National Payroll Week, our payroll experts have answered your frequently asked questions to make it less so!
There is a lot to consider when it comes to processing and administrating your school, academy, or trust’s payroll. From processing maternity and paternity pay to tax code changes – we address and provide answers to some of our clients’ most frequently asked payroll questions.1. What is needed to process Paternity Leave and Pay?
Paternity Leave cannot start before the birth and it must end within 56 days of the birth (or due date if the baby is born early).
To process Paternity Leave, a copy of the MATB1 form for the due date of the baby is required, alongside information on the date the baby was born. This is essential to processing payroll accurately.2. How is Maternity Pay processed? One of our employee's started Maternity Leave on 01/09/2021, shouldn’t this just be 1 month of pay?
Statutory Maternity Pay (SMP) is paid for up to 39 weeks. The employee can get 90% of their average weekly earnings (before tax) for the first 6 weeks and £151.97 or 90% of the employee’s weekly earnings (whichever is lower) for the next 33 weeks.
SMP is based on the employee’s qualified earnings - this is the two pay periods within the 11 weeks prior to the 15th week before the due date. The employee may also be entitled to Occupational Maternity Pay (OMP) which will be stated in their school’s policy.
Maternity Pay is paid in whole weeks only. Since the employee started maternity leave on 01/09/2021, they will be paid 4 weeks of SMP from 01/09/2021 to 28/09/2021. A maternity schedule will be produced for the employee in question to support their maternity pay and leave period.3. I have an employee whose tax code has changed. Do you know why?
There are many reasons for a tax code update (P6 notification). Here are some of the reasons:
- The employee could have paid too much or too little tax in the previous year.
- The employee could have extra benefits that are being claimed.
- HMRC could be holding inaccurate information about the employee’s earnings.
If the employee believes the new code is incorrect, they can call HRMC directly on 0300 200 3300 and request for this to be amended. This is the quickest way to find out the reason for the change. Alternatively, they can log into their online Tax Account and find out more information on the change in tax code.4. I’m completing an LGPS leaver form for an employee, what is APP?
APP is Assumed Pensionable Pay. When an employee’s pay is reduced for either sickness or family leave, the employer's pension contribution should continue to be calculated on their earnings prior to the reduction in pay.
For example, if an employee’s pensionable pay is normally £1000 but in one month, they only receive £800:
- The employee contribution is £800 (actual pensionable pay received).
- The employers % will be based on their usual pay of £1000 (assumed pensionable pay).
This only needs to be completed on the leaver form if the employee’s pay has been reduced for sickness and family leave (APP does not apply to unpaid leave).5. One of our employee’s has finished paying off their student loan. What do we need to do to stop this from being deducted through the payroll?
HMRC will notify the payroll department by producing a student loan stop notice (SL2). Once applied, this will end the student loan deduction. Until the SL2 is received from the department, the deduction will continue. If at any point the employee has overpaid, this can be refunded via the payroll.6. How can an employee opt-in and opt-out of the pension scheme?
If the employee wants to opt-in to the pension scheme, they will need to take the following steps:
- For Teachers – opt-in via their MPO (My Pensions Online) portal – a notification is then sent to the payroll team.
- For Support staff – An LGPS New Members Notification form is required.
It is essential to keep the payroll team informed of employees’ pension statuses to prevent any over or underpayment discrepancies.
To opt-out - if the employee has been enrolled in the Teachers’ Pension Scheme, they will need to log into ‘My Pension Online’ and opt-out themselves. If they are in the LGPS Scheme, then the employee will need to complete an ‘opt-out form’. This form needs to be sent to the payroll team and the Local Government for this to be correctly processed.7. Why is one of my new starters on a 0T code?
0T tax codes are used when setting up a new starter in the absence of a P45 or a New Starter Checklist.
An 0T tax code notifies HMRC that the employee in question has no personal allowance and will pay 20% on all earnings. Once a new starter checklist or P45 are provided, the code can be amended accordingly. In most instances, HMRC will issue a P6 notification to your provider after the first payroll submission to HMRC, which will then update the tax code and refund any monies owed.8. Please can you send another P45? One of our leavers lost the original form.
Unfortunately, due to HMRC legislation, duplicate P45’s cannot be issued. However, some payroll service providers, like SAAF, publish P45’s to their self-service portal (where payslips can be found). SAAF’s clients and their employees have access to the portal 6 months after leaving the school, so it is worth contacting your payroll provider or team for more information on accessing P45’s.9. One of our employee’s has received a letter stating they owe HMRC Tax. What do we do?
In the first instance, the employee should always contact HMRC for further information - HMRC can advise the reason for the letter, and they will provide the YTD figures they hold for the relevant year.
These figures should match the employee's March Payslip and their P60. If the figures are incorrect, they can update HMRC accordingly with the correct figures to prevent the issue from going further.
If there is another reason, this needs to be resolved by the employer. They should take as much information down as possible and pass this to the payroll department who can assist in getting this rectified.10. How can our employees get their automatic enrolment pension deductions refunded?
If employees have opted out within 3 months of being enrolled, the refund will be automatically refunded through the payroll. If they opt-out after 3 months of being enrolled, they will need to go to the scheme provider directly to request a refund.