PAYE Processing

The menu option ‘Reports, PAYE’ is only visible if you subscribe to the Omni PAYE Module.

The scheme administrators should ensure that all necessary data is entered under ‘Members, Pensions’ and run the ‘Reports, Gross Pension’ functions to check the data before the PAYE is processed.

The Pension Payroll Processing (Payroll Schedule) uses all of the data from that screen to produce a list of the gross amount of all pensions due in a month. This schedule can then be passed to the person responsible for the PAYE, who then ensures that all the data described below is correct before processing the PAYE. This ensures that the correct amounts net of tax are paid to the correct bank accounts.

PAYE Functions

Once all of the details have been entered, you should follow the PAYE functions using the ‘Reports, PAYE’ option.

Global or Individual

If Omni is set up to process all pensioners globally then the reports will cover all pensioners (even if they are not being paid through your payroll).

If you operate several payrolls, you can choose to process all of them together or any payroll individually.

If Omni is set up to process each pensioner individually, the reports just show the pensioners in the currently selected scheme.

Split Net Payments and Tax

The Omni PAYE processing can operate on 2 different methods:

1. the ‘split’ method - the scheme account pays the net pension from the scheme bank account and then the tax separately, directly from the scheme bank account.

2. the ‘gross’ method – the scheme bank account pays the gross pension to a central account that pays the net pay to the member and tax.

You need to choose the method when you subscribe to the Omni payroll module and Omniphi Systems will set the correct parameters. If you wish to switch methods, contact Omniphi Systems.

Imported Bank Transactions

There are 2 different options for the types of transaction that can be created:

a) ‘Posted and Imported’ means that records will be created as posted bank transactions which are automatically imported to the Benefits Payments tab on the Member’s Pension screen

b) ‘New bank transactions’ means that bank transactions will be created in the ‘New’ tab on the Bank Transactions screen. They will then have to be posted and imported manually.

In either case, transactions for the PAYE tax to be paid in the future are created as expected transactions, which can be posted and imported in bulk when they are paid.

The option that you want is selected on the Payroll tab on the ‘System, Master User Options, Settings’ screen.

HMRC tax code update

The tax codes for pensioners can be obtained electronically from HMRC’s database each month. Log onto the HMRC website and find the tax codes for everyone under your PAYE reference. Save the data file to a convenient place. Then click on the ‘HMRC tax code update’ button and browse to the file that you have just saved. Omni will then take all of the tax codes and save them to the Omni records. In this way all tax code changes are updated in one operation and all other codes are checked. If you have a member with two records .i.e. a pensioner in their own right and a flexi-access dependant’s fund the tax code for each will need to be checked manually.

If a pensioner is resident in Scotland, HMRC will issue a tax code that reflects this, starting with ‘S’ e.g. S1185L. Omni will recognise this and use the Scottish rates and bands to calculate the PAYE due. There is no need to specifically tell Omni that the member is resident in Scotland. Similarly Welsh residents will be issued with a tax code beginning with ‘C’. This process is completely separate from the Nationality stored for claiming tax relief on contributions.

Payroll Dates

When running some reports, the Pay Day will be displayed and can be edited – this is the date that the net payment will be credited to the member’s personal bank account.

The ‘Date Pension Leaves Account’ can also be edited – this will be used for the date of the bank transaction if the ‘Day Pension Leaves Account’ on the ‘Members, Pensions’ screen is blank.

PAYE Report

The PAYE Report produces a schedule of all pensioners showing the gross pension, tax due and net payment. No information is stored and the data on the report should be checked thoroughly before proceeding further. Tax free beneficiaries are included and are identified separately to HMRC when the RTI submission is made.

Omni will check whether the payroll has already been run for any members for that tax month and, if so, give you the option to cancel.

Omni will look at the PAYE records for all previous months in the current tax year. It will find the tax paid in the last month that the member was paid, unless you are processing the PAYE for the first month of the tax year or the member’s pension has just started. If the tax for the current month differs from the previous month’s tax by more than £10, the difference will be shown in the ‘Tax Change’ column. Each change should be investigated to ensure it is expected and reasonable.

Reports for Bank

There are 9 different reports that can be produced relating to the instructions to be given to the bank to make payments:

1. The ‘Details of receiving accounts’ provides information that will have already been provided to the bank as a standing instruction for the members’ personal bank accounts.

The ‘Date Last Changed’ column will show the date that the details of the member’s bank account were last changed, if that change was within the previous frequency period plus 15 days i.e. for a pension paid monthly that column is blank if there were no changes made for the personal bank details in the previous 45 days – for a quarterly pension the period is the previous 105 days.

The report only shows members where there is an amount to pay. If Omni could not calculate the tax then the member will not be included in the BACS listing. Members without receiving bank details are still included.

2. The ‘Bank Instructions – Net Pay’ report provides the bank with the amount of net pay and the details of the bank accounts that the net pay will come from. It is assumed that the bank will already have standing instructions for the account to which the payments will be made.

3. The ‘Bank Instructions – Tax’ report provides the bank with the amount of tax and the details of the bank accounts that the tax will come from. It is assumed that the bank will be given a cover sheet with details of the HMRC bank account and reference for the payment(s). Omni does not recalculate the tax but retrieves saved details for the selected payroll month. The tax includes the payroll records produced in the bulk update and also adjustments and manual payments. The report is not based on the expected bank transactions and it does not know whether any tax has previously been paid for any member. If tax is paid for different members at different times, you will need to monitor the payments to ensure the correct amount is paid.

4. CAPB Net Pay – produces a sheet with details of the scheme account paying the pension and the member’s receiving account, with the amount of net pay, in the format compatible with Cater Allen scanning the details electronically, avoiding retyping the transactions.

5. CAPB tax – similarly, details for Cater Allen to pay the tax with electronic scanning rather than retyping transactions. The details of HMRC’s tax collection account are taken from ‘System, Master User Options, Settings screen, Payroll tab’.

6. The ‘CSV file full’ option produces a electronic data file for amounts to be paid, to be used where the bank will accept computer files rather than paper instructions. It also produces the ‘Full Internal Report’ on which the csv data is based.

7. Bank of Scotland csv – a csv file in the format required by Bank of Scotland.

8. Metro csv - Net Pay – produces a csv file in the format required by Metro Bank with details of the net pay

9. Metro csv – Tax - produces a csv file in the format required by Metro Bank with details of the PAYE. The details of HMRC’s tax collection account are taken from ‘System, Master User Options, Settings screen, Payroll tab’.

Final PAYE Report and Process Payments.

Bank transactions, benefit payments and the PAYE records are stored. In addition, the PAYE Report is produced again, to provide a permanent record of the transactions actually made.

Bank transactions – the new bank transaction is created

PAYE Records - Omni will store the Tax Month End, Gross Pension, Tax due and the tax code used in that particular month in the ‘Members, Payroll’ screen.

If the ‘Posted and Imported’ option is selected using Imported Bank Transactions above:

Bank transactions – the new transaction will be posted and imported.

Benefit payments – the records in the ‘Benefit Payments’ grid on the ‘Members, Pension’ screen are created.

If the ‘Gross’ method is used, they will be the total gross amount paid to the central account.

If the ‘Split’ method is used, the formal transactions created will relate to the net payment to the member. Omni will also create expected bank transactions for the amount of the tax that will be due.

Arrangements – when storing the pension payments, Omni will calculate the part of the pension relating to different arrangements (pre 2006 and TiDs) and any protected rights part using the split percentages stored at the date of the transaction. This is important for the expected transactions for the PAYE – the split percentages may have changed by the time that the tax is actually paid and so these amounts are stored as part of the expected transaction when it is created.

Tax rebates – if a member is due a tax rebate, the net pay can exceed the gross pay. For example, a member may have gross pay of £1,000 but with a tax rebate of £100, the net pay will be £1,100. If the split method is used, Omni assumes that the scheme will pay the full amount of the net pay (£1,100) and Omni will create a pension payment for £1,100. It will also create an expected transaction for the tax that the scheme is due to receive from HMRC. In the example the expected transaction for tax will be expenditure (as a pension payment) of £-100 (the negative amount shows that it is a refund). When the pension transactions are totalled for applying the limits the higher net pay will be reduced by the negative tax pension payment to obtain the correct amount.

In month 12 of the tax year, if a rebate of tax is required select the month 12 rebate on the Member’s Pension screen. Omni will check to see whether a tax rebate is due, even if there is no gross pay due for that month and even if the pension has been suspended. If a rebate is due it will include that member in the listings and the processing.

Produce Payslips

Once the PAYE has been processed, the payslips can be produced. A screen will ask for the Pay Day and the date to be shown on the payslips. It will also allow you to select groups of members (Select Payroll below). It then produces a document in Word with a separate payslip for each member.

There is a setting (System, Master User Options, Settings) that allows you to send payslip data to Excel which then gives more control over the production of Word documents.

Reverse PAYE Records

It is recommended that you carry out extensive checks before the PAYE records are processed. However, if there is a systematic error in the payroll records that have just been created, the processing can be reversed. This will reverse bank transactions, benefit payments and PAYE records for all members across all payrolls/departments. You can’t reverse one department in isolation. It is intended that this option is used very carefully and only shortly after the PAYE and Payroll records were processed – if any data has been amended in between running and reversing, there may be unexpected consequences.

PAYE v Bank Reconciliation

The PAYE records of pensions due to be paid (on which tax has been calculated) and the bank transactions for pension actually paid should agree. When the transactions are processed using Omni, the PAYE month is stored with each pension payment bank transaction and so Omni can uniquely identify the payments. Discrepancies can arise, perhaps if payments are added manually or amended after they were created. The reconciliation report compares the 2 sets of records and lists all discrepancies i.e. where the PAYE records do not agree with the bank transactions.

Select Payroll

The reports can be run across all payrolls or for one or more selected payrolls. Once you have selected a Payroll, click the ‘Add’ button to add it to the list.

Pay/Reverse Tax

The Pay Tax and Reverse Tax buttons are only visible if your database is set up to use ‘Split’ method. When you pay the net pay to the member and process the payments, the tax payable will be stored as expected bank transactions. When the tax is due (14 days after the end of the tax month), you will instruct the banks to pay the tax.

You will be prompted to select the Pay Day and the date the tax is being paid. Omni will then find the previously saved expected bank transactions and convert them to actual bank transactions. The payments will be imported into the Members, Pensions screen (Benefit Payments tab).

If you Reverse the Tax then the records in the Benefits Payments grid on the ‘Members, Pensions’ screen will be deleted and the bank transactions will be converted back to expected transactions, preserving any previous data on the split of the payment between arrangements.