Coronavirus contaminates the budget process and payrollers suffer
By Justine Riccomini, Head of Taxation (Scottish Taxes, Employment and ICAS Tax Community)
1 February 2021
Justine Riccomini explains why there is a real risk that payroll software may not be ready in time for the start of the new tax year in April 2021.
Payroll software businesses are joining forces to tell their customers and other stakeholders that the current timing of both the Scottish Budget on 28 January 2021 and the UK Budget on 3 March 2021 are not leaving enough time to allow them to prepare the software which payrollers will rely on from 6 April 2021. The Budget statements have been delayed due to the Coronavirus pandemic.
A very similar situation arose last year when payroll software houses had to announce that they were unable to release their software for the 2020/21 tax year because the Scottish Rate Resolution had not taken place in time for them to configure the amendments which affected the payers of Scottish Income Tax.
Consequently, the software could only be used from 11 May and had to be configured in such a way as to calculate the new Income Tax Personal Allowance, rates and bands back to 6 April 2020.
This is extremely frustrating for the payroll profession, whose members sit in accountancy firms, payroll bureau, in-house and as independents across the UK, and who have been recognized as key workers for their hard work and tenacity throughout the pandemic – keeping the nation paid.
The information which is missing affects many areas of employment taxation, such as Employment Allowance, CIS rates, Pensions, statutory payments, Income Tax rates and bands, Apprenticeship Levy, company car and other payrolled benefits in kind reporting…the list goes on.
As payroll teams prepare for the year-end from the end of January, the work needed to ensure everyone is paid is usually very intense during February and March. However, these tasks will probably need to be duplicated in May by those waiting for software updates.
It is hoped that the Autumn UK Budget and December Scottish Budget will resume in 2021 and restore some kind of order to the process.
If you wish to contribute to the debate
If you have any thoughts on the impact on payroll for your clients please let us know on tax@icas.com.