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Payroll Ad L3 PRC4
Payroll administrator level 3 mock test
| Question | Answer |
|---|---|
| Employements Rights Act Year | 1996 One of most important acts in defining responsiblities of payroll dept. |
| Summary of ERA | Confers legal status on contract of employment - document which defines Rate of pay and Employee statutory rights eg. notice of dismissal and redundancy |
| What does the ERA specify a worker is entitled to? | An itemised pay statement Commonly known as payslip |
| When must a payslip be given to an employee | At or before the time they are paid |
| What must a payslip contain? | Gross amount of salary/wages NET amount of salary/wages Number of hours worked (if payed with reference to time) Amounts of any deductions Statutory deductions (TAX, NI, SL, AOE) Statutory payments ( Statutory MAT pay) |
| ITEPA Income Tax (earnings and pensions) Act Year | 2003 |
| ITEPA summary | Taxed on income Main statutory instrument governing taxation of income and pensions in the UK |
| National insurance summary | Pay NI on earnings |
| National insurance legislation | Social security contributions and benefits act 1992 Social security administration Act 1992 Social security (contributions) regulations 2001 Social security (categorisation of earners) regulations 1978 |
| NI contributions act 2014 | Employment allowance |
| NI contributions act 2015 | Apprentices under 25 |
| Which act made it illegal to pay salary in vouchers or tokens | The Truck Act 1831 Right to be payed in money |
| The apportionment act | 1870 |
| Which act ensures employers calculate salary in a fair and consistent way as by the contract of employment | The apportionment act 1870 |
| Which act states how pay should be calculated for a starter who has started part way through a pay period | The apportionment act 1870 |
| The national minimum wage act Year | 1998 |
| What act states employers must pay a national minimum wage set by the government | The national minimum wage act 1998 |
| Why was the national minimum wage act amended and what year | Amended in 2016, national living wage |
| What will happen if an employer does not pay minimum wage | They will be penalised |
| The working time regulations act Year | 1998 |
| Why was the working time regulations act amended and in what year | Amended in April 2020, holiday pay |
| Which act covers working time directive and implements European legislation | Working time regulations act 1998 |
| Which act sets out the principals, rights and obligations when handling personal data | |
| General data protection regulation GDPR | |
| What act sets out how GDPR applies in the UK | The data protection act 2018 |
| The data protection act Year | 2018 |
| Pensions act Year | 2008 |
| Which act introduced automatic enrolment | The pensions act 2008 |
| Who is responsible for employers compliance in automatic enrolment | The pensions regulator |
| What happens if an employer fails to comply/ false filing of automatic enrolment | Max penalty issued |
| How is law set in the UK | Law in the UK is set either by primary legislation (Act of parliament) Or secondary legislation ( changes existing acts of parliament) Or by case law |
| Name a case law example | Alabaster V Barclays Bank |
| How is an annual tax bill calculated | On an employees annual earnings |
| What is the Pay As You Earn scheme (PAYE) | Tax is taken through the payroll system and paid to HMRC by the employer |
| What year was income tax introduced | 1944 |
| What is tax used for | Education and welfare, public projects and the NHS |
| How is income tax calculated | On an employees taxable pay |
| What is taxable pay | Gross pay minus any tax free elements |
| Name some tax free elements | Employees pension contributions (NET pay arrangements only), charitable contributions such as GAYE, cycle 2 work contributions |
| What is a personal allowance | A tax free allowance |
| What is the weekly income tax allowance (2020/21) | £241 |
| What is the monthly income tax allowance (2020/21) | £1042 |
| What is the annual income tax allowance (2020/21) | £12,500 |
| What are the rates and bands for earnings above personal allowance (basic rate) 2020/21 | £0 - £37,500 at 20% |
| What are the rates and bands for earnings above personal allowance (higher rate) 2020/21 | £37,500 - £150,000 at 40% |
| What are the rates and bands for earnings above personal allowance (additional rate) 2020/21 | Over £150,000 at 45% |
| How do we know when to use the Scottish income tax rates? | There will be an S at the beginning of their tax code |
| What are the Scottish bands and rates for earnings above personal allowance (starter rate) 2020/21 | £12,500 - £14,585 at 19% |
| What are the Scottish bands and rates for earnings above personal allowance (basic rate) 2020/21 | £14,586 - £25,158 at 20% |
| What are the Scottish bands and rates for earnings above personal allowance (intermediate rate) 2020/21 | £25,159 - £43,430 at 21% |
| What are the Scottish bands and rates for earnings above personal allowance (higher rate) 2020/21 | £43,431 - £150,000 at 41% |
| What are the Scottish bands and rates for earnings above personal allowance (top rate) 2020/21 | Over £150,000 at 46% |
| What is national insurance | Deduction taken from an employees earnings |
| When was national insurance introduced | 1911 |
| Why was national insurance introduced | To provide a government safety net for workers |
| What does national insurance contribute towards | A national fund for, the NHS, unemployment benefits, state pension, sickness and disability allowance |
| What is a national insurance number | A unique number given at the age of 16 to record TAX and NI contributions |
| Where can a national insurance number be seen | On P60s, payslip and letters regarding benefits, TAX and pension |
| What is the weekly NIC limit and threshold CLASS 1 LEL 2020/21 | £120 |
| What is the monthly NIC limit and threshold CLASS 1 LEL 2020/21 | £520 |
| What is the annual NIC limit and threshold CLASS 1 LEL 2020/21 | £6,240 |
| What is the weekly NIC limit and threshold for primary and secondary 2020/21 | Primary = £183 Secondary = £169 |
| What is the monthly NIC limit and threshold for primary and secondary 2020/21 | Primary = £792 Secondary = £732 |
| What is the annual NIC limit and threshold for primary and secondary 2020/21 | Primary = £9,500 Secondary = £8788 |
| What is the weekly NIC limit and threshold UEL 2020/21 | £962 |
| What is the weekly NIC limit and threshold UEL 2020/21 | £4,167 |
| What is the annual NIC limit and threshold UEL 2020/21 | £50,000 |
| What is the NIC rate for ees earnings to personal threshold CLASS 1 2020/21 | 0% |
| What is the NIC rate for ees earnings between PT and UEL 2020/21 | 12.00% |
| What is the NIC rate for ees earnings above UEL 2020/21 | 2.00% |
| What is the NIC rate for married women’s reduced rate 2020/21 | 5.85% |
| What is the NIC rate for the deferred rate 2020/21 | 2.00% |
| What are the NIC rates for ers on earnings to secondary threshold 2020/21 | 0% |
| What are the NIC rates for ers on earnings above ST 2020/21 | 13.80% |
| What are the NIC rates for ers on under 21 earnings between ST and UST | 0% |
| What are the NIC rates for ers on apprentice earnings between ST and AUST | 0% |
| How do we calculate NI”able pay | NI’able pay is calculated by the NI rate - it depends on the NI category |
| How do we calculate employers NI | This is paid on a percentage of the employees NI’able pay |
| What are company directors classed as for purposes of NI | Employees |
| How often is a company directors NI calculated | On an annual basis |
| What is included in a company directors NI | Can include salary and bonuses over £9,500 |
| What are the directors NI Rates | Over £9,500 at 12% Over £50,000 at 2% |
| What must still be made on a directors NIC | Employers secondary contributions |
| What should be reported when reporting directors NIC contributions | AN should be reported on the FPS to indicate the Annual Method is being processed |
| What other method can be used to process directors NIC | The Alternative Method - to process NIC on a standard basis |
| What must happen when a director uses the Alternative method | Recalculation must take place at the year end using the Annual Method - AL should be reported on the FPS indicating the alternative method is being used |
| Statutory sick pay SSP | The minimum amount of sick pay you must pay workers whilst off sick |
| Who pays SSP | All employers are liable to SSP to their employees |
| What is the SSP Rate | £95.85 per week for up to 28 weeks |
| When does SSP start | First 3 days (waiting days) no SSP due 4th day (PIW) period of incapacity for work SSP due Paid on qualifying day - day you are expected to work |
| Linking period | 8 weeks |
| How many weeks of entitlement is per period of sickness | 28 weeks |
| What time frame between last SSP is linked | Less than 8 weeks |
| What time frame between last SSP is not linked | More than 8 weeks |
| How long can SSP continue | Maximum of 3 years |
| When does SSP stop | When the employee returns to work ( prior to 28 weeks) 28 weeks entitlement has finished Employee starts receiving MAT pay or allowance |
| When would we use a SSP1 Form | SSP 28 weeks exhausted and employee is still off sick Employee does not qualify Claim for employment and support allowance instead |
| Qualifying rules To qualify for SSP an employee must | Have an employment contract Earn at least £120 a week Be sick for at least 4 days in a row Give the correct notice as set in contract Provide fit note after 7 days |
| When to pay SSP | Employees usual pay date TAX and NI deductions |
| Statutory maternity pay Leave entitlement | 52 weeks |
| Compulsory maternity leave | 2 weeks after the birth Or 4 weeks for factory workers |
| Ordinary maternity leave | 26 weeks (inclusive of company leave) |
| Additional maternity leave | 26 weeks |
| What length of service must an employee have to take mat leave | Leave can be taken regardless of their length of service with an employer |
| MAT leave notice | 15 weeks before the baby is due |
| 15 weeks before the baby is due an employee must | Inform employer of pregnancy The expected week of child birth (MATB1) |
| 11 weeks before the baby is due an employee must | Advise the intended date of maternity leave |
| What will happen if the employee is off with pregnancy related illness | Maternity leave will automatically start 4 weeks before baby’s due date |
| How many weeks of SMP are employees entitled to | 39 weeks pay |
| First 6 weeks of SMP | 90% of average earnings |
| Remaining 33 weeks of SMP | 90% of average earnings or SMP rate (whichever is lower) |
| where would I find the SMP pay tables | HMRC provide tables to help us work out the dates |
| SMP Rates 20/21 | £151.20 per week Payable for 33 weeks or 90% of average weekly earnings (whichever is lower) |
| Eligibility for SMP | Must have been in your employment for 26 weeks continuously Have average gross weekly earnings of at least £120 |
| When would we use a SMP1 form | Non-eligible employees Allows employee to claim maternity allowance |
| Statutory paternity leave and pay SPP Statutory paternity leave | 1 or 2 weeks leave |
| When must paternity leave be taken | After the birth of the baby - within 56 days of the birth (or due date of the baby is early) |
| How must paternity leave be taken | In whole and consecutive weeks |
| Eligibility for SPP and leave Employee must be: | The child’s biological father Child’s adopter or intended parent Child’s mothers husband or partner (including same sex parents) |
| Eligibility for SPP and leave The employee must have been employed for 26 weeks continuously by: | The end of the 15th week before baby’s due date The end of the week that they’ve told they’re a match (adoption) |
| Eligibility for SPP And leave Employee must have an average gross weekly earnings of | At least £120 |
| SPP Rate | £151.20 OR Pay 90% of AWE |
| Notice period of SPP 15 weeks before the baby is due: | Baby’s due date Paternity leave start date How much leave they want Can be general dates as babies can be early/late |
| SPP Adoption notice period for pay and leave | Pay - 28 days before the employee wants paternity pay leave - Within 7 days of the employee being told they’re a match |
| when would we use a SPP1 form | Sent out for non eligible employees |
| Statutory adoption leave and pay SAP Leave allowance | Same as maternity - 52 weeks |
| Are both the partners entitled to the leave allowance SAP | No, only one person is entitled to the leave, the other would take paternity |
| When can SAP Leave start | 14 days before the placement date When an employee has matched with a child Within 28 days of the child arriving in the UK The day the child is born or day after |
| What is the SAP Rate | £151.20 for 39 weeks |
| Eligibility for SAP | Same as maternity leave Matching cert used in this instance rather than MATB1 |
| What are exceptions within SAP | A private adoption, adopting a stepchild or family member and if employee becomes guardian |
| Shared parental leave and pay SHPP and SPL Entitlement | Entitled to up to 50 weeks leave and up to 37 weeks pay shared between the parents |
| What do the parents need if they decide to take the SPL in blocks | A complete plan which must be accepted by both employers |
| SHPP Pay entitlement | AWE must be £120 per week or above Been continuously employed for at least 26 weeks Staying with the same employer whilst claiming SPL |
| SHPP Rate | £151.20 per week or 90% of AWE whichever is lower |
| Notice period for SPL three notices: | 8 weeks before start date of first absence One block of leave, needs to be agreed Two or more blocks of leave, need to be agreed |
| What happens if the blocks of SPL are not agreed | Employee can withdraw notice Employee can choose a date to take leave in one block |
| Statutory parental bereavement leave and pay SPBP Entitlement | Employees are entitled to SPBP and leave if they have lost a child under the age of 18 Or have had a still birth after 24 weeks of pregnancy |
| SPBP and leave entitlement dates | Lost a Child under 18 or have had a still birth after 24 weeks of pregnancy - Both must of happened on or after the 06/04/2020 |
| How long can an employee take for SPBP leave | Employee can take 2 weeks leave for each child death |
| How can SPBP Leave be taken | The weeks can be taken separately, together or 1 week can be taken |
| SPBP Rate | £151.20 per week |
| To be entitled to SPBP an employee must be employed: | 26 weeks prior to the relevant week and earn AWE of £120 per week |
| Who does bereavement pay apply to | Adoptive parents Surrogates Foster parents Individuals caring for a child continuously for a period of 4 weeks |
| What information is required for bereavement pay | Employees name, date of child’s death, declaration that they meet the conditions of eligibility |
| When must an employee give written notice for bereavement pay | Within 28 days, beginning with the first day of the week in which SPBP of £151.20 is being claimed |
| Optional Renumeration Arrangement OpRA and Salary Sacrifice What is salary sacrifice | Flexible benefits Give up salary in exchange for a benefit |
| Why would someone do salary sacrifice | TAX and NI savings for employee and employer |
| Reporting Sal Sac and OpRA | Online reporting for P11D form |
| What does the P11D form include | Includes the cash equivalent cost of benefit given |
| What is the P11Db | Declaration of benefits and expenses and class 1A NIC |
| What is the deadline for P11Ds and P11Dbs | 6th July each year |
| What is Construction industry scheme CIS | Statutory tax scheme set up by the government where contractors deduct money from a subcontractor to pay HMRC liabilities |
| What are the CIS deductions | Advance payments for subcontractors’ TAX and NI liability |
| What is a contractor | A business who pays subcontractors for construction work |
| What is a subcontractor | A business who carry out construction work for the contractor |
| What work is covered by CIS | Permanent and temporary building and structures Civil engineering work such as roads and bridges |
| For purposes of CIS, construction work includes | Preparing the site Demolition and dismantling Building work Alterations, repairs, decorating Installing systems for heating, lighting, power, water and ventilation Cleaning the inside of buildings after construction work |
| Exemptions to CIS | Architecture and surveying Scaffolding hire ( no labour) Carpet fitting Delivering materials Running a canteen on site/ site facilities |
| Court orders AEO Attachment of earnings order | A court issues an AEO on an employee, this will come straight to the employer to notify them that the deduction must be made from the employee |
| What does an AEO tell you | How much the employee owes If it’s priority or non-priority order How much to deduct from wages (normal deduction rate) The minimum amount they must take home (protected earnings rate) How often the payments must be made |
| Priority order | Issued for unpaid maintenance or fines |
| Non priority order | Usually a debt from the county court judgement |
| What can the employer ask payroll to do for AEO | To deduct an extra £1 for admin costs as long as it doesn’t breach NMW |
| What is a court order called in Scotland | Earnings arrestment order / wage arrestment |
| Gender pay gap | The difference in the average hourly wage of all men and women across a work force |
| When would a gender pay gap usually be bigger | If women do more of the less well-paid jobs within an organisation than men |
| Who must publish gender pay gap data | Employers with more than 250 employees |
| How often must employers publish gender pay gap data | Every year within 12 months of the relevant snapshot date |
| When is the Snapshot date For listed public sector employers | 31st March each year |
| What is the deadline for reporting GPG ( public sectors) | 30th March each year |
| When is the snapshot date for private and voluntary sector employers | 5th April each year |
| What data must be published for the GPG 7 pieces of data: | Mean gender pay gap Median gender pay gap Mean bonus gender pay gap Median bonus gender pay gap Proportions of men in organisation receiving bonus Proportion of women in organisation receiving bonus Proportion of men and women in each pay band |
Created by:
Catherinee