Steve Cook, independent financial adviser St Albans, Hertfordshire
Steve Cook, IFA St Albans - Auto enrolment contribution changes for 2017/18
Friday 12 May, 2017
Steve Cook, Independent Financial Adviser St Albans - Auto enrolment contribution changes for 2017/18 tax year.
For the 2017/18 tax year the following contribution changes for auto enrolment have been announced in respect of auto enrolment schemes that have contributions based on qualifying earnings. Qualifying earnings is the name that relates to the band of earnings that you can use to calculate auto enrolment contributions and for 2017/18 tax year this is between £5,876 and £45,000. These figures will be reviewed annually by the government.
Steve Cook, Independent Financial Adviser St Albans said: 'Remember that qualifying earnings include not only a worker’s salary or wages but overtime, bonuses, commission, statutory sick pay, adoption pay, paternity or maternity and holiday pay. If an eligible employee earns between £5,867 and £45,000 you will contribute a percentage of their gross annual earnings. As an example if an employee earns £30,000 their qualifying earnings would be £24,124. For the 2017/18 tax year qualifying earnings cannot be more than £39,124 which is £45,000 less £5,876. As contributions are made at every pay day you will need to work out qualifying earnings every pay day on a pro rata basis. Below are figures that show the upper and lower levels of qualifying earnings for some common pay periods. For more information about making sure contributions meet the legal minimums please visit The Pensions Regulator website.'
| Pay period | Lower level of qualifying earnings | Upper level of qualifying earnings |
| weekly and tax weekly | £113 | £866 |
| Fortnightly | £226 | £1,731 |
| Four-weekly | £452 | £3,462 |
| Monthly and tax monthly | £490 | £3,750 |
If qualifying earnings are used to calculate auto enrolment contributions the minimum contribution rates are shown below. The legal minimum contribution rates will vary depending on what part of a member’s earnings you use to calculate contributions.
|
Date |
Minimum contributions (as a percentage of worker's qualifying earnings) |
| Staging Date to 5th April 2018 | Minimum contribution 2 per cent. The employer must pay at least one per cent of this |
| 6 April 2018 to 5 April 2019 | Minimum contribution: 5 per cent. The employer must pay at least 2 per cent of this. |
| 6 April 2019 onwards | Minimum contribution 8 per cent. The employer must pay at least 3 per cent of this. |
Please note: The Financial Conduct Authority does not regulate some elements of auto-enrolment.
