Auto-enrolment for small business owners Get set for your auto-enrolment staging date with FreeAgent
What is auto-enrolment?
Automatic enrolment for workplace pensions is a government initiative to help more people save for later life. In the past, many workers missed out on the benefit of a pension either because their employer did not offer one or because they failed to join their company's scheme. Under the new initiative, all employers that have employees other than directors without contracts of employment are required to enrol eligible employees into a workplace pension scheme before their given auto-enrolment staging date.
When does auto-enrolment start for small businesses?
The deadlines for auto-enrolment, known as staging dates, have been rolling out since 2012 to ensure employers of all sizes eventually take part. If your business hires between one and ten people it's likely that your staging date is fast approaching. Use the last two characters of your PAYE reference number to find your staging date in the table below:
|Last two characters in your PAYE reference number (what's this?)||Staging date|
|BZ||1 November 2015|
|02-04, C1-C9, D1-D9, CA-CZ or DA-DZ||1 January 2016|
|00, 05-07, E1-E9 or EA to EZ||1 February 2016|
|01, 08-11, F1-F9, G1-G9, FA-FZ or GA-GZ||1 March 2016|
|12-16, 3A-3Z, H1-H9 or HA-HZ||1 April 2016|
|I1-I9 or IA-IZ||1 May 2016|
|17-22, 4A-4Z, J1-J9 or JA-JZ||1 June 2016|
|23-29, 5A-5Z, K1-K9 or KA-KZ||1 July 2016|
|30-37, 6A-6Z, L1-L9 or LA-LZ||1 August 2016|
|N1-N9 or NA-NZ||1 September 2016|
|38-46, 7A-7Z, O1-O9 or OA-OZ||1 October 2016|
|47-57, 8A-8Z, Q1-Q9, R1-R9, S1-S9, T1-T9, QA-QZ, RA-RZ, SA-SZ or TA-TZ||1 November 2016|
|58-69, 9A-9Z, U1-U9, V1-V9, W1-W9, UA-UZ, VA-VZ or WA-WZ||1 January 2017|
|70-83, X1-X9, Y1-Y9, XA-XZ or YA-YZ||1 February 2017|
|P1-P9 or PA-PZ||1 March 2017|
|84-91, 93-99||1 April 2017|
|Fewer than 30 but not described above||1 April 2017|
Auto-enrolment staging dates for new employers
|Date PAYE income first payable||Staging date|
|1 April 2012 and 31 March 2013||1 May 2017|
|1 April 2013 and 31 March 2014||1 July 2017|
|1 April 2014 and 31 March 2015||1 August 2017|
|1 April 2015 and 31 December 2015||1 October 2017|
|1 January 2016 and 30 September 2016||1 November 2017|
|1 October 2016 and 30 June 2017||1 January 2018|
|1 July 2017 and 30 September 2017||1 February 2018|
If you feel your business needs more time to prepare there are a few postponement options available.
What's my PAYE reference number and where can I find it?
Your Pay As You Earn (PAYE) reference number, also known as your Employer Reference Number (ERN), is issued to you when you register with HMRC as an employer. You'll first receive note of it in your employer's welcome pack and later in correspondence with HMRC relating to PAYE including P45s, P60s and payslips. The number is made up from a three-digit HMRC office number followed by a reference number unique to your business.
Can I opt out?
As an employer you cannot opt out of auto-enrolment, opt out on your employees' behalf or actively encourage staff members to opt out. Your employees are free to opt out of the pension scheme, but only within a set amount of time (usually one month) after their automatic enrolment has been validated. For more information on opting out of auto-enrolment check out this detailed guide from the Pensions Regulator.
What are the minimum pension contributions for small businesses?
There is a minimum level of contribution that employers and/or employees have to pay into the workplace pension scheme. These are being increased gradually over time as shown in the table below. Minimum contributions can vary according to which workplace pension scheme you use but the minimum auto-enrolment contributions as set by the Pensions Regulator are rolling out as follows:
|Date||Employer's minimum contribution||Total minimum contribution (employer + employee)|
|Up to 30 September 2017||1%||2%|
|1 October 2017 to 30 September 2018||2%||5%|
|1 October 2018 onwards||3%||8%|
Check out this article from the Pensions Regulator for more detailed guidance on your contributions.
What happens if I don't comply?
You must comply with automatic enrolment for workplace pensions initiative by your staging date or the Pensions Regulator are likely to take enforcement action against you. Penalties for non-compliance range from an informal warning to a fine of up to £5,000!
We've got it covered
Auto-enrolment resources for small business owners
- Workplace pension employer contribution calculator
- AE Smart's auto-enrolment fact sheets
- Step-by-step guide to auto-enrolment