Level III Diploma in Payroll Management

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Syllabus Information

Type of Examination: Assessment at home (non-timed)

Prior Knowledge:

No prior bookkeeping knowledge is assumed but candidates must have basic numeracy skills.

Prerequisites:

Candidates must hold valid student registration or membership

Overview:

This qualification covers the theoretical knowledge and demonstration of the use of various tables and publications issued by HMRC and the demonstration of how to carry out computerised handling of payroll related matters. Students must be able to demonstrate their ability to understand and carry out processing of the areas of the syllabus.

Syllabus Detail:

Demonstrate knowledge and understanding of the theory of payroll

Demonstrate a basic understanding of the law relating to payroll, discrimination, employment status, data protection and confidentiality.
Understand and explain the legislation for PAYE and National Insurance Contributions (NICs)
Understand and explain the requirements of the Working Time Directive
Demonstrate an understanding of the Statutory Minimum Wage
Demonstrate an awareness of the legislation concerning the provision of a pension scheme and the different types of pension schemes together with the effect they may have on PAYE and NI deductions
Demonstrate understanding of the schedule of submissions to HMRC under the "Real Time Information" (RTI) scheme
Understand how a business may receive recompense for statutory payments including the effect of Small Employer's Relief and when this may be applied
Understand what information must be submitted to HMRC and the relevant deadlines that apply

Demonstrate knowledge and understanding of, and be able to calculate, the various payments that can make up an employee's gross Pay

Calculate the correct gross pay for each pay period for employees who are paid an annual salary, weekly wage, hourly pay, overtime, piecework and bonuses including statutory payments when appropriate
Understand and explain statutory payments of sickness, maternity, paternity and adoption pay
Understand the procedures to use when an employee is paid in advance for a period to be taken as paid holiday

Show knowledge and understanding of, and be able to calculate through the use of tables the amount of National Insurance Contributions that will be deducted from gross pay

Understand and explain the difference between contracted in and contracted out NI contributions
Use appropriate tables to determine the NI contributions for a gross pay figure
Using the current legislation, calculate the NI contributions
Be able to correctly calculate the NICs for an employee being paid for periods (such as holidays) in advance

Show knowledge and understanding of the concept of PAYE, together with the use of tax codes to correctly calculate the amount of PAYE to be deducted in a given period

Understand how tax codes are calculated and applied
Given a tax code to be applied, be able to calculate the amount of free pay that an employee may earn in any given period
Determine the amount of pay that is taxable for an employee with a given tax code
Determine the correct amount of PAYE to be deducted for a given period
Calculate the amount of PAYE to be deducted when an employee is being paid in advance
Understand how to deal with notifications of change in tax code issued by HMRC (Forms P6 and P9)

Show knowledge and understanding of other statutory deductions that can be applied to an employee's pay

Demonstrate understanding of the process used to repay student loans
Determine the correct deduction towards repayment of a student loan
Understand when and how an attachment of earnings may be used

Directors

Demonstrate understanding of the requirement for directors NI deductions to be treated differently from ordinary employees
Correctly calculate the NI deductions for directors using the "non Cumulative" ("Alternative" or "Table method") and the "Cumulative Director method"

Benefits in Kind (BIK)

Understand the concept of BIK and the impact it has on an employee's pay and their employer's costs
Calculate the appropriate costs and deductions when an employee is provided with the following benefits by their employer: company car, private fuel, loan, private health insurance, other common basic benefits assuming all required details are provided
Understand how to complete forms P11D, P11D(b) and P9D with details relating to the above benefits and the deadlines by which they must be submitted

Construction Industry Scheme

Understand and explain the basic principles behind the Construction Industry Scheme (CIS).
Understand the duties of a contractor to verify sub-contractors
Correctly calculate the amount of tax to be deducted if applicable
Understand how to make appropriate adjustments to payments to HMRC for CIS tax
Accurately complete a CIS300 form at month-end for a contractor business in the construction industry
Accurately complete a CIS132 form at month-end for a subcontractor business in the construction industry
Understand the duties of a sub-contractor to submit relevant invoices within appropriate timescales
Explain why tax may be deducted at source from such an invoice
Understand the different methods of reclaiming tax deducted depending on the legal entity of the business (ie sole trader v limited company)

Understand and be able to complete the various forms that apply to a business running a payroll system

Understand when and how to complete a P45 form and where each part should be sent / stored
Demonstrate an understanding of how a P46 (starter checklist) form is completed and used
Demonstrate an understanding of the use of form P11 with payments and deductions for directors and regular employees on various payment schedules, statutory requirements and with differing tax codes including when payments are being made in advance
Accurately complete a P60 form at year-end for each employee
Demonstrate an awareness of all other relevant payroll forms.

Demonstrate practical skills in the application of a payroll software package

Utilising knowledge of the theory of payroll, demonstrate a full understanding of a sophisticated payroll package by installing, setting up, configuring and using it to produce accurate, comprehensive reports from a range of payroll scenarios encountered in a business of up to 10 employees.
Set up the details of a new business including appropriate company and existing employee details. Some existing or new employees may be directors who undertake to have their NI deducted using different methods or employees who work irregular hours. Enter and process payroll for a variety of different pay periods and produce reports detailing gross pay, deductions and net pay for each period
To adequately secure the business' payroll data, carry out periodic back-ups of payroll-related information.
Produce summary reports for defined periods
Perform the necessary actions within the software to handle an employee leaving and produce the required documentation
Configure a new employee within the software according to information provided
Where possible, carry out or simulate a month end procedure under RTI and produce a number of required reports including potential adjustments resulting from CIS deductions and any other recoverable amounts. Note: under the new RTI scheme it is impossible to produce the month end information unless you are using a live business. Be prepared to be able to show what information would be submitted or to explain how this would work

Note: the 'Basic PAYE Tools' package provided by HMRC does not offer the level of sophistication required to cover this part of the syllabus and an alternative payroll software package must be used. Contact ICB if in doubt.

Scenarios

Scenarios may include:

Making advance payment of holiday pay to an employee
Making a bonus payment to a defined range of employees
Configuring an attachment of earnings
Setting up a pension scheme for a range of employees.
Making Statutory payments for Sickness, Maternity, Paternity, Adoption
Processing a change to an employee's tax code or basis under which a tax code operates
Configuring deductions of student loan repayments