Category: Pension

Tax-driven Pension Provisions and the ‘Wholly and Exclusively’ Test – What A D Bly v HMRC Means for UK Companies

Posted on by Farazia Gillani

In November 2025, the Court of Appeal in A D Bly Groundworks & Civil Engineering Ltd and CHR Travel Ltd v HMRC [2025] EWCA Civ 1443 confirmed that corporation tax deductions for certain unfunded pension provisions were not allowed. The arrangements were set up primarily to reduce tax rather than to provide genuine retirement benefits, not because pensions are inherently problematic. This decision matters for any company considering large tax-driven pension provisions, unfunded retirement promises, or promoter-led schemes. 

It clarifies how the “wholly and exclusively for the purposes of the trade” test operates in the context of pensions and how far a tax-motivated structure can go before it loses deductibility.

Our concern is practical: what did the court actually say, what went wrong in this case, and what does a compliant, defensible pension contribution look like for a UK business in 2026 and beyond?

Before looking at the facts of the case, it is important to understand the legal landscape the court was working within: the nature of unfunded schemes and the way the wholly and exclusively test works for pension costs.

Unfunded, unapproved retirement benefit schemes and EFRBS

Historically, many employers used “unapproved” pension arrangements to provide additional benefits outside the registered scheme regime. HMRC now groups these under the concept of employer-financed retirement benefit schemes (EFRBS). Within that category sit funded and unfunded schemes.

UURBS as a form of EFRBS

 HMRC’s internal manuals explain that, before 2006, unapproved schemes were broadly of two types: funded unapproved retirement benefit schemes (FURBS) and unfunded unapproved retirement benefit schemes (UURBS). After 2006 these sit under the EFRBS label. A UURBS is essentially a contractual promise by an employer to pay benefits in future, without building up a separate fund or trust to hold assets earmarked for those benefits. There is no registered scheme status and no automatic access to the tax privileges of registered pensions.

Tax treatment and risk profile of UURBS

Because UURBS are not registered schemes, they operate outside the mainstream relief rules. HMRC guidance and advisory literature note that, while employers can sometimes deduct actual benefits paid under such schemes, unfunded promises and accounting provisions do not enjoy the same straightforward treatment as contributions to a registered pension. That makes the purpose behind any provision absolutely central.

The ‘wholly and exclusively’ rule for pension contributions

For corporation tax, the starting point is that all expenditure must be incurred “wholly and exclusively” for the purposes of the trade to be deductible (s.54 CTA 2009). HMRC’s Business Income Manual confirms that this rule applies to pension contributions just as it does to other trading expenses.

HMRC’s general approach to pension contributions

HMRC recognises that pension contributions are normally part of the cost of employing people. Commentary from Slaughter and May (drawing on BIM46030) notes that the condition will be met in most cases, because properly structured pension payments operate as a normal staff cost.

When deductibility is at risk

However, HMRC’s own guidance and professional commentary stress that they may disallow contributions when a clear non-trade purpose exists — for example, when tax-avoidance aims dictate the level, timing or structure of a contribution rather than commercial remuneration policy. Barnett Waddingham’s analysis of HMRC guidance highlights that employer contributions must be “wholly and exclusively” for business purposes and that HMRC’s updated statements on this point caused concern precisely because of their focus on underlying purpose.

The A D Bly decision is essentially an application of these principles to an aggressively tax-driven unfunded scheme.

How the A D Bly and CHR Travel Arrangements Worked

The Court of Appeal accepted the factual findings of the First-tier Tribunal (FTT) and the Upper Tribunal (UT). Those findings are important because they explain why the scheme failed, not just what the scheme was.

Adoption of an unfunded scheme promoted under DOTAS

Both A D Bly Groundworks & Civil Engineering Ltd and CHR Travel Ltd were profitable trading companies. They did not historically operate complex pension arrangements. The evidence, summarised in professional coverage and tribunal materials, shows that the UURBS was introduced to them by a third-party promoter and was disclosable under DOTAS, indicating HMRC considered it a tax avoidance arrangement.

The companies entered into the unfunded scheme and recorded very large provisions in their accounts. In broad terms, the scheme worked as follows:

  • The companies promised to pay certain key employees and directors pension-type benefits at some point in the future.
  • There was no separate pension fund or trust to hold assets to meet those obligations; this was a purely contractual promise.
  • The size of each year’s provision was calculated by a remuneration consultant, not by a pensions actuary, and was set as a proportion of pre-tax profits — typically 80% to 100% of estimated annual profits.
  • The companies then claimed corporation tax deductions for these provisions, amounting in total to around £5 million across both entities.

Crucially, no pension benefits were actually paid, and no cash left the businesses in relation to these promises during the relevant periods.

HMRC’s response and closure notices

HMRC opened enquiries and issued closure notices disallowing the deductions. The reasons were two-fold:

Failure of the “wholly and exclusively” test

HMRC argued that the primary purpose of the provisions was to reduce corporation tax, not to provide commercially justified pensions. In their view, the linkage to profits, absence of actuarial input, and the timing of the scheme’s introduction all pointed to tax avoidance as the central object of the expenditure.

Argument based on s.1290 CTA 2009

HMRC also advanced an alternative argument that the deductions were excluded by s.1290 CTA 2009, which restricts relief for certain “employee benefit contributions.” This point became important later, because the tribunals and Court of Appeal held that s.1290 did not actually apply to unfunded promises such as these.

The companies appealed the closure notices to the FTT.

Tribunal Findings: FTT and UT Focus on Purpose and Commerciality

First-tier Tribunal: primary purpose was tax reduction

The FTT examined the factual matrix in detail. It considered contemporaneous documents, emails and board minutes, as well as witness evidence from those involved.

From that evidence, the FTT drew a series of key conclusions:

Lack of pre-existing pension strategy

The companies had not previously engaged in structured pension planning or discussed a need to improve retirement benefits. The idea arose only after the promoter, Charterhouse, presented the UURBS arrangement.

Profit-driven contribution calculations

The size of the provisions was not determined by analysis of the employees’ likely retirement needs, nor by actuarial valuation. Instead, it was calculated as a high percentage of expected pre-tax profits for the year. The FTT interpreted this as a strong indicator that the scheme was designed to sweep profits into a tax-deductible provision.

Absence of genuine funding or benefit delivery

No funds were set aside, no trust was established, and no benefits were paid. The only tangible outcome was a reduction in taxable profits supported by an accounting provision.

On that basis, the FTT decided that the main purpose of the provisions was to reduce corporation tax. Any pension-related objective was, in its words, at best “incidental”. As a result, the expenditure failed the wholly and exclusively test and the deductions were denied.

Upper Tribunal: no error of law in the FTT’s approach

The companies appealed to the Upper Tribunal (UT), arguing that the FTT had misapplied the case law, in particular Scotts Atlantic, and that tax advantage should not be treated as a separate “purpose” in this way. The UT rejected those arguments.

The UT held that:

  • The FTT had correctly identified and applied the legal principles governing “wholly and exclusively” expenditure.
  • FTT was entitled to weigh factors such as the failure to obtain proper pension advice and the profit-based calculation of contributions.
  • Factual findings — especially the tax-driven motivation — were open to the FTT on the evidence.

The Upper Tribunal therefore upheld HMRC’s position and confirmed that the provisions were not deductible.

The Court of Appeal’s Decision: Purpose, s.1290 CTA 2009, and the Role of Tax Avoidance

The companies then obtained permission to appeal to the Court of Appeal, advancing two central grounds:

  1. That the FTT and UT had incorrectly applied the principles in Scotts Atlantic, or
  2. That Scotts Atlantic itself had been wrongly decided and was inconsistent with later authority such as Hoey v HMRC.

The Court of Appeal dismissed the appeal. Its reasoning can be grouped into several key themes.

1. The tribunals applied the Scotts Atlantic principles correctly

The Court reaffirmed that the Scotts Atlantic line of authority, which sets out how to assess purpose in trading expenditure, remains good law. It emphasised that:

  • The FTT did not simply “copy” Scotts Atlantic; it used that case to structure its analysis of purpose, which is exactly what tribunals are supposed to do.
  • There was no inappropriate “fact matching”. The FTT did not assume that because Scotts Atlantic involved tax avoidance, this case must also; it made its own factual findings first.

In other words, the Court found that the FTT and UT had applied the right legal tests and had not committed any errors of law that would justify interference.

2. The dominant purpose was tax saving, not pension provision

The Court of Appeal placed heavy weight on the FTT’s factual findings and refused to disturb them. It accepted that:

  • The UURBS was adopted primarily as a tax-saving scheme.
  • There was no real evidence of prior concern about employee pensions or remuneration strategy before the promoter’s involvement.
  • The use of profit percentages to calculate the provisions pointed clearly towards a tax-planning objective.

On that basis, the Court agreed that pension provision was only an incidental by-product and not the main object of the expenditure. That is fatal under the wholly and exclusively test, because once a substantial non-trade purpose is identified, the deduction must fail.

3. Tax avoidance can defeat deductibility even for “remuneration” expenses

A critical part of the taxpayers’ argument was that pension and remuneration costs should only lose deductibility if they are “excessive”. They suggested that, as long as an amount can be described as remuneration, the existence of a tax advantage should not in itself prevent a deduction.

The Court rejected that argument. It held that:

  • There is no principle in the case law that ring-fences remuneration or pension contributions from the normal purpose-based analysis.
  • While tax efficiency is not objectionable, a transaction whose main object is to secure a tax advantage is not incurred “wholly and exclusively” for trade purposes, even if it has the form of a salary or pension provision.

This confirms that labelling something “pension” or “remuneration” does not protect it if the underlying purpose is artificial tax reduction.

4. Unfunded promises fall outside s.1290 CTA 2009

Although not strictly necessary to the outcome (given the finding on purpose), the Court of Appeal also addressed HMRC’s alternative argument under s.1290 CTA 2009, which restricts relief for certain employee benefit contributions.

Drawing heavily on reasoning already accepted by the Supreme Court in NCL Investments, the Court held that:

  • s.1290 and s.1291 CTA 2009 concern employee benefit contributions involving identifiable property, usually held in a trust or similar arrangement for employees.
  • A bare contractual promise to pay a pension in future, without a fund, trust, or separate assets, is not an “employee benefit contribution” for these purposes.
  • Unfunded UURBS promises therefore sit outside s.1290. Any question of deductibility is instead governed directly by the general “wholly and exclusively” rule in s.54 CTA 2009.

This part of the judgement is important because it closes off a potential argument that s.1290, rather than the general trading rules, should dictate the treatment of unfunded pension provisions.

Practical Lessons for UK Businesses

The case is not just of academic interest. It gives very concrete signals about how HMRC and the courts will approach pension-related tax planning.

1. Purpose and evidence will be scrutinised

Companies must assume that HMRC will examine not only what they have done but why they did it. In practice:

  • Employers need contemporaneous evidence showing that any pension or remuneration provision was introduced for coherent commercial reasons – such as staff retention, succession planning, or aligning director rewards with long-term performance.
  • If the only documented discussions revolve around tax savings or profit extraction, it will be very difficult to argue that the expense was incurred wholly and exclusively for the trade.

The A D Bly decision shows that tribunals will read board minutes, emails and advice letters closely and draw inferences about motive from them.

2. Profit-based formulas are a warning sign

Basing a pension provision on a simple percentage of estimated profits, without any link to employee circumstances, is now especially dangerous.

  • A profit-linked formula strongly suggests that the real goal is to strip profits out of the corporation tax base.
  • Without separate actuarial or remuneration analysis, it is difficult to demonstrate that the resulting amount is a reasonable reflection of retirement needs.

In A D Bly, this approach was one of the decisive factors leading the courts to treat the arrangements as tax-driven.

3. Unfunded promises are structurally weak from a tax perspective

The decision does not say that unfunded schemes are always ineffective. It does, however, underline why they are inherently vulnerable:

  • There is no cash outflow that can readily be characterised as a “cost of employing staff”.
  • There is no trust or separate fund, so the statutory rules that deal with contributions to EFRBS and employee benefit trusts do not apply neatly.
  • The only real impact is on the accounting profit and the tax computation, which heightens the perception of artificiality if the scheme is promoted as tax planning.

Case commentary following the Court of Appeal judgment has emphasised that deductibility for unfunded UURBS provisions will always come down to purpose and commercial substance under s.54 CTA 2009, not technical arguments under s.1290.

4. Genuine pension contributions remain safe – if properly structured

The case is not an attack on mainstream pension saving. HMRC’s own manuals, as well as independent law firm guidance, make clear that contributions to registered schemes are usually deductible as part of normal staff costs, provided they are reasonable and genuinely linked to employment.

To preserve deductibility:

  • Contributions should be made to registered pension schemes or properly structured, funded EFRBS arrangements.
  • The level of contribution should reflect salary, responsibilities, and long-term reward policy, rather than being reverse-engineered to match profits.
  • The employer should be able to point to a consistent remuneration policy and professional advice supporting the structure.

How Apex Accountants Can Help

Given the complexity and risk highlighted by A D Bly, many companies will want to review their pension and remuneration structures. Apex Accountants can assist in several specific ways.

Reviewing existing pension and remuneration arrangements

We can undertake a structured review of your current pension promises and related accounting entries. This includes:

  • Identifying any unfunded retirement promises, EFRBS or historic UURBS that might expose the business to challenge.
  • Analysing whether contributions and provisions align with HMRC guidance and case law on the wholly and exclusively test.
  • Flagging high-risk patterns, such as profit-linked provision formulas, absence of advice, or schemes introduced solely on promoter recommendation.

Designing compliant pension contribution strategies

Where existing structures are risky or inefficient, we can help design more robust alternatives:

  • Moving from unfunded promises to funded, registered schemes or more conventional employer contributions that fit within the normal tax relief framework.
  • Creating contribution policies that reflect commercial objectives, such as retention of key personnel, succession plans for owner-managers, or gradual de-risking of founder involvement.
  • Working alongside pension advisers and solicitors to ensure that legal, tax and regulatory aspects are aligned.

Supporting documentation and HMRC-facing evidence

One of the strongest messages from A D Bly is the importance of evidence. We can:

  • Help you document remuneration and pension decisions through appropriate board minutes, internal policies and rationale papers.
  • Prepare clear explanations linking pension contributions to business strategy, rather than tax motivation.
  • Assist in responding to HMRC enquiries, using both the technical analysis and the factual context to defend legitimate deductions.

Integrating pensions into broader corporation tax planning

Pensions are only one part of the tax and reward picture. We also:

  • Review how pension contributions interact with dividends, bonuses and other profit extraction routes for shareholders and directors.
  • Model the tax and cash-flow impact of different remuneration mixes, so that you can plan over several years rather than reacting in a single year.
  • Help ensure that any tax planning remains within the line of accepted practice, avoiding high-risk arrangements that are likely to attract HMRC challenge.

Conclusion

The Court of Appeal’s decision in A D Bly and CHR Travel underscores a simple but powerful point: pension-related deductions are only safe when they are grounded in genuine commercial purpose and real employee benefit. When provisions are engineered to mirror profits, introduced via promoters, and unsupported by actuarial or remuneration analysis, HMRC and the courts will treat them as tax-driven and refuse relief.

For UK businesses, this means revisiting unfunded promises, documenting decision-making more carefully, and ensuring that pension contributions, however tax-efficient, can be defended as part of a coherent employment strategy rather than an accounting device.

Apex Accountants can help you carry out that review, adjust the course where needed, and design structures that support both staff and shareholders without falling foul of the “wholly and exclusively” test.

FAQs on Tax-driven Pension Provisions

1. Are unfunded UURBS provisions still ever deductible for corporation tax?

In principle, it is not impossible for an unfunded promise to be deductible, but A D Bly shows that the bar is high. Where there is no funded scheme, no trust, and no actual payment, the only basis for deduction is that the accounting provision genuinely reflects a commercial liability incurred for the purposes of the trade. If the facts show that the arrangement was mainly created to reduce tax, as they did in A D Bly, the deduction will fail.

2. Does the decision affect normal employer contributions to registered pension schemes?

No, not in the sense of removing their basic deductibility. HMRC’s Business Income Manual still treats contributions to registered schemes as typically allowable, because they form part of staff costs. However, they must still satisfy the wholly and exclusively test. Extremely large or irregular contributions, introduced for obvious tax-planning reasons, could still be challenged, but orthodox contributions in line with salary and role remain low risk.

3. How does HMRC decide whether a pension contribution is “wholly and exclusively” for the trade?

HMRC and the courts look at the object of the expenditure. They examine surrounding documents, advice, and how the contribution amount was set. If those materials show that the main goal was staff retention, succession planning, or aligning incentives, the contribution is likely to pass the test. If they show that the main goal was to eliminate taxable profits, it will not. This object-based analysis is exactly what the FTT, UT and Court of Appeal applied in A D Bly.

4. Why did s.1290 CTA 2009 not rescue or block the deduction in A D Bly?

Section 1290 CTA 2009 restricts relief for certain “employee benefit contributions”, but the Court of Appeal, echoing the Supreme Court in NCL Investments, held that it only applies where there is identifiable property, typically held in trust or under a scheme structure. Because the UURBS in A D Bly involved only unfunded promises and no separate fund, s.1290 did not apply. Deductibility therefore turned entirely on the general trading rules and the wholly and exclusively test.

Before implementing any significant pension-related strategy, employers should:

  • Obtain independent tax and pensions advice, not rely solely on promotional material.
  • Ensure the proposed contributions or provisions can be justified by a written remuneration or people strategy.
  • Avoid automatic linkage of contributions to year-end profits.
  • Document discussions in board minutes and internal papers in a way that clearly sets out the commercial rationale.

Payroll and Pension Planning for UX Design Studios: What Employers Need to Know for 2026

Posted on by Malaika Sohail

As the UX industry evolves, managing payroll and pension obligations is crucial for studios to remain compliant, competitive, and financially stable. With mixed staffing models—including permanent designers, project-based researchers, developers, and long-term contractors—payroll and pension planning for UX design studios is becoming increasingly complex. Regulatory changes in 2026 are expected to bring shifts in payroll costs, National Insurance (NI) rules, and pension obligations. These changes could impact your studio’s financial planning if not managed well.

In this article, we’ll highlight the essential tips for pension and payroll management for UX design studios and provide actionable steps to navigate these upcoming shifts effectively.

Payroll Considerations for UX Studios in 2026

1. Employer National Insurance Contributions (NICs)

Since April 2025, the Employer NIC (Class 1) rate increased to 15% for salaries above the Secondary Threshold, which is set to drop to £5,000 annually.

Why This Matters for UX Studios

  • Variable Salaries Across Roles: UX studios often have varying salaries depending on the role (e.g., junior designers vs senior UX architects).
  • Project-Based Income: With income fluctuating based on the project cycle, this creates payroll unpredictability.
  • Freelancers and Contractors: Freelancers are exempt from employer NICs unless they fall under IR35, in which case NICs apply.

Key Actions for UX Studios

  • Update payroll software to reflect the 15% NIC rate and the £5,000 secondary threshold.
  • Identify contractors operating within IR35, as they will trigger additional NIC costs.
  • Stress-test staffing budgets for junior designers and part-time staff who may now be subject to NICs due to the lower threshold.

2. Employment Allowance

Since April 2025, the Employment Allowance has increased to £10,500, enabling eligible employers to reduce their NIC liability by this amount.

Why This Matters for UX Studios

  • Eligibility: Most small to mid-sized UX studios (fewer than 250 employees) will qualify for this allowance.
  • Excludes Contractors: The Employment Allowance only applies to PAYE employees, not contractors.

Key Actions for UX Studios

  • Confirm your eligibility for the Employment Allowance and apply for it to offset rising NIC costs.
  • Reassess your mix of employees vs. freelancers—consider shifting more roles to PAYE to benefit from the Employment Allowance.

Pension Planning for UX Design Studios in 2026

As part of the UK’s automatic enrolment system, employers must ensure that eligible workers are enrolled in a qualifying pension scheme.

1. Automatic Enrolment Eligibility

Employers are required to automatically enrol employees who:

  • Are aged 22 to State Pension Age.
  • Earn £10,000 or more per year.
  • Work in the UK.

The minimum contribution rate remains at:

  • 5% employee contribution.
  • 3% employer contribution.
  • 8% total (qualifying earnings).

Why This Matters for UX Studios

  • Fluctuating Salaries: Many UX studios rely on part-time specialists or contractors, and their earnings may fluctuate above or below the £10,000 threshold, especially during busy project cycles.
  • IR35 Contractors: Some contractors may be deemed employees under IR35 and therefore eligible for auto-enrolment.

Key Actions for UX Studios

  • Track earnings for part-time employees and contractors whose income may cross the £10,000 threshold mid-year.
  • Make sure your pension scheme covers IR35 contractors treated as workers.
  • Communicate pension contribution structures clearly to staff, particularly around project cycles when earnings may vary.

2. Salary Sacrifice Schemes for UX Studios

Salary sacrifice schemes for UX studios remain a tax-efficient strategy for both employers and employees. By sacrificing part of their salary in exchange for higher pension contributions, employees can reduce both income tax and NICs.

Why This Matters for UX Studios

  • Senior Staff Benefits: UX leads, senior designers, and architects often have higher salaries, making them prime candidates for salary sacrifice schemes.
  • Tax Efficiency: This scheme helps reduce both employee and employer NICs, making it a cost-effective option for both parties.

Key Actions for UX Studios

  • Assess the feasibility of implementing a salary sacrifice scheme for senior employees.
  • Work with your pension provider to create a tax-efficient contribution structure.
  • Include salary sacrifice as part of your employee benefits package to attract and retain top talent.

3. Proposed Pension Reforms (Expected 2026–27)

Government proposals for 2026-27 may impact pension eligibility and contribution structures:

  • Lower Earnings Limit: The £6,240 lower earnings limit for pension eligibility may be removed, making more employees eligible for auto-enrolment.
  • Age Threshold: The auto-enrolment age limit may be reduced from 22 to 18.

Impact on UX Studios

  • Wider Eligibility: More part-time, junior, and younger staff (18–21) may become eligible for pension contributions, increasing the overall cost to the studio.
  • Broader Pool of Eligible Workers: Employees with lower earnings, previously excluded, will now receive pension contributions on all earnings.

Key Actions for UX Studios

  • Plan for higher pension costs as eligibility widens and younger employees become eligible.
  • Review recruitment and onboarding processes to ensure compliance with pension eligibility for junior hires.
  • Update your pension budget to reflect contributions for employees who previously fell below the qualifying earnings band.

Actionable Payroll & Pension Checklist for UX Studios (2026-Ready)

  1. Payroll Updates: Ensure systems reflect the new 15% NIC rate and the £5,000 secondary threshold.
  2. Claim Employment Allowance: Apply for the £10,500 allowance to offset NIC costs.
  3. IR35 Compliance: Review contractor arrangements and ensure any IR35 workers are classified and treated correctly.
  4. Track Pension Eligibility: Monitor earnings for staff nearing the £10,000 threshold or turning 22.
  5. Implement Salary Sacrifice: Introduce salary sacrifice schemes for senior staff.
  6. Prepare for Pension Reforms: Plan for increased pension contributions as auto-enrolment expands.

The Importance of Payroll and Pension Planning for UX Design Studios

In an industry driven by creativity and project cycles, the need for sound payroll and pension planning cannot be overstated. Failing to keep up with changes in regulations can lead to:

  • Unexpected payroll liabilities.
  • Non-compliance with pension regulations.
  • Challenges with talent retention and satisfaction.

Proactive planning not only helps UX studios manage payroll and pension obligations efficiently but also ensures they remain competitive in a rapidly evolving sector.

How Apex Accountants Can Support Your UX Studio

At Apex Accountants, we specialise in providing expert payroll management for UX design studios and pension advice to creative and digital businesses. Our services include:

  • Payroll System Configuration: Ensuring your systems comply with new NIC rates and thresholds.
  • Pension Scheme Advice: Offering insights on automatic enrolment, salary sacrifice, and pension contribution strategies.
  • IR35 Assessment: Helping you navigate the complexities of contractor classifications.
  • Cost Forecasting: Providing financial forecasts for payroll and pension obligations.

Ready to optimise your payroll and pension planning for 2026? Contact Apex Accountants today and let us support your studio’s growth and compliance.

Key Challenges in Payroll and Pension for Appliance Manufacturing Companies

Posted on by Farazia Gillani

Managing payroll and pensions across global factory sites is rarely straightforward. As each country applies its own rules on taxation, pay cycles, and pensions, appliance manufacturers encounter significant challenges in maintaining compliance and control. At Apex Accountants, we support manufacturing groups with practical, location-specific solutions—from real-time payroll systems to international pension reporting. Our expertise in payroll and pension for appliance manufacturing companies helps reduce risk, improve accuracy, and ensure full compliance with UK GAAP or IFRS reporting standards.

This article outlines the most common payroll and pension challenges faced by multinational appliance manufacturers and explains how Apex Accountants helps resolve them across borders.

Operational Challenges in Managing Pay and Pensions Globally

Managing payroll and pension obligations across international factory sites requires more than just administrative oversight. With varying legal frameworks, employment terms, and reporting requirements, businesses often face significant complications that affect both compliance and cost efficiency.

The following are the most common payroll and pension challenges faced by global appliance manufacturers.

Multi-Jurisdictional Payroll Compliance

Each country has its own payroll laws, deadlines, and reporting formats. A factory in the UK must meet PAYE and RTI rules, whereas sites in Europe or Asia may require localised social contributions and different tax bands. 

Apex Accountants builds location-specific payroll systems that comply with local laws while providing a central view. We manage statutory deductions and reconcile multiple payment schedules. This simplifies payroll compliance for appliance manufacturing companies in multiple jurisdictions.

Shift Patterns and Irregular Hours

Appliance factories often run 24/7 operations. Staff may work in rotating shifts, nights, weekends, or overtime—all of which attract different pay rates. Tracking hours and calculating the correct pay is time-consuming and prone to error.

We use cloud-based payroll tools that link to time-tracking systems and factory rosters. This allows us to process accurate pay based on real-time attendance and shift premiums, avoiding underpayment claims or misclassifications.

Currency Conversion and Reporting

Salaries are paid in local currencies, but group reporting typically requires a functional currency such as GBP or EUR. Volatile exchange rates can skew payroll forecasting, pension funding, and cost allocation.

Our team standardises currency reporting by using fixed periodic rates and real-time conversions. This ensures payroll data can be reported accurately under FRS 102 or IFRS, even when operating in high-volatility markets.

Varied Pension Structures Across Sites

While the UK mandates auto-enrolment into defined contribution schemes, other countries may offer defined benefit plans or no pension system at all. Managing these inconsistencies makes planning difficult and increases compliance risk. These are some of the most pressing pension challenges in multinational appliance factories, especially where workforce demographics and regulatory maturity differ widely.

We help employers evaluate local pension obligations and integrate global pension strategies. This includes aligning benefit structures, managing DB liabilities, and implementing International Pension Plans (IPPs) where needed.

Mobility and Pension Portability

International staff transfers are common in global manufacturing. But without pension portability, employees may lose accrued benefits or fall into regulatory gaps. This adds to the list of ongoing pension challenges in multinational appliance factories, particularly when schemes are incompatible across countries.

Apex Accountants supports cross-border contribution tracking and designs pension schemes that accommodate mobile employees. We also advise on double taxation agreements and the equalisation of benefits across jurisdictions.

Pension Liability and Financial Disclosures

Defined benefit schemes require actuarial valuations and complex accounting treatment. Inaccurate or delayed pension data from sites can lead to misstatements in financial reports.

We collect, review, and reconcile pension data across all factory locations. Our team prepares pension notes and disclosures that comply with FRS 102 Section 28 or IAS 19, keeping the business audit-ready.

Case Study

Apex Accountants supported a UK-based appliance manufacturer operating across four countries, including Poland, Turkey, and Vietnam. The company employed over 4,500 factory workers on rotating shifts and faced significant issues with inconsistent payroll reporting, delayed pension data, and missed UK RTI deadlines. Each site used different payroll software, currencies, and pension schemes—causing group-level disclosures under FRS 102 to be unreliable and frequently late.

We implemented a centralised cloud-based payroll solution integrated with systems that address challenges related to pensions in multinational appliance factories and compliance with payroll regulations for appliance manufacturing companies.

Within three months, payroll accuracy rose by 98%, and late submissions were eliminated. Pension disclosures were delivered on time for the first time in two years, and the business saved over £130,000 annually in compliance costs and internal inefficiencies.

How Apex Accountants Supports Payroll and Pension for Appliance Manufacturing Companies

Effective payroll and pension management in a multinational appliance factory setup requires more than basic processing. It demands in-depth knowledge of country-specific regulations, coordinated systems across sites, and accurate real-time reporting.

We understand that payroll compliance for appliance manufacturing companies involves more than meeting deadlines—it requires integrated tools, reliable data, and specialist support tailored to complex labour structures. Apex Accountants brings over two decades of experience supporting global manufacturers with fully integrated payroll and pension solutions. We combine sector-specific insight, cloud-based technology, and hands-on guidance to reduce risk, improve compliance, and give finance teams complete control over cross-border operations.

Whether you’re expanding into new markets or refining your global workforce strategy, Apex Accountants can help you build a compliant and efficient payroll and pension framework tailored to your factory footprint. 

In line with industry standards, organisations like AMDEA (the Association of Manufacturers of Domestic Appliances) help appliance manufacturers stay informed about regulatory changes and best practices, further supporting effective payroll and pension management.

Ready to simplify payroll and pension management across your sites? Contact Apex Accountants for expert guidance.

Understanding Payroll and Pension Services for Auction Houses

Posted on by Sidra

Handling payroll and pensions in a busy UK auction house is far from straightforward. Staff often include a blend of permanent employees, commission-based specialists, part-time porters, and seasonal handlers. Pay structures vary across departments, while employment statuses frequently change. This makes compliance with HMRC rules and The Pensions Regulator’s requirements especially demanding for auction houses. At Apex Accountants, we provide expert payroll and pension services for auction houses across the UK. Our team guarantees accurate staff payments, adherence to auto-enrolment regulations, and timely completion of all reporting deadlines. From commission payments to short-term worker assessments, we offer solutions built for the auction sector.

This article explains how payroll and pension compliance works for UK auction houses. It highlights key employer responsibilities under PAYE for UK auction houses and auto-enrolment law, outlines common compliance mistakes auction houses make, and provides guidance on staying up to date with changing legislation.

Payroll obligations under UK PAYE rules

Auction houses must process all staff pay through Pay As You Earn (PAYE). This applies to auctioneers, valuers, administrators, and temporary staff during peak sale seasons. Managing PAYE for UK auction houses requires careful planning, especially when contracts vary or involve overseas hires.

Key payroll tasks include:

  • Submitting Real-Time Information (RTI) to HMRC every pay cycle
  • Applying correct tax codes and National Insurance rates
  • Accounting for bonuses and commissions accurately
  • Administering deductions for student loans or court orders where applicable

Hiring overseas specialists for specific auctions? You’ll need to determine whether they qualify as UK employees or self-employed consultants. Incorrect classification is a common HMRC trigger for audits.

Auto-enrolment pension duties

All UK auction houses must comply with auto-enrolment pension law:

  • Eligible staff (aged 22+ earning £10,000+) must be enrolled
  • Minimum contributions are 5% employee and 3% employer
  • Re-enrolment is required every three years
  • A Declaration of Compliance must be submitted to The Pensions Regulator

Many auction houses struggle with auto-enrolment for auction staff, especially when roles are irregular or seasonal. You must assess each payroll period to avoid missing eligible workers.

Common mistakes auction houses make

Many auction houses unintentionally breach regulations. Typical errors include:

  • Failing to re-enrol seasonal staff who meet eligibility during high-volume months
  • Overlooking auto-enrolment for part-time or commission-based staff
  • Incorrectly excluding freelance specialists who meet employment criteria
  • Missing the re-declaration deadline with The Pensions Regulator

Auction payroll often includes variable pay such as commissions and overtime. These must be included in both PAYE calculations and pension assessments, especially where they push a staff member’s income above the £10,000 threshold.

Case study: Apex Accountants & a London auction house

A mid-sized London auction house approached Apex Accountants after a payroll review revealed they had failed to re-enrol seven seasonal art handlers into a pension scheme. They had also misclassified two catalogue editors as self-employed, risking penalties from HMRC.

We provided:

  • A full payroll compliance audit
  • Correction of past RTI submissions
  • Backdated pension enrolments through their Nest scheme
  • Staff reclassification and updated contracts
  • Ongoing monthly payroll bureau support and TPR re-declaration reminders

The client avoided fines, regained compliance, and received positive feedback from staff on their improved payslip clarity and pension support.

How Apex Accountants Delivers Payroll and Pension Services for Auction Houses

Our specialist team understands the working patterns and payroll quirks of auction houses. We offer:

  • Tailored payroll setup for variable and seasonal staff
  • Robust processes to support auto-enrolment for auction staff
  • Real-time tax and pension compliance support
  • HMRC representation and audit preparation

Auction houses must manage payroll and pensions with precision to avoid fines, protect staff rights, and stay compliant with UK regulations. With the right support, even the most complex staff arrangements can be handled smoothly and accurately.

Contact Apex Accountants today for reliable payroll and pension support built for UK auction houses.

Payroll and Pension Strategies for Art Education Centres with Mixed Staff Types

Posted on by Sidra

Running an art education centre means management more than creativity. These organisations often juggle salaried lecturers, part-time tutors, visiting artists, and freelance professionals, all working under different arrangements. Each group brings unique payroll and pension requirements that, if overlooked, can lead to compliance risks and financial strain. At Apex Accountants, we specialise in guiding creative and educational organisations through these challenges. With our expertise in payroll management, pension compliance, and tax advice, we design tailored payroll and pension strategies for art education centres to keep them financially organised while protecting their reputation with funders, staff, and regulators.

This article explains the payroll and pension issues art education centres face when working with mixed staff types. It outlines sector-specific risks, explores how funding cycles affect payroll, and shares practical strategies that can help centres stay compliant, efficient, and financially secure.

Efficient Payroll services for art education centres

Payroll processes differ across staff types. Permanent employees fall under PAYE, with fixed salaries, holiday pay, and statutory deductions. Visiting tutors may be paid per hour or per course. For instance, a visiting ceramicist teaching a 10-week course could cross the pension enrolment threshold is mid-year. Such scenarios require close monitoring of income levels and holiday entitlements.

Freelance staff bring additional challenges. An artist-in-residence may invoice as self-employed, but they still face IR35 scrutiny if they are effectively working under the centre’s direction. Misclassification can lead to HMRC penalties, tax arrears, and reputational damage. Professional payroll services for art education centres provide the structure needed to manage these risks effectively, especially when staff move between hourly, sessional, and freelance contracts.

Funding cycles add another layer. Many centres depend on term student fees or external grants. Tying payroll runs to these inflows helps avoid cash shortfalls, particularly during quieter academic periods.

Auto-Enrolment For Art Education Staff

Auto-enrolment applies to all UK employers, and art centres must assess their workforce carefully. For salaried staff, the process is straightforward: at least 3% employer contribution, totalling 8% with employee input. Variable-hour tutors are more difficult to manage. Anyone earning over £10,000 in a year must be enrolled, while those earning between £6,240 and £10,000 retain opt-in rights.

Many creative professionals hold several part-time posts. This makes pension eligibility harder to track. A tutor working three days across different centres might appear under the threshold at each employer, yet still be entitled to enrolment in one or more roles. Careful planning can manage auto-enrolment for art education staff efficiently without becoming a burden.

Sector risks and practical strategies

Short-term project funding can cause sudden peaks in payroll. New residencies or grant-funded workshops may require rapid staff onboarding. Without digital systems, payroll errors are likely.

Best practice includes:

  • Segmenting staff categories clearly – Separate payroll structures for salaried, hourly, and freelance staff.
  • Using digital payroll tools – Automate sessional pay and pension assessments.
  • Linking payroll to funding cycles – Align payment dates with grant or fee income to manage cash flow.
  • Reviewing IR35 contracts – Reduce compliance risks for freelance artists.

How Apex Accountants Supports Payroll and Pension Strategies for Art Education Centres

At Apex Accountants, we help art education centres stay compliant while protecting their relationships with funders and staff. Mishandled payroll or pensions can damage credibility in creative and educational networks. Our team designs tailored payroll frameworks, manages pension obligations, and provides ongoing compliance reviews.

With robust payroll and pension strategies, centres can concentrate on fostering creativity while safeguarding financial integrity. Contact Apex Accountants today for specialist guidance.

Payroll and Pension Management for Research Institutions

Posted on by Sidra

Agricultural research institutions in the UK drive food security, crop innovation, and climate resilience. Yet, many struggle with payroll and pension costs that slow progress and stretch limited budgets. At Apex Accountants, we specialise in payroll and pension management for research institutions. We help organisations manage payroll, pensions, and grant-funded projects with accuracy and compliance. Our support allows research bodies to focus on science while staying financially stable.

This article explores payroll and pension pressures in agricultural research institutions, compares them with other sectors, and shows how Apex Accountants provide practical solutions.

Payroll complexities in research institutions

Payroll structures are complicated. Staff often include permanent researchers, field assistants on short contracts, and grant-funded specialists. Each category demands accurate tax codes, National Insurance calculations, and pension enrolment. International collaborations bring added risk. Hiring overseas experts requires compliance with double taxation rules and HMRC cross-border payroll standards. Any oversight can cause penalties or funding clawbacks.

With expert payroll and pension management, institutions can categorise staff correctly, process contributions accurately, and avoid penalties that threaten funding stability.

Pension schemes and rising liabilities

Many institutions participate in established sector schemes such as the Universities Superannuation Scheme (USS) or Research Councils’ pension arrangements. Contribution rates in these schemes have increased steadily. For smaller agricultural research bodies, these commitments strain budgets. Since April 2025, employer National Insurance contributions rose to 15%, intensifying cost pressures.

In contrast, universities often spread pension costs across broader income streams, including tuition fees. Commercial laboratories can offset rising pension liabilities by adjusting service prices. Agricultural research institutions, however, depend on restricted grants. They cannot easily pass costs on, leaving them vulnerable when contribution rates rise. Tax accountants for agricultural research institutions can help address these pressures by aligning payroll with available funding.

Moreover, pension management solutions can forecast liabilities, optimise employer contributions, and build cash flow strategies that align pension payments with grant deadlines.

Consequences for research capacity

The financial impact is clear. High payroll and pension costs limit the ability to hire field researchers during critical crop trials. By managing payroll efficiently, institutions can allocate resources better and protect seasonal recruitment during peak trial periods.

Some institutions delay seasonal recruitment, reducing the scale of data collection. With structured payroll planning, recruitment schedules can be aligned to funding windows, reducing delays and keeping data collection on track.

Others postpone the adoption of new crop testing projects until grant income stabilises. Pension cost forecasting helps institutions balance liabilities with research budgets, allowing projects to move forward without delay.

Over time, this slows the development of agricultural innovation. Targeted payroll and pension support secures financial stability, ensuring that scientific progress continues without disruption.

These challenges show why pension and payroll solutions for research bodies are essential to safeguard capacity and maintain progress.

Case study: Delayed crop trial due to pension costs

One midsize research centre in the Midlands faced rising liabilities from the USS scheme, along with higher employer NICs. Its annual pension contributions increased by over 12% in three years. To remain solvent, the centre cut back on hiring seasonal field workers. A planned wheat resilience trial was delayed for a full season. The delay meant missing critical testing during a drought year, weakening the data set available for policymakers and farmers.

This example highlights how pension costs, while unavoidable, directly affect the UK’s capacity to respond to food security challenges.

How Apex Accountants Supports Payroll And Pension Management For Research Institutions

At Apex Accountants, we help research institutions stay compliant and financially stable through:

  • Digital payroll integration with HMRC standards
  • Specialist pension scheme management (USS, Research Councils, auto-enrolment)
  • Cross-border payroll and tax residency checks
  • Cash flow planning to match grant cycles
  • Reporting frameworks to satisfy donor and council requirements

Our approach delivers pension and payroll solutions for research bodies that reduce financial risks and allow management teams to focus on science.

Conclusion

Payroll and pension pressures continue to challenge agricultural research institutions in the UK. Unlike universities or commercial laboratories, they cannot rely on diverse income streams to offset rising costs. The results are clear: reduced hiring capacity, delayed field trials, and slower scientific progress.

Agricultural research institutions can manage these pressures more effectively by working with experienced tax accountants. Our expertise helps institutions stay compliant, protect funding, and plan for long-term sustainability.

Contact Apex Accountants today to discuss how we can support your institution’s payroll and pension needs.

What Changes to Salary Sacrifice Scheme Could Mean for Employers

Posted on by Sidra

The Autumn Budget 2025 is fast approaching, and one of the most debated areas is pension salary sacrifice. More than 90% of mid-market employers now expect restrictions, reflecting the Chancellor’s push to raise revenue and curb the rising cost of pension tax reliefs. Business leaders are preparing for reform, and many are questioning what the expected changes to salary sacrifice scheme could mean for their staff and overall costs.

At Apex Accountants, we work with businesses across the UK to provide clarity on complex tax and pension rules. Our goal is to help employers anticipate reforms, safeguard employee benefits, and plan ahead with confidence.

What Changes Are Being Considered?

HMRC’s research, published in May 2025, set out three possible models for reform:

  • Full NIC charges – remove the National Insurance exemption, so both employers and employees pay NIC on the sacrificed salary.
  • Complete removal of reliefs – end both NIC and income tax advantages, making salary sacrifice no more beneficial than direct pension contributions.
  • Threshold model – preserve NIC savings up to a set amount (for example, £2,000 per year), with NIC applying above that threshold.

Employers strongly rejected the first two scenarios, warning they would undermine long-standing pensions salary sacrifice schemes. The third option was considered more balanced, though still unwelcome.

Why Do Employers Expect Restrictions Now?

Several factors suggest reform is imminent:

  • A Censuswide-BDO survey found that 49% of senior executives think restrictions are “quite likely”, and 45% think they are “very likely”. Less than 1% believe changes are unlikely.
  • In 2023/24, the government spent £23.5 billion on NIC relief and £28.5 billion on income tax relief for pensions. Together, this represents one of the costliest areas of tax support.
  • The Resolution Foundation, in a September 2025 report, recommended “dialling down” the benefits of salary sacrifice for employers to raise revenue. Their proposals underline the growing pressure on the Chancellor to act.

What Other Approaches Are Being Discussed?

Beyond the HMRC-tested models, policymakers and think tanks have floated additional options:

  • NIC cap across benefit types – set a universal ceiling of £2,000–£5,000 for all salary sacrifice benefits, including pensions.
  • Pension fund levy – introduce a small annual charge on pension funds (for example, 0.25%), collected by providers, to raise revenue with minimal impact on savers.
  • Standardised tax relief – shift to a flat-rate relief model, reducing the benefits currently enjoyed by higher-rate taxpayers.

Any of these measures would cut Treasury costs, but each risks making pension saving less attractive. Businesses currently relying on salary sacrifice pension rules would need to recheck compliance carefully if changes are introduced.

How Will Changes to Salary Sacrifice Scheme Affect Employers and Employees?

  • Higher employer costs – NIC liabilities would increase if exemptions were capped or removed.
  • Reduced staff savings – employees may see lower take-home pay, affecting morale and pension participation.
  • Administration pressure – payroll teams would face greater complexity under a threshold model or levy system.
  • Timing risks – employers considering new schemes must weigh the possibility of transitional protections if reforms apply only to future arrangements.

Both employers and employees benefit from existing salary sacrifice pension rules, which make contributions more efficient. Any restriction will therefore have a direct impact on savings, benefits, and long-term staff retention.

How Should Employers Prepare Ahead of the Autumn Budget?

At Apex Accountants, we believe employers should not wait for the Chancellor’s announcement. Key steps include:

  • Review existing schemes – understand current NIC and tax savings across your workforce.
  • Run scenario testing – calculate potential costs under full removal, NIC-only, or threshold restrictions.
  • Communicate early – prepare to explain changes clearly to employees, reducing confusion and preserving trust.
  • Reassess benefits packages – explore other incentives to support retention if pension advantages are reduced.
  • Seek specialist advice – early planning with tax and pension experts will help you adapt smoothly.

Apex Accountants’ View

Pensions salary sacrifice schemes have long provided a tax-efficient way for businesses to support retirement savings. Yet the fiscal and political climate makes reform highly probable in the Autumn Budget 2025. Early planning will put employers in the best position to safeguard employee benefits and manage costs.

Apex Accountants supports businesses with tailored pension and tax planning advice. We translate complex reforms into practical actions, helping employers maintain compliance and employee confidence during change.

Conclusion

The Chancellor is under growing pressure to reform pension salary sacrifice in November’s Budget. Whether through NIC charges, cap relief, or new levies, restrictions now seem more like a question of “how” than “if”. Employers should act now to prepare.

Apex Accountants is here to guide you through these changes. Contact us today to discuss how our tailored advice can help you protect your workforce and plan for the future.

Pension triple-lock abandoned for one year

Posted on by Rana Zubair

The government has confirmed that its triple-lock guarantee on pensions is to be abandoned for one year. The guarantee was first introduced in 2010 and has remained in place until now. This guarantee has seen the full yearly State Pension increase by over £2,050 in this period.

The triple-lock is the mechanism used to calculate increases to the state pension each year. Under the triple-lock guarantees the basic state pension rises by whichever is the highest out of average earnings growth, inflation or 2.5%.

The government is concerned that the growth in earnings will be between 8% and 8.5% and has decided that setting aside for one year the use of average earnings growth figures for State Pensions would be prudent. This large growth figure has been caused by the unprecedented fluctuations to earnings caused by the COVID-19 pandemic.

The other two elements of the triple-lock will remain in place, meaning that the State Pension will be uprated by the higher of inflation or 2.5%.

The government has argued that this pause in the triple-lock is the fairest approach for both pensioners and younger taxpayers. However, this decision will leave many of those in receipt of the State Pension deeply disappointed with this decision and worried that this is the start of further broken promises.

It had been rumoured for quite some time that HM Treasury was exploring ways to suspend the triple-lock as it became apparent that the earnings growth figure would appear to be artificially high.

Source: Department for Work & Pensions Tue, 14 Sep 2021 00:00:00 +0100

Covering pension contributions with unused allowances

Posted on by Rana Zubair

The annual allowance for tax relief on pensions is currently set at £40,000. The annual allowance is further reduced for high earners. This means that if your income is in excess of £240,000 you will usually begin to see your £40,000 annual allowance tapered. For every complete £2 your income exceeds £240,000 the annual allowance is reduced by £1. The annual allowance can also be reduced if you have flexibly accessed your pension pot.

If you have not used all your annual allowance in a tax year, then the unused allowance can usually be carried forward to the current tax year and added to the current year’s annual allowance. The calculation of the exact amount of unused annual allowance that can be carried forward can be complicated especially if you are subject to the tapered annual allowance. 

Normally, you can carry forward unused allowance from the three previous tax years. You do not need to report this to HMRC. If you have unused annual allowances from more than one year, you need to use the allowance in order of earliest to most recent. Any remaining balances can be used in future tax years, subject to the usual time limits. You do not need to report this to HMRC.

HMRC’s pension calculator can also help you check if you have any unused annual allowance to carry forward.
 

Source: HM Revenue & Customs Tue, 24 Aug 2021 00:00:00 +0100
Book a Free Consultation