The world of tax is rarely static. New regulations and changes in legislation are announced regularly. While most tax changes follow a predictable, often annual cycle, there are instances where authorities introduce out-of-cycle changes with far shorter lead times.
Expectations for Global Mobility teams to support key functions such as payroll for employees, delivering the correct net pay on time to reflect the current rules, remain unchanged despite these tighter timelines. We understand the importance of ensuring accurate and efficient payroll, and the calculations that our clients prepare in the Equus platform’s Compensation Calculation and Cost Estimate modules are a key part of that process. That’s why, alongside our standard release schedule, we offer Interim Tax Engine Releases to support our clients.
What Is an Interim Tax Engine Release?
Equus delivers scheduled Tax Engine releases six time each year, on the last Thursday of odd-numbered months. Interim Tax Engine Releases are targeted updates to our Tax Engine designed to address specific, high-impact tax changes in key jurisdictions with high usage on our platform. These updates differ from our regularly scheduled releases in that they address changes legislated as effective before the next planned release date.
We deliver these time-sensitive updates via Interim Releases to clients in two different ways. Depending on the effective date and impact of the change, interim releases are either delivered automatically to all clients, or targeted to certain impacted clients. First, when substantial tax changes may impact a majority of clients, the Interim Release automatically updates for all clients. Second, our more targeted Interim Releases are typically offered to specific clients who have a key upcoming payroll activity in the impacted jurisdiction, or who have reached out to us regarding an upcoming tax change to obtain it more urgently. Once the Interim Release is available, our clients can apply it to the Equus platform immediately. Clients who do not opt to apply a targeted Interim Release receive the same update in the next available Tax Engine release.
Why Do We Offer Interim Releases?
Employees expect their pay to reflect the latest tax deductions, and businesses need accurate cost estimates for upcoming assignments to make reliable decisions on spending and budgeting. Currency of tax data is especially important during key pay adjustment processes, such as annual salary reviews or allowances reviews.
With the rise of outsourcing and offshoring of payroll processes, deadlines are getting tighter. Earlier access to updated tax calculations ensures your employees receive correct pay on time. Interim Releases enable us to deliver crucial Tax Engine updates to clients who need them earlier, without impacting clients with less sensitive timelines, who continue to receive updates within the normal release cycle.
The Impact of an Interim Release: UK Social Tax Changes
The UK Autumn Finance Bill 2023 reduced the 12% rate band for Employee National Insurance Contributions (social tax) to 10%, affecting the net pay of all UK employees earning more than £1,048 per month – likely the majority, if not all, of UK calculations prepared within the Equus platform. Several clients informed us of the importance of this change to their businesses, as their employee populations expected pay to be adjusted without delay.
The change was effective from January 6, 2024, but not enacted into law until November 30, 2023. This enactment date fell too late in our release cycle to include in the November release. However, waiting until our next scheduled release on January 25, 2024, would fall short of our clients’ needs.
We acted swiftly following enactment and made an Interim Release available on December 7, 2023, for clients to deploy to their platforms as needed. This adjustment enabled several of our clients to run new calculations within their Equus platform, and to process adjustments for January payroll to accurately pay their employees on time.
How Clients Can Ensure They Receive Interim Releases for Key Locations
The exact timing of these releases can’t be predicted as the Tax Team responds to legislation enacted out-of-cycle. However, dedicated Equus contacts know their clients’ key locations, and our Research team monitors potential impactful changes in all supported authorities. We also encourage our clients to proactively get in touch with us if there is an upcoming tax law change that is key to them.
We invite our clients to visit our Equus Tax Engine – Upcoming Tax Updates page within the Help Center. We update the page weekly on upcoming high-impact changes to be delivered in our next Tax Engine release and highlight significant tax law changes that we are monitoring for key authorities.
To learn more about the Equus Tax Engine click here. Interested in our technology? Request a demo.
