KEY CHANGES for the 2014 / 2015 TAX YEAR
Income Tax Allowances
The basic personal allowance for 2014-15 increases to £10,000 and the tax code for emergency use will be 1000L.
Income Tax bands and rates
The tax bandwidths for 2014-15 are as follows:
Basic rate = 20% £1 to £31,865
Higher rate = 40% £31,866 to £150,000
Additional rate = 45% £150,001 & above
The Lower Earnings Limit, the amount of earnings which allow an employee to qualify for certain state benefits, increases to £111 per week (£5772 per annum).
The Primary Threshold, above which employees begin to pay National Insurance, increases to £153 per week. The main rate of Class1 NIC’s due on earnings above this threshold and up to the Upper Earnings Limit remains unchanged at 12%.
The Upper Earnings Limit increases to £805 per week. The additional rate of employee Class 1 NIC’s on earnings above this point remains unchanged at 2%.
The Secondary Threshold, above which employers Class 1 NIC’s become due, increases to £153 per week.
The Class 1 employer rate of NIC’s remains unchanged at 13.8%.
The Statutory Sick Pay (SSP) rate increases to £87.55 per week.
From 6 April 2014 employers are no longer able to recover any SSP from HMRC.
The weekly rate for Statutory Maternity Pay (SMP), Ordinary Statutory Paternity Pay (OSPP), Additional Statutory Paternity Pay (ASPP) and Statutory Adoption Pay (SAP) increases to £138.18.
REAL TIME INFORMATION
From 6 April 2013 it became compulsory for the large majority of employers to begin reporting PAYE information to HMRC in real time – known as Real Time Information or RTI. The system hasn’t been without its teething problems with HMRC admitting glitches that required fixing.
Payroll year end will feel a bit different this year, with employers no longer required to file a P35 Employer Annual Return and associated P14s. Instead generally it should be as simple as marking your final RTI return for 2013/14 as being the ‘Final Return’, completing the end of year questions and declarations and providing P60’s for your employees. Further guidance can be found at www.hmrc.gov.uk/payerti/end-of-year/tasks.htm.
Changes in RTI reporting for the 2014/15 tax year include the addition of an extra banding in reporting the hours worked by your employees and the introduction of a field for indicating the reason for any late reporting of RTI.
Under RTI employers are no longer required to submit new starter forms P46 or P45 Part 3. Instead HMRC have introduced Starter Checklists to help employers gather the information required to be reported the first time you pay your employee, which is done via the FPS. These can be found at http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=kPZMkDs75qQ&formId=7377.
New in-year penalties for late filing of RTI and late payment of PAYE/NI were due to be introduced from this April, however HMRC announced that, to allow more time to adapt to reporting in real time, employers won’t be charged late filing penalties as long as they bring themselves fully up to date by 5 October 2014 and that automatic late-payment penalties won’t be introduced until April 2015. However, from April 2014 HMRC will charge interest on any in-year payments not made by the due date.
NICs Employment Allowance
In the Budget 2013 the Chancellor announced the creation of a new Employment Allowance, allowing the majority of businesses and charities a reduction of up to £2000 in their employer Class 1 NIC liability each year. The allowance will be claimed as part of the normal payroll process via RTI reporting. The Employment Allowance will be offset against employers Class 1 NICs when they become due, until either the full £2000 allowance is used up or the tax year ends, whichever is soonest.
WORKPLACE PENSIONS and AUTO ENROLMENT
You will no doubt have read in the Press and seen on the TV news about Workplace Pensions and Auto-enrolment. This change in law will see every employer in the UK required to help more of their workers save for retirement. It will involve new legal duties including the auto-enrolment of eligible employees into a qualifying pension scheme and paying a minimum contribution into that scheme. The changes, which for larger employers began in 2012, are being phased in over a number of years, with each employer being allocated a ‘staging date’ from when their duties will begin.
If you are a payroll client of ours, we will already have contacted you if this legislation is relevant to you. Alternatively please visit the Payroll News section of our website for more details. Grant & Co will be offering a complete Auto-enrolment service to our payroll clients, which will include workforce assessment and communication and management of pension contributions making compliance simple and hassle free.
If you would like further information or advice, please do get in touch.
A Greener Service
As part of our effort to be as green as possible, please note it is possible for us to upload payslips / payroll summaries to the secure Clientzone area of our website for you to download at your convenience. If you would like to take advantage of this service, please let our Payroll Department know.
If you would like further advice or information on any of the above issues, then we’d be pleased to help.
Telephone – 01242 223160
Email – email@example.com.