Tag Archives: PAYE

Payroll changes for the 2018 / 2019 tax year

With a new tax year fast approaching there are some key changes to be aware of:

  • the tax free personal allowance will increase to £11,850 and the new emergency tax code will be 1185L.
  • the National Living Wage NLW (for those aged 25 & over) will increase from £7.50 to £7.83.
  • the National Minimum Wage NMW will increase as follows:
Employees aged 21-24 – from £7.05 to £7.38
Employees aged 18-20- from £5.60 to £5.90
Employees aged under 18- from £4.05 to £4.20
Apprentices aged under 19, or aged over 19 in the first year of their apprenticeship – from £3.50 to £3.70 
  • the minimum contribution rates for workplace pension schemes will increase to 5%, with a minimum of 2% employer contribution.  (eg. employer 2%, employee 3% contribution)
  • Statutory Sick Pay will increase from £89.35 per week to £92.05 per week.
  • Statutory Maternity, Paternity, Adoption and Shared Parental Pay will increase from £140.98 per week to £145.18 per week.
  • the repayment threshold for student loans will increase as follows:
    Plan type 1 loans from £17,775 to £18,330
    Plan type 2 loans from £21,000 to £25,000

Please do not hesitate to contact us if we can help you meet your payroll and workplace pension duties.

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PAYROLL NEWS

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

 NICS

 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%.

 Statutory Payments

 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.

 Penalties

 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 – payroll@grantandco.co.uk.

Payroll News

 The 2013 / 2014 TAX YEAR holds many changes and challenges for employers

Today we published a Payroll Newsletter highlighting the many changes and challenges faced by employers in the coming tax year.  The full article can be read here, but these are some of the headlines:

Income Tax Allowances 

The basic personal allowance for 2013-14 increases to £9,440 and the tax code for emergency use will be 944L. 

Income Tax bands and rates

The tax bandwidths for 2013-14 are as follows:

Basic rate = 20%         £1 to £32,010

Higher rate = 40%       £32,011 to £150,000

Additional rate = 45%            £150,001 and above 

NICS

The Lower Earnings Limit, the amount of earnings which allow an employee to qualify for certain state benefits, increases to £109 per week.

The Primary Threshold, above which employees begin to pay National Insurance, increases to £149 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 reduces to £797 per week.  The 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 £148 per week.

The Class 1 employer rate of NIC’s remains unchanged at 13.8%.

Statutory Payments 

The Statutory Sick Pay (SSP) rate increases to £86.70 per week.

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 £136.78.

REAL TIME INFORMATION

From 6 April 2013 it becomes compulsory for the large majority of employers to begin reporting PAYE information to HMRC in real time – known as Real Time Information or RTI.  We have written about the changes previously in our blog (https://grantandcoaccountants.wordpress.com/2012/12/05/real-time-information-are-you-ready/), but essentially this means:

  • If you currently use commercial payroll software you will need to check that it is RTI compliant, upgrading your software if necessary.  If you currently use HMRC’s free Basic PAYE Tools software be aware that it will only be suitable for employers who have fewer than nine employees during a tax year. If you are likely to exceed this number you will need to either invest in commercial software or employ the services of a payroll provider such as ourselves.
  • You will need to send PAYE information to HMRC every time you pay your employees, on or before the time that you pay them, rather than after the tax year end as at present.

The new types of submission required by HMRC under RTI are as follows:

  • Employer Alignment Submission (EAS):  This is a one-off submission that      employers with 250 or more employees, or those whose PAYE scheme is      administered by two or more payroll systems / providers, have to send to HMRC to help align employee data with HMRC records.
  • Full Payment Submission (FPS):  The FPS must be sent to HMRC each time you pay your employees and contains key employee data plus details such as the amount you paid your employee(s) and deductions such as PAYE and NICs.
  • Employer Payment Summary (EPS):  This submission is required when you      haven’t paid any employees in a pay period or if you need to reduce the amount of PAYE/NI due to be paid to HMRC.  This may be because of things like SSP and SMP recovery, CIS deductions suffered and NIC holiday.  This must be submitted within 14 days of the end of the tax month, i.e. by 19th.
  • Earlier Year Update (EYU): This submission is used if you need to correct data submitted to HMRC in a previous tax year (only applicable for corrections to 2013/2014 and later years).
  • NINO Verification Request (NVR):  Once you have started submitting data to      HMRC via RTI you can use a NVR to verify or obtain a National Insurance number for new employees.

The following forms will no longer be required to be submitted to HMRC under RTI – P14/P35 end of year return, P45 starter / leaver form (although no longer required by HMRC, a P45 should still be issued to leavers), P46 starter form, CA6855 NINO trace form, P38(s) student form.

More information can be found at www.hmrc.gov.uk/payerti/at-a-glance.pdf.

Clients taking advantage of our outsourced payroll service need not take any action, as we have updated our payroll software, successfully taken part in HMRC’s pilot scheme and are fully RTI compliant. However, if you require any further information regarding RTI please give us a call. 

Making your PAYE payment to HMRC 

From the 2013 / 2014 tax year there will be just one HMRC bank account for making PAYE payments (including Income Tax, NIC’s, Construction Industry Scheme and Student Loan deductions), as follows:

Sort code 08 32 10
Account number 12001039
Account name HMRC Cumbernauld

Employers who previously paid using the Shipley account will need to update to the bank details shown above.

Student employees 

From 6 April 2013 students will be treated in exactly the same way as other employees and form P38(s) will be withdrawn. 

Auto Enrolment

As you are probably aware, starting with large employers (greater than 10,000 employees), from October 2012 a new system of workplace pensions is being rolled out.  Gradually, more and more people working for large and medium sized employers will be enrolled. By early 2014, everyone working for a company or organisation with a workforce of 350 people or more should have been signed up.  Smaller employers will then gradually be brought in, until by 2018 everyone should finally be in the scheme.

We will cover this topic in a separate newsletter shortly, but in the meantime if you would like an overview of Auto Enrolment or would like to know your Auto Enrolment staging date, please do get in touch. 

If you would like further advice or information on any payroll issues, then we’d be pleased to help.   

Telephone – 01242 223160

Email – payroll@grantandco.co.uk.

Getting ready for RTI

In just over a month the biggest shake up of the PAYE system, the introduction of Real Time Information (RTI), will be upon us. For the vast majority of employers RTI is going to be compulsory from 6 April 2013.  To make the transition as smooth as possible there are 3 questions you should be asking yourself now:

1.  Is my payroll software / provider RTI ready?

Under RTI HMRC’s Basic PAYE Tools software will only be suitable for employees who are likely to have no more than 9 employees in total (including starters during the tax year).  This may mean that if you have previously used this free resource you need to consider purchasing payroll software for the first time, or even outsourcing your payroll function completely.

If you currently use payroll software, then is it going to be upgraded to handle RTI for you?  Do check with your provider that their package is RTI ready.  Similarly if you currently use a payroll bureau, service provider or agent then talk to them now about how RTI will change the service they provide to you and if you’re not happy then shop around for an alternative.

2.  Is the employee data I hold accurate & up to date?

As part of the RTI process key pieces of employee information are submitted to HMRC via a report known as a Full Payment Submission (FPS), and by an initial Employer Alignment Submission (EAS) for larger employers, which are then checked against HMRC records.  These include:

  • Employee surname & forenames (this must an employee’s full name, no initials or common names must be used)
  • Employee date of birth (this should accurate, software default dates should not be used)
  • Employee National Insurance number (this must be accurate, temporary NI numbers, eg. TN845491F will not be acceptable)
  • Employee address (it is worth checking with employees that the address you hold is up to date)
  • Employee contracted hours. You must select the number of hours your employee is contracted to work from one of the following bands of weekly hours:
  1. Up to 15.99 hours
  2. 10 to 29.99 hours
  3. 30 hours or more
  4. Other

3.  Do I need to review my payroll procedures and / or train staff?

For example you may need to design new employee starter forms to capture the new data items needed for RTI submissions such as the employee contracted hours.  You may need to set up a system to make sure payments made to casual / occasional workers are recorded as under RTI it becomes compulsory to complete employee information and report payments for such workers even if they are paid below the National Insurance Lower Earning Limit (LEL).

Do you need to train HR / Payroll staff to make sure they are aware of the impact of RTI?  Once RTI is bedded in penalties will be raised by HMRC for late or inaccurate submissions.

OUR SUMMARY

By being prepared now you can ensure that the switch to RTI is as painless as possible and by ensuring that the data you will be sending to HMRC is as accurate as possible you are likely to significantly reduce the risk of triggering any HMRC investigation of your PAYE records.

If you would like further information or advice regarding RTI, then do please get in touch.  Having successfully joined HMRC’s RTI pilot we are well placed to help.  Alternatively if you feel now would be a good time to look at outsourcing your payroll function then we can offer a cost effective solution.

REAL TIME INFORMATION – are you ready?

As you will probably be aware April 2013 brings an important change to the way in which PAYE is reported to HMRC.  The introduction of Real Time Information (RTI) means that rather than just sending your PAYE information to HMRC after the end of the tax year, you will be required to send an online report every time you make a payment to your employees. 

What are the challenges for me as an employer? 

  • If you are not already registered for PAYE online you will need to do so.
  • If you currently use commercial payroll software you will need to check that it will be RTI compliant, upgrading your software if necessary.
  • If you currently use HMRC’s free Basic PAYE Tools software be aware that when RTI comes in it will only be suitable for employers who have fewer than nine employees during a tax year.  If you are likely to exceed this number you will need to either invest in commercial software or employ the services of a payroll provider.
  • Prior to April 2013 you will need to ensure that your payroll data meets the quality required under RTI, checking that employee details such as date of birth, gender, address and National Insurance number are correct and entered in full.  You will also be required to include new information, such as the number of hours your employees work.
  • It will become compulsory to complete employee information and report payments for temporary / casual workers and employees paid below the National Insurance Lower Earning Limit (LEL).
  • You will need to review certain payroll procedures such as the way starters and leavers are processed.
  • From 2014 it is expected that HMRC will introduce penalties for late and or inaccurate RTI returns and for late payment of PAYE/National Insurance.

 How can Grant and Co help? 

We are able to offer a complete, outsourced payroll solution provided by the experienced staff in our dedicated Payroll Department.  We already look after the payroll function for over 100 clients and having successfully joined HMRC’s voluntary pilot scheme we are ahead of the game when it comes to RTI.  Alternatively, we can provide RTI advice and / or training.

If you would be interested in a cost effective, proven and reliable solution to the challenges of Real Time Information then talk to us about how we can tailor our payroll service to your specific business needs.  Contact Sara or Tamsin on 01242 223160, or payroll@grantandco.co.uk for more information and a no obligation quote.

Real Time Information

We are pleased to announce that we have sucessfully joined HMRC’s RTI pilot and are now fully RTI compliant.

Real Time Information brings a major change to the way PAYE is reported to HMRC.  From April 2013, instead of the current system whereby an annual employer’s return (P35) is sent to HMRC at the end of the tax year, information about PAYE payments will need to be reported in real time each time an employee payment is made.

If you require any help, advice or information about RTI and how it affects your business and payroll process, then please do get in touch.  Maybe you feel that now is the time to outsource your payroll function?  We have a dedicated, highly experienced Payroll Team and offer a cost effective payroll solutions to suit individual business needs.    Telephone Tamsin or Sara on 01242 223160, or call in to see us.