Payroll Archives - Southside Accountants Wimbledon

April 2015 – Employer Payroll Taxes

Apr8

As a new tax year kicks off, make it your new (tax) year’s resolution to get your payroll system on top form. Further, it is important that you are are up to date with the changes in employer payroll taxes.

Not only are there important changes to payroll, there are optional allowances and provisions that could well benefit your business and employees.

Personal Allowances

The most basic change is the increase of the standard personal allowance to £10,600 as from 6th April 2015. Most of your staff will probably be on the tax code 1060L. … Continue Reading

Annual Payroll and RTI

May13

Under real time information (RTI) PAYE reporting, a Full Payment Submission (FPS) report is required to be made to HMRC every time an employee is paid, not just once after the end of the tax year as is currently the case. RTI will be compulsory for most employers from the first pay date following 6 April 2013.

Many one-person companies may wish to pay the director just once a year and avoid monthly RTI reporting. If you want to do this, you must first check that your payroll software will cope with an annual payroll, as many main-stream payroll software packages do not.

The second stage is to understand what reports HMRC will require under RTI. An annual payroll must be registered with HMRC. The current advice on the HMRC website says: “If all payments on which tax and NICs are due are paid to your employees annually in a single tax month, you can ask HMRC to be treated as an ‘annual payer’. You must use the same month every year, so if this changes or you start paying your employees more frequently, you will need to tell HMRC.”

There should be more guidance on the HMRC website about annual payrolls soon. If you do not register the payroll as being annual you will need to submit an Employer Payment Summary (EPS) to HMRC every month, which shows nil payments made to the employee.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

RTI Gathers Pace

Jan21

We warned you previously about the new real time information (RTI) process. Now the Taxman is writing to all employers who are not already part of an RTI pilot, to tell them how to prepare for RTI.

To recap: RTI is a new way of submitting payroll data to the Tax Office. Instead of sending PAYE information to HMRC once after the end of the tax year, employers must submit their payroll data online on every occasion their employees are paid.

If you run a computerised payroll, your payroll software should be updated to cope with RTI. However, do check with your software provider, as some payroll packages are not going to be revised for RTI. In which case you need to find new payroll software, or use the free software provided by HMRC (for up to 9 employees), or ask us help you process your payroll each month.

All small and medium sized employers will be expected to start using RTI to submit payroll data from April 2013, unless they have agreed a different start date with the Tax Office. Once you receive an ‘invitation’ from the Taxman to use RTI, you must join the RTI system from the date directed.

You will need to collect some new data items under RTI which are not currently required for PAYE, such as:

– Hours worked per week for each employee based on one of four bands;
– Details of those earning less than the lower earnings limit (£107 per week);
– Which employees are paid irregularly, perhaps only once per year; and
– Passport numbers for employees who do not have NI numbers.

In addition you will need to have the correct NI number (where this exists), date of birth, gender, full name and address for each employee.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Payroll Taxes

May19

Irrespective of the form of business in which you operate, if you are going to have employees, then you will have to contend with payroll taxes. The brief summary that follows will give you some guidance in the rules and regulations of H M Revenue & Customs.

Helpful publications

H M Revenue & Customs publish various booklets relating to how PAYE is operated and the legislation that you have to comply with. Not only do you collect and remit PAYE to the Collector of Taxes on behalf of H M Revenue & Customs, you also operate the sick pay scheme and maternity pay scheme. You should run the PAYE scheme in accordance with the legislation and should you fail to comply then H M Revenue & Customs will look to you for the tax or NIC you failed to deduct. This can be costly if you are unable to recover the tax and NIC from the employee.

Do you have employees?

Whether an individual is an employee or not in a particular situation is a question of fact depending on the terms on which he works. The question of whether an individual is employed or self-employed is very important for the business “employing” him or her, as that business has to comply with the reporting requirements.

In certain areas H M Revenue & Customs has placed emphasis on reclassifying individuals claiming to be self employed and has issued leaflet IR56 entitled “Tax: employed or self employed”. This booklet sets out the questions that should be answered to determine the problem. If you have treated someone as self employed and subsequently after a routine visit from H M Revenue & Customs it is clear that they were employees, then the tax and NIC which should have been paid will be assessed on you. Therefore it is important to ensure when using the services of self employed people, that they are in fact self-employed. If doubt exists as to the status of an individual, the situation can be clarified with H M Revenue & Customs.

The Operation of a PAYE Scheme

Upon registration H M Revenue & Customs will send to you guidelines on operating PAYE, National Insurance, Statutory Sick Pay and Statutory Maternity Pay (employer’s pack). Included will be a number of forms with which to operate the PAYE and NIC system. You should familiarise yourself with and have supplies of these forms, which are as follows:-

P11	Deduction working sheet
P46	Notification to the Inland Revenue where no code has been notified to the employer and application for coding
P46(Car)	Notification of a car provided for the private use of an employee or a director
P45	Details of employee leaving
P14/P60	End of year return and employers certificate
P35	Employer’s annual statement
P38A	Employer’s supplementary return
P11D	Expenses and benefits
P9D	Expenses payments and income from which tax cannot be deducted.

In order to calculate the amount of tax and national insurance due by an employee, H M Revenue & Customs will supply you with sets of tables. By reference to the “tax free” tables and an employee’s tax code you will be able to calculate the amount of salary that is not subject to tax. The difference between this figure and the gross amount is the employee’s taxable pay. This can then be calculated by reference to another set of tables. The employer’s and employee’s national insurance is calculated by reference to the gross pay with a third set of tables. Special rules exist for the calculation of national insurance for directors.

The tax and national insurance should be paid to H M Revenue & Customs by the 19th of the month following that in which the salaries were paid.

In most businesses, the directors, and often the employees, have benefits that are not immediately taxed through the PAYE system, the most usual being the provision of a car and possibly fuel. Class 1A national insurance contributions are due on the taxable value of these benefits in kind and are due on the 19 July following the fiscal year in which the benefits are made available. In addition, H M Revenue & Customs requires on an annual basis, a form P11D (Return of expenses payments and benefits) for all directors irrespective of income and all employees receiving remuneration including the benefit in excess of £8,500. For those employees earning less than £8,500 but who receive expense payments and benefits, a form P9D is required.

A form P46(Car) needs to be completed quarterly on 5 July, 5 October, 5 January and 5 April if any employees have been provided with or have changed their company car. Further details are given on the taxation of company cars in Inland Revenue leaflets IR132 and IR133. H M Revenue & Customs will still require form P11D to be submitted annually in addition to the P46 (car) forms.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.