A new service launched this month makes it easier for businesses to meet their legal obligation to deduct child maintenance from employee’s wages. The Child Maintenance Service Employer Self Service replaces the old paper-based system with a new free online portal.
Using the self service website you can:
• View the amounts you are due to deduct for specific employees
• Complete an online schedule that details your actual deductions and the total payment
• View schedules and payments you have made previously
The Department for Work and Pensions (DWP) has set up a dedicated team of 25 staff to deal with any enquiries from employers regarding child maintenance, thus providing a better service for them through a single point of contact.
Work & Pensions Minister Steve Webb said “This new online service will reduce the time and effort needed for employers who have to deduct child maintenance for their staff and will be particularly helpful to small businesses. We are replacing the outdated child maintenance system with a more efficient streamlined service to better support parents and employers.”
Further information can be found at www.gov.uk/child-maintenance-for-employers
When taking on a new employee employers reporting their PAYE in real time are no longer required to submit a completed P46 or P45 Part 3 to HMRC
Instead they will need to gather specific information to enable you to complete and submit a Full Payment Submission (FPS) to HMRC the first time you pay a new employee.
In light of this change of process, HMRC are replacing the P46 starter forms on their internet site with Starter Checklists to help you gather the information needed to submit a FPS. The main checklist can be found at http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=kPZMkDs75qQ&formId=7377
You do not need to send the checklist to HMRC, and there is no obligation for you to use one, you can, if you prefer, obtain the starter information for the FPS using your own forms and practices.
HMRC also has a separate checklist to help you gather information if you take on a new employee who has been seconded to work in the UK from overseas. The checklist and guidance can be found at http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=2Abcj2SjIsA&formId=7398
The data items; “Living in UK for 183 days or more”, “Living in UK for less than 183 days”, “Employee Working both in and out of the UK but Living Abroad” and “Indicator of European Economic Area citizen” must be left blank unless the employee is seconded to you from an overseas employer.
There are different types of payments made to employees when they are being made redundant and they are all treated differently. Some types of leaving payments are tax-free , some taxable in full and others are taxable over £30000. Most redundancy payments are tax free up to £30,000 and are not liable for NICs. Employers must remember that separate rules apply for working out the PAYE tax and NICs due.
For NICs purposes payments on redundancy are either wholly liable to NICs or not liable at all. Outstanding payments for salary and holiday pay are treated as earnings for the purposes of tax and NICs.
To see a list of PAYE tax and NIcs rules covering the most common types of one-off leaving payments, for help with these payments you should read the HMRC publication CWG2 (Employer further guide to PAYE and NICs).
For taxable redundancy payments where you have shown the date of leaving on a previous FPS and have provided the employee with a P45 – the payments must be shown as payments after leaving by completing the following steps:
- Deduct PAYE Tax using code OT on a week1/Month 1 basis.
- Calculate NICs if appropriate – help can be found in HMRC Publication CWG2
- Include this additional payment and the tax deducted on the FPS and in the pay and tax in this period- ensure the revised YTD figures include the additional payment. If you make a payment after leaving in a different tax year the YTD figures on the FPS should only reflect the additional payment.
- Make sure that the employee is given written confirmation of the payment (Payslip , letter or other printable document) which clearly shows the date of the payment, the gross amount, any PAYE Tax or NICs deducted and that the payment is a post-leaving payment.
- The original date of leaving should be put on the payment after leaving and the employee must not be given another P45.
Abolition of Employers National Insurance Contributions for Under-21s
From 6th April 2015 employers will no longer be required to pay Class 1 secondary National Insurance Contributions (NICs) on earnings up to the upper earning limit (UEL), for employees under the age of 21. The upper earning limit in 2015-16 is expected to be £813 per week (£42,285 per annum); employer NIC will be liable as normal beyond this limit. The saving to the employer will be £500 where an employee earns £12,000 per annum and £1,000 where an employee earns £16,000 per annum.
The aim of the policy is to encourage employers to employ individuals under the age of 21. Under current law, employers are liable to Class 1 secondary NICs on all earnings paid to employees over the age of 16 provided their earnings exceed the secondary threshold which is currently £148 per week.
This move follows the introduction of the Employment Allowance of £2,000 per year for all businesses and charities, to be offset against their employer Class 1 secondary NICs liability from April 2014.
HMRC director general personal tax, Ruth Owen, who holds responsibility for the RTI project, has announced “Penalties for late filing of RTI submissions were due to come in from April – that will now start from 6th October this year, so that gives employers through to October to bring everything up to date.
“In terms of automated late-payment penalties they were due to start in April of this year and recognising that people are still getting to understand their charges under RTI we’ve decided to start late payment penalties from 6th April 2015 – so a 12 month delay to those penalties.
“Interest will still apply, so anyone paying late payment interest – this will apply from April 2014, as has always been the case, so no change. We are not delaying interest.
“Also there are some businesses that have been using the concession for ‘on or before’ during this year for whom the concession will not apply from April, so if you are a small but not micro business you will now need to start reporting in real time."
The Chartered Institute of Payroll Professionals (CIPP) has been lobbying for a delay in the introduction of RTI penalties as reported here.
Its associate director of policy, research, and strategic visibility, Karen Thomson, said: “The CIPP is delighted the minister, David Gauke, and HMRC has listened to the concerns of the profession and welcomes the delays to the RTI penalty regime.
“This additional time will allow both employers and HMRC to iron out all the teething problems being experienced by employers, particularly around the payment reconciliation process without the fear of financial implications.”
And Paul Aplin, chairman of the ICAEW tax faculty technical committee, said: “I think it is absolutely essential that the penalties are delayed as there have been a number of issues including incorrect demands, difficulty in reconciling amounts and also not all employers are even on RTI now so we have not been through one complete cycle and until we have been through a complete cycle for all employers and until those issues with incorrect demands are sorted it is completely inappropriate to charge penalties.”
0800 904 7900
HM Revenue & Customs (HMRC) appreciate that some individuals and businesses may find it difficult to meet their tax obligations due to the severe floods.
A new helpline has been set up to support those affected with fast, practical help and advice on tax matters such as offering time to pay tax debts for those affected by flooding.
The helpline is: 0800 904 7900. Opening hours are Monday to Friday 8.00 am to 8.00 pm, Saturday and Sunday 8.00 am to 4.00 pm
For any employee for which you have been instructed to apply the student loan deduction, you will see an increase to net pay directly resulting from the change to the Student Loan thresholds with effect from 06th April 2014.
With effect from 06th April 2014 the student loan threshold increases to;
|£16,910 per year||£16,365 per year 2013/14|
|£1,409.16 per month||£1,363 per month 2013/14|
|£325.19 per week||£314 per week 2013/14|
The deduction rate remains at 9%
Employees should direct all queries to the Student Loan Company;
Tel 0845 300 50 90
(open Mon-Fri from 8.00am to 8.00pm and between 9.00am and 4.00pm on Sat - Sun)
UK businesses with less than 30 employees will be impacted by auto enrolment from the start of 2016.
BrightPay will be a great aid with auto enrolment as it already has all the information required to assess which of your staff should be enrolled and then to handle the pension deductions (and your contributions) in the manner prescribed by the regulations.
Apart from assessing employees and handling deductions, there are numerous additional auto enrolment tasks that BrightPay will help you with. An example of this is producing the letters or emails that must be sent to your employees on enrolment (or postponement).
A month or two before your staging date (the date on which your auto enrolment responsibilities commence), decide which pension provider to use and register with that provider. NEST is probably the most popular scheme as it is government backed and has an obligation to accept employers of all sizes and employees of all earnings. This is different to some schemes who may attempt to cherry pick who they take on.
When your staging date arrives, an hour or two should be sufficient to deal with the following auto enrolment tasks:
BrightPay will guide you through the above tasks.
From that point on it is just a matter of monitoring. The initial month or two after staging you will need to deal with any requests from employees to opt out and any requests from employees, who you were not obliged to enrol, to opt in (or join).
BrightPay will monitor the age and earnings of your staff in each subsequent pay period to see if any further enrolments are required and if any new employees should be enrolled. For most small businesses, these enrolment events will probably happen no more than once or twice a year and each such event should only take a few minutes to process.
A contribution file will need to be submitted after each pay period to the pension provider and payments of all amounts due must be made by 22nd of the following month. This file will be produced by BrightPay in much the same way as RTI files are currently produced.
So, your new payroll workflow will be something like:
Steps 2 and 6 are new.
In conclusion, staging will be a small bit of work but, after that, auto enrolment should become a seamless part of your payroll process.
There are a number of 2014-15 Budget measures which will affect the payroll for employers.
As a general rule, effective from 05th April 2014, unless an amended code notification has been received on a form P9 (T), employers should amend 2013-14 codes as follows:
National Insurance contribution thresholds 2014-15
|Weekly Lower Earnings Limit (LEL)||111|
|Weekly Primary Threshold (PT)||153|
|Weekly Secondary Threshold (ST)||153|
|Upper Earnings/Profits Limit (UEL/UPL)||805 (41,865 per year)|
|Small Earnings Exception (SEE)||5885|
|Lower Profits Limit (LPL)||7,956 (per year)|
|Employment Allowance||2,000 (per year, per employer)|
Statutory Payment Changes 2014/15
Statutory Adoption Pay: Earnings threshold £111.00, Statutory Payment Changes 2014/15
Statutory Adoption Pay: Earnings threshold £111.00, Standard Rate £138.18
Statutory Maternity Pay: Earnings threshold £111.00, Standard rate £138.18
Statutory Paternity Pay: Earnings threshold £111.00, Ordinary Statutory Paternity Pay (Standard Rate) £138.18, Additional Statutory Paternity Pay (Standard Rate) £138.18
Statutory Sick Pay: Earnings threshold £111.00, Standard rate £87.55
National Insurance: £2,000 employment allowance
The Government will introduce an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 secondary NICs liability from April 2014.
Exemption threshold for employer provided beneficial loans
Legislation will be introduced in Finance Bill 2014 to increase the exempt threshold for employment-related loans from £5,000 to £10,000 with effect from 6 April 2014.
The Chancellor announced the creation of a NICs Employment Allowance in the 2013 Budget. The implementation date for this is planned for 06th April 2014.
Businesses, Charities and Community Amateur Sports Clubs will be able to reduce their NICs bill by up to £2,000 per year. The Employment Allowance is to be set against an employer’s liability for secondary Class 1 National Insurance Contributions (NICs) only, not against other NICs such as primary (employee’s) Class 1, Class 1A or Class 1B contributions.
The greatest benefit of this allowance goes to small businesses, as it will reduce their National Insurance Contributions bill the most. Over 90% of the benefit of this allowance will go to small businesses with fewer than 50 employees.
This will also mean that businesses will be able to employ four adults or ten 18-20 year-olds full-time on the National Minimum Wage without paying any employer National Insurance contributions at all.
The claim process for eligible employers is very straightforward and is administered through the payroll;
The Employment Allowance calculator allows you to see the effect of the Employment Allowance in 2014. For example, you can see the effect on your National Insurance Contributions bill of employing one additional person or you can look at the reduction to your current National Insurance Contributions payments. Simply follow the link to access the calculator;