Payrolling of benefits: From the start of the tax year 2016/17, employers can account for the tax on benefits provided to employees through PAYE each pay day. Employers must register with HM Revenue and Customs (HMRC) using the online Payrolling Benefits in Kind (PBIK) service before 6th April 2016 to start payrolling for tax year 2016/17.
HMRC will amend tax codes before the start of the tax year to remove any benefits previously included. In later years employers changing over to payrolling must register well before the start of the tax year.
Registering with HMRC allows you to payroll tax on benefits without the need to submit a form P11D after the end of the tax year. You can register with HMRC using the PBIKs service
Using the online service, you can:
• Choose which benefits and expenses you want to include in the payroll for the following tax year
• Add or remove benefits and expenses
• Exclude employees who receive benefits or expenses but don’t want them payrolled. For these employees you must continue to report the benefit or expense on a P11D (you can exclude an employee at any time in a tax year but once you’ve done this you can’t reverse the decision, in year)
The only benefits you won’t be able to payroll are:
• Vouchers and credit cards
• Living accommodation
• Interest free and low interest (beneficial) loans
Tax is collected on benefits and expenses by adding a notional value to your employee’s taxable pay in payroll, tax is then deducted or repaid as usual as per the employee’s tax code.
PBIK functionality is planned for BrightPay 2016/17.
Currently there are two types of Income Contingent Student Loans however, only one is repaid via deduction through payroll. Income Contingent Loans pre-September 2012 are known as Plan 1 loans and are currently operated through payroll. Loans taken out post-September 2012 are known as Plan 2 loans and are currently repaid outside of the payroll directly to the Student Loans Company.
From 6 April 2016 Plan 2 loans will also be calculated and repaid via deduction from payroll. Employees repaying under the existing threshold will not be affected by the change.
Plan 1 Loans - £17,495 per annum
Plan 2 Loans - £21,000 per annum
Key employer facts:
• Employers will never be asked to operate more than one plan type at a time for an employee
• The main employer notice will continue to be the SL1 start notice, every SL1 issued will indicate which plan type should be operated
• From the 6th April 2016, the starter declaration checklist will prompt employers to ask new employees about their student loan plan type
• The P45 will not be amended, it will continue to indicate if employees were repaying a student loan in their previous employment but it will not specify if it was a Plan 1 or Plan 2 loan
• If new employees cannot say which Plan type they have, the default for employers is Plan 1
• If this is incorrect, HMRC will be sending a SL1 anyway once the new employee information is sent on the first FPS
• If applicable, the Plan type can be amended within the payroll software
Further information can be found in HMRC’s August 2015 Employer Bulletin
Welcome news as the start date for automatic in-year filing penalties for late submission of an RTI return will be delayed until 6 March 2015 for PAYE schemes with less than 50 employees. Late filing penalties for PAYE schemes with 50 or more employees will start on 6 October as originally planned.
HM Revenue & Customs (HMRC) has said that the extra time will give smaller employers, who appear to be experiencing the greatest difficulties with RTI, more time to adjust their processes to comply with RTI requirements. It also gives HMRC more time to update its systems and enhance its guidance and customer support.
HMRC will send electronic generic notification notices to all employers during September so they will know when penalties will start for them.
These notifications will confirm whether HMRC’s records show that the employer has:
• less than 50 employees or
• 50 or more employees
The date on which the number of employees is to be measured is the 6 October but HMRCs count will be based on an earlier date. If an employer has been miscategorised, they will have to write to HMRC’s Employer Office to tell them they have less than 50 employees on 6 October.
The in-year penalty notices will be issued quarterly with the first ones expected in early 2015. Appeals will be accepted where there is a reasonable excuse for submitting the return late; an online appeals service is available for these.
All penalties are due for payment 30 days following the date of the penalty notice. Penalties not paid on time will attract interest.
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
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.
Further to our Blog of 4th July HMRC have now confirmed that they have a fix in place to deal with the requests they have received from employers since April 2013 requesting to change their PAYE scheme to annual.
All requests that have been made since April will be accepted and those schemes changed to annual schemes. Employers will NOT be notified when that change has been made.
An annual scheme must meet the following criteria:
If you are making an annual payment to an employee using BrightPay remember to tell BrightPay the payment frequency for the FPS is annually, if you have any queries please phone the BrightPay Support Team.
When a business is registered as an annual scheme, the employer is not required to submit an Employer Payment Summary (EPS) for the 11 months of the tax year where no payments are made to the employees.
If an employer that is registered as an annual scheme pays an employee or employees and submits a Full Payment Submission (FPS) for more than a single month in the year HMRC will automatically cancel the annual payer status for that year and the following years and will write to the employer to advise them of same.
Full details can be found on the HMRC Website, http://www.hmrc.gov.uk/news/annual-schemes.htm
2015 could see fathers in the UK taking as much as 50 weeks’ parentalleave. It could also radically change the career paths of mothers and return these skilled resources to the economy more quickly. But how will it work in practice? The “additional paternity leave” regime is effective for children due on or after 3 April 2011. Here, if a mother returns to work before the end of her 52-week statutory maternity leave period, the father/her partner is entitled to use the remaining unused portion of her maternity leave. If the mother has returned to work before the end of the 39-week paid statutory maternity leave period, the father/mother’s partner is also entitled to the remaining portion of unclaimed statutory maternity pay.
The two main conditions attached to the existing additional paternity leave regime are that: (1) the father/mother’s partner is only entitled to additional paternity leave if the mother has returned to work; and (2) the period of additional paternity leave cannot begin any earlier than 20 weeks from the date of the child’s birth or placement for adoption.
Proposed New Regime
The proposed shared parental leave regime will maintain the two-week compulsory maternity leave period for the mother immediately following the child’s birth or placement for adoption
After initial 2 week period: both parents will be entitled to share the remaining 50 weeks’ parental leave in any way they choose. This means both parents can take their joint parental leave entitlement either concurrently or consecutively, by alternating in periods of no less than one week at a time. The total number of weeks taken by both parents in aggregate must not exceed 52 (including the mother’s compulsory two weeks). This new regime will therefore permit mothers to return to work immediately after the initial compulsory two-week period, allowing the father/mother’s partner to take the whole of the remaining 50 weeks.
Payment - only the first 39 weeks of parental leave will be paid. The existing minimum two weeks’ statutory paid paternity leave system will continue to operate as before. The current additional paternity leave regime will be abolished.
How will this affect your business?
Firstly, employees will not be required to provide their employers with full details of their plans regarding the whole parental leave period from the outset.
8 Weeks Notice: They will be required to give employers 8 week’s notice of their intention to end the maternity leave and commence the shared parental leave, and the separate employers of both parents must then agree with their respective employees to the pattern of parental leave.
No Limit - there is no limit to the number of times parents can alternate between weeks of parental leave and work, which can result in their employers receiving notice of multiple proposed periods of leave in an ad hoc and piecemeal fashion.
The Department of Business Innovation and Skills (BIS) envisages that the new system will require a “light touch” administrative approach but employers have expressed disquiet about the anticipated managerial burden of implementing the new policy. For example, although BIS has stated it does not expect that each parent’s respective employer will need to contact the other in order to verify their employees’ leave entitlements, it is difficult to see how this can otherwise be achieved without risking errors or even employee fraud.
The increased flexibility for parents also means that employers may find themselves obliged to hire short-term replacements for these employees or share the burden of additional work amongst other employees.
Brightpay.co.uk will issue updates on any changes in relation to this new law.
HMRC have confirmed that they have received a number of requests since April 2013 from employers asking to change to annual payment scheme for PAYE.
At the moment they are unable to process requests from employers to:
There will be a fix for this by the end of July and this will be confirmed in the “what’s new” section of the HMRC website. In the mean time employers who are not paying employees should submit a nil Employer Payment Submission by the 19th of each month.
When the fix is in place all requests that have been made will be accepted and changed to annual schemes. These employers will be informed on what action they need to take once the fix is in place.