Mar 2017


Spring Budget 2017 - Employer Focus

The main points to be noted by employers from Spring Budget 2017 announced by Chancellor of the Exchequer, Philip Hammond are:

• The personal tax allowance will increase by £500 from £11,000 to £11,500 from 6th April 2017 as previously announced, this is in line with the government's goal to have the personal tax allowance at £12,500 by 2020.

• The Dividend Allowance will decrease by £3,000 from £5,000 to £2,000 from 6th April 2018. This means that there is no tax payable on dividend payments up to £2,000 from April 2018 onwards. Any dividends above this allowance will be taxed at 7.5% for basic-rate taxpayers, 32.5% for higher-rate taxpayers and 38.1% for additional-rate taxpayers.

• There were no changes regarding company car and van charges or fuel charges.

• In the Finance Bill 2017, legislation will be introduced by the government about dates where an employee can make a payment in return for a Benefit in Kind they receive, this can reduce the taxable value of the Benefit in Kind. The 6th of July after the end of that tax year has been decided by the government, so if employees make a payment for the BIK before that date, they can reduce the taxable value of the BIK or remove if payment in full is made. This will be for the 2017-18 tax year and following tax years.

• Termination payments over £30,000 which are subject to income tax currently from April 2018 will be subject to Employer National Insurance Contributions (NICs) The first £30,000 of a termination payment will remain exempt from Income Tax and NICs. In the Finance Bill 2017, the tax treatment of termination payments will be clarified and this will include all contractual and non-contractual payments in lieu of notice taxable as earnings and requiring employers to tax the equivalent of an employee’s basic pay if notice is not worked. The changes, including to Foreign Service Relief, will take effect from 6 April 2018.

• The Money Purchase Annual Allowance to £4,000 will be reduced from April 2017, down from £10,000. This restricts the amount of tax relieved contributions an individual can make in a year into a money purchase pension, if they have flexibly accessed their pension savings.

• The Government is carrying out the first statutory review of State Pension Age and the details will be published in their review by 7th May 2017.

• HMRC's compliance team are monitoring employers that are claiming the Employment Allowance, as it has been reported that some employers are using avoidance schemes to avoid paying National Insurance amounts due.

Posted byDebbie ClarkeinHMRCPayrollPayroll Software

Feb 2017


2017-18 Notice of Coding - P9

Electronic Notification - HMRC will be sending out email notifications from 18th February up until the 5th March to notify employers that P9 coding notices for the tax year 2017-18 are available to view online. HMRC have advised employers to ensure when logging into their online account to ensure they have the correct tax year selected, 2017-18. And also if the notices are not available that day, to leave it 24 hours and log in the next day and the P9s should be available to be viewed.

HMRC have commenced to send out the P9 paper coding notices and employers should expect to receive them up until the 17th March, although some employers may receive this notifications up until 20th March. If for some reason the employer does not receive the paper coding notice before the 6th April 2017, the employer may contact HMRC Employer Helpline on 0300 200 3200 and request a duplicate. Just to note the duplicate will only be made for the full employer PAYE scheme and no individual tax codes will be sent for individual employees. HMRC have advised that the duplicate requests may take up to 14 working days.

Posted byDebbie ClarkeinHMRCPayroll Software

Feb 2017


Higher rate Scottish Taxpayers to pay more

The new tax year will see thousands of Scots having to pay more in income tax compared to their British counterparts earning the same salary.

This follows the announcement that the wage at which Scots will start to pay the 40p income tax rate will remain frozen at £43,000 in tax year 2017-18. For the rest of the UK, this threshold will increase to £45,000 when the new tax year commences in April.

As a result, it is estimated that approximately 370,000 higher rate taxpayers in Scotland will pay up to £400 more than people earning the same in the rest of the UK.

Under devolved powers, Scotland is able to vary the rates of Scottish income tax (SRIT) by up to 10% from those set by the government in Whitehall.

Posted byVictoria ClarkeinHMRCPAYEPayroll

Dec 2016


Wales handed powers to set income tax

Income tax rates in Wales could vary from April 2019 following a deal between the Welsh government and UK treasury.

In a milestone agreement between the UK and Welsh governments, Wales will take control of 10p in each band of the income tax collected within its borders.

The new fiscal framework was negotiated by chief secretary to the Treasury David Gauke and Welsh finance Minister Mark Drakeford.

The block grant that Wales gets from the Treasury annually will be reduced in a fair way, the governments claimed.

Posted byCaoimhe ByrneinHMRC

Oct 2016


NINOs with prefix 'KC' will be accepted by HMRC from 15th November

National Insurance Numbers had been issued with the prefix of KC by Jobcentre Plus (on behalf of the Department for Work and Pensions). These National Insurance numbers are valid. HMRC had issues with these NINOs with the KC prefix as HMRC has not included the KC prefix as a valid prefix on their list of valid prefixes to software developers. So HMRC's systems did not recognise the prefix KC and most payroll software did not recognise it either. But from 15 November 2016, as advised by HMRC, employers will be able to submit RTI data to HMRC for employees using this NINO prefix.

Some software products, including HMRC’s Basic PAYE Tools, may not be updated before April 2017. If this applies to you then you should continue to follow this guidance when submitting your returns:

• Do not enter the NINO for the employee - this field should be left empty

• The employee's address has to be entered, the first two lines are the minimum requirement

• You do not need to request a new NINO as the NINO with the KC prefix is valid.

Posted byDebbie ClarkeinHMRCPayroll Software

Sep 2016


Payrolling Benefits in Kind 2017-18

HMRC requires an employer to register in order for them to process benefit in kind through the payroll. If you are planning on processing the benefit in kind through the payroll for 2017-18 you can register now and up to 5th April 2017. But HMRC are advising employers that it would be best to register before the 21st December, when the annual tax coding process normally starts, in order to avoid being sent several tax codes for employees with payrolled benefit in kinds.

Employers who wish to process benefits in kind through the payroll must ensure they are registered with HMRC for real time information. Employers can register for payrolling of benefits using their government gateway ID to login. Currently agents cannot use this registration service for payrolling of benefits but HMRC will develop this option at a later stage.

Employers must select the benefits that will be processed in the payroll for their employees for the whole tax year. If a benefit is not selected by the employer but is processed through the payroll the employer must report these benefits on a P11D. Benefits may be added or the original application can be changed by the employer if an error was made. Normally the selection of benefits, if no changes were made, would automatically be carried forward to the next tax year.

Posted byDebbie ClarkeinHMRCPayroll Software

Aug 2016


Employment Intermediaries - Ensure you avoid Penalties for Incorrect Reporting

Employment Intermediaries that have the contract with the client have to send a report to HMRC periodically. The report contains the details of all workers they place with clients where the intermediary does not operate Pay As You Earn (PAYE) on the workers' payments. The Intermediary can decide how frequently they send this report to HMRC - they have several options available including sending these reports weekly or monthly. But the report has to be send to HMRC at least once every 3 months.

From next week, 5th August 2016, penalties will start to apply for late filing of these reports. The report for the first 3 months - 6th April to 5th July 2016 - will be due for filing on 5th August 2016. The amount per penalty depends on the amount of infringements in the prior 12 month period. The penalties are £250 for the first infringement, £500 for the second and £1,000 for the third and other charges will apply for further infractions. If a report is submitted late, but is after 12 months since the last report was late it will be only deemed as the first offence.

If a report sent is incorrect or is missing any information, penalties may occur. These penalties are determined on a case by case basis. If the incorrect report is replaced by a corrected report before the deadline approaches without being prompted by HMRC, this will be taken into consideration if a penalty has to be paid. Where reports are consistently late or are failed to be submitted a penalty of up to £600 per day that the report is late may apply.

Posted byDebbie ClarkeinHMRC

Jul 2016


National Insurance Numbers - KC Prefix

Recently new National Insurance Numbers have been issued with the prefix of KC by Jobcentre Plus (on behalf of the Department for Work and Pensions). These National Insurance numbers are valid. Unfortunately there have been issues with these NINOs with the KC prefix as HMRC has not included the KC prefix as a valid prefix on their list of valid prefixes to software developers. So currently HMRC's systems do not recognise the prefix KC and most payroll softwares will not recognise it either. You may not be able to enter the National Insurance number into your payroll software as it may not be recognised and even if you can your Full Payment Submission may be rejected by HMRC due to the prefix not being recognised by HMRC.

HMRC have issued a message regarding the problem "We are aware that a small number of National Insurance numbers with prefix 'KC' were issued recently and that these are causing some problems for our customers."

If you have an employee with a NINO with a KC prefix you should take the following steps when entering their details in your payroll software for the moment, as your RTI returns will successfully submit to HMRC:

• Do not enter the NINO for the employee - this field should be left empty

• The employee's address has to be entered, the first two lines minimum requirement

• You do not need to request a new NINO as the NINO with the KC prefix is valid.

Per HMRC " We are working hard to resolve this issue quickly and will provide more information shortly"

Posted byDebbie ClarkeinHMRCPayroll Software

Jun 2016


HMRC claims Customer Service Better than ever - Do you agree?

HMRC claims it is offering its best customer service in years presently. This is a reaction from a report that the National Audit Office published in May 2016 stating that the quality of customer service HMRC provides has deteriorated over an 18 month period in 2014 and 2015. In this period some people calling HMRC were waiting up to an hour, treble the average call waiting time, costing taxpayers the equivalent of £97 million last year.

HMRC says it has achieved improvements to customer service by:

• recruiting more than 3,000 additional advisers who can work outside normal office hours;

• introducing more flexible working to deal with large fluctuations in customer demand throughout the year, underpinned by a new telephone system that enables HMRC to move calls around the country in response to demand;

• launching online services that enable customers to manage their tax affairs when and where they want, including by smartphone, with online support such as webchats.

HMRC have also indicated that they may make the following changes that were in Chancellor George Osborne’s 2016 budget, including:

• the introduction of a seven-day service by April 2017, with extended hours and Sunday opening on main phone lines, as well as online support services such as webchats;

• the recruitment of more than 800 new staff into the customer services teams, to reduce call answering times and further increase the flexibility to respond to demand;

• a new secure email service – operated through customers’ online tax accounts.

Ruth Owen, HMRC’s director general for customer services, said: “Over the past six months we’ve consistently answered calls in an average of six minutes, and have launched new online tax accounts and webchat for everyone, enabling customers to manage their tax affairs wherever and whenever they want. There’s never been a better or more convenient service for our customers.”

Research conducted by CIPP has shown that HMRC's response times in recent months have improved.

Posted byDebbie ClarkeinHMRC

Jun 2016


Employers fined over £21 million for Employing Illegal Employees

Every quarter UK Visas and Immigration and Immigration Enforcement publish a report showing the number of fines issued to employers in each region of the UK for employing illegal employees. Over £21 million fines were issued in the second half of 2015. The total amount of illegal employees in that same period was 1,820, the area with the most illegal employees was in the London and South East region.

Employers can face fines and criminal prosecution for hiring illegal employees, the maximum fine having increased from £10,000 to £20,000 in May 2014 for illegally hiring an immigrant. Employers are advised to ensure they know what the correct work checks are and ensure these checks are being made.

On GOV.UK the UK Visas and Immigration and Immigration Enforcement have An employer’s guide to right to work checks which details:

• what a right to work check is

• why you need to do right to work checks

• whose documents you should check

• how to carry out checks

• when to carry out initial checks, follow-up checks and what happens under TUPE what documents are acceptable.

Posted byDebbie ClarkeinHMRCPayroll Software