Payroll Benefits - Have you registered?

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.

Posted byAudrey MooneyinHMRCPayroll Software

Are you one of the 3.7 million couples missing out on the Marriage Allowance?

Recent statistics show that only 8% of couples eligible for the Marriage Allowance have actually claimed it, with approximately 3.7 million couples still missing out.

The Marriage Allowance was introduced this tax year, and is a way for couples to transfer a proportion of their personal allowance between them. This could represent a saving of up to £212 per year for eligible couples.

To be eligible for the Marriage Allowance, the following must apply:

1. You must be married or in a civil partnership.
2. One of you needs to be earning £10,600 or less (not including any of your £5,000 tax-free savings interest).
3. The other one of you needs to be a basic-rate taxpayer (couples with a higher- or additional-rate taxpayer aren't eligible for this allowance).
4. Both of you must have been born after 6 April 1935.

If you are eligible and wish to apply for the marriage allowance, this can be done at www.gov.uk/marriage-allowance by completing the application. After going through the application process you'll be notified immediately if you're eligible for the allowance via email. You can also apply over the phone on 0300 200 3300.

It doesn't matter when in this tax year you apply – you will get the full financial benefit for the full tax year as long as you apply by 5 April 2016.

Once you have successfully applied, there will be no need to apply every year going forward. Your personal allowance will transfer automatically to your partner every year until one of you cancels the marriage allowance or you inform HMRC that your circumstances have changed eg, because of divorce, employment pushing you into a higher rate tax threshold or death.

Posted byVictoria ClarkeinHMRC

New Apprenticeship Levy to be Introduced for 2017-18 Tax Year

In the Finance Bill 2016 legislation will be introduced for the new Apprenticeship Levy which will take effect from 6 April 2017. Currently draft legislation has been published to introduced this new levy.

The new Apprenticeship Levy will be paid by employers and will help fund new apprenticeships in the future. This levy of 0.5% will be charged on employers’ paybills which will be based on the total employee earnings subject to Class 1 secondary NICs. The levy will be payable through Pay As You Earn (PAYE) and will be payable alongside income tax and National Insurance.

An annual allowance of €15,000 will be made available to each employer to offset against their levy payment, which calculates that the Levy will only be payable on paybills on over £3 million in that tax year. Similar to the Employment Allowance Claim, an employer who operates multiple payroll schemes will only be able to claim one annual allowance for this levy.

Posted byDebbie ClarkeinHMRCPayroll Software

Contracting-out - on its way out!

From 6th April 2016 contracting out of the additional State Pension on a defined benefit basis will cease. Employees will no longer be able to use a contracted-out salary related occupational scheme to contract out of the State Scheme and will be automatically put back into the State pension scheme. The rebate of 1.4% for employers and 3.4% for employees will also end at 5th April 2016.

With the new State Pension being introduced there will a few changes in what and how you report to HMRC:

• Employers will no longer have to report on the Full Payment Submissions to HMRC the Employers Contracting-out Number (ECON) and the Scheme Contracted-out Number (SCON)

• A requirement to report National Insurance earnings between Primary Threshold (PT) and Upper Earnings Limit (UEL), as was required prior to 2009

• It is not necessary to report the information of seperating the National Insurance (NI) earnings between the Primary Threshold (PT) and Upper Accruals Point (UAP) and UAP to Upper Earnings Limit (UEL).

• From the start of the new tax year employers will be no longer be allowed to use your Contracted-out Salary Related (COSR) occupational pension scheme to contract out employees out of the new State Pension scheme.

• The form P60 will change as there will be one less column to complete on the form.

HMRC systems will be all updated to reflect these changes from 6th April 2016 onwards and the UAP field will be removed from the Full Payment Submission (FPS) and Earlier Year Update (EYU).

Regarding the National Insurance Categories for the 2016-17 tax year the Standard Insurance tables/categories A,B,J,M,P,Q,R,T,Y and Z will replace the contracted-out National Insurance tables/categories of D,E,I,K,L,N,O and V.

Posted byDebbie ClarkeinHMRCPayroll Software

No 'Y' Suffix Tax Code from 6th April 2016

For the tax year beginning 6th April 2016 HMRC will cease to use the suffix 'Y' on tax code notifications P2, P6 and P9. As the personal tax allowance in 2016-17 will increase from £10,600 to £11,000 it will result in the basic personal allowance being higher than the maximum personal age allowance of £10,660 for people born before 6th April 1938.

All employers or pension providers will receive a P9 coding notification for the 2016-17 tax year advising the correct tax code for all individuals affected. All individuals who would have had a 'Y' suffix in their tax code previously will be issued with a P2 notice of coding informing them of their new tax code.

HMRC's systems will still accept the 'Y' suffix if submitted but HMRC have requested the 'Y' suffix not to be used by employers or payroll agents.

Posted byDebbie ClarkeinHMRCPayroll Software

10 key reasons to move from HMRC Basic PAYE Tools to BrightPay

1. BrightPay is HMRC recognised
2. RTI is fully automated
3. BrightPay will automatically import your HMRC Basic PAYE Tools data
4. BrightPay will handle all auto enrolment tasks (at no extra cost)
5. BrightPay includes the NEST API, meaning the upload of auto enrolment data is automated
6. BrightPay will perform a pre staging assessment of your workforce to establish how much auto enrolment is going to cost and to determine if you need to register with a pension scheme
7. Payslips can be emailed to employees and will contain details of any pension deductions
8. You can use postponement, giving you more time to get a pension scheme in place
9. BrightPay is free for up to 3 employee records or £89 plus VAT per annum for a single employer with unlimited employees
10. Support is included in this price

This list is not exhaustive and only covers the key points.

Posted byPaul ByrneinAuto EnrolmentHMRCPayroll Software

HMRC received 11,500 tweets from frustrated callers in the last year complaining about long waits

Citizens Advice reported that those who took to twitter to complain spent an average of 47 minutes waiting to speak to someone. The charity said it helped with 295,000 queries in the past 12 months which could have required people to contact HMRC. Official figures from HMRC suggest on average wait time of 10 minutes. Citizens Advice calculated that hanging on the line to HMRC for 47 minutes will, charged at the standard landline rate, cost consumers £4.66 in call charges.

Citizens Advice looked at complaints made to the @HMRCgovuk Twitter account between September last year and August after those seeking help from the charity reported not being able to get through to HMRC to resolve issues.

Citizens Advice chief executive Gillian Guy said: "People are paying the price for not getting through to HMRC. From fines for not completing a tax return in time to under or overpayments for tax credits, people can be left out of pocket because they cannot speak to HMRC on the phone.

"Work and caring responsibilities means not everyone will be able to wait for three quarters of an hour to ask HMRC a question.

"We have consistently raised this issue with the Government. But evidence from across the Citizens Advice service, and our new research, shows HMRC is still failing to provide a timely service.

"There is already a clear demand to be able to speak to HMRC. With the roll-out of Universal Credit and big changes to tax credits just around the corner this is only going to grow. HMRC needs to urgently address the problems many people are experiencing with phone lines."

Posted byBrian O'KeeffeinHMRC

Error 1046: Authentication Failure is the most common issue when trying to submit your Real Time Information to HMRC

Error 1046, one of the most common issues that you may face when processing payroll. The Error 1046 will state: The supplied user credentials failed validation for the requested service.

BrightPay does not check your User/Sender ID and Password as we don’t know what they should be. BrightPay sends this information to the Government Gateway. If you get this Error 1046 it means that the Government Gateway has rejected the submission.

Is the User/Sender ID and Password correct?

Ensure that you can access the HMRC website at http://www.gateway.gov.uk/ using your User ID and Password that you entered in BrightPay. If you are unable to log in you can call the HMRC Online Services Helpdesk on 0300 200 3600.

Is your password greater than 12 digits?

When you are entering your password into the HMRC website, only the first 12 digits will be accepted. However when entering your password into the software it recognises all digits and deems anything after the first 12 as being incorrect causing the Error 1046. If your password is longer than 12 digits, only use the first 12 in BrightPay.

Is your Government Gateway activated?

Once you have registered to use HMRC’s Government Gateway your new Activation Code will be sent via post within 7 days. Once received you can log into HMRC online using your User ID and Password and activate the service. You must do this within 28 days of the date shown on the Activation Code letter.

Double check the information you entered in BrightPay!

Ensure that your PAYE reference number, Accounts office reference and HMRC office name are entered correctly and match the details that HMRC have for you. Check the references don’t have 'Z' instead of '2' or '0' in place of 'O'. Ensure your email address is correct and matches the one you have registered with HMRC.

Posted byBrian O'KeeffeinHMRCOnline filingPayroll SoftwareRTI

What penalties are applied by HMRC if RTI returns are not submitted on time?

Hmrc have recently provided employers with information about late/non filing PAYE penalties, inaccurate reports and how to avoid penalties in the future.

Penalties are applied when one or more of the following occur:

- The full payment submission (FPS) was late
- The expected number of FPSs are not sent for any given period
- An EPS (Employer Payment Summary) is not sent when you did not pay any employees in any given pay period

HMRC will not charge a penalty if:

- The FPS is late but all reported payments on the FPS are within 3 days of the employee’s payday
- A new employer sends their first FPS within 30 days of paying an employee
- It is the first failure in the tax year to send a report on time (this does not apply to employers who register with HMRC as an annual scheme or have fewer than 50 employees for the tax year 2014 to 2015)

HOW MUCH WILL BE CHARGED FOR LATE FILING?

Number of employees - Monthly penalty

1 to 9 - £100
10 to 49 - £200
50 to 249 - £300
250 or more - £400

If an employer is over 3 months late they wil charged and additional penalty of 5% of the tax and NI Insurance that they should have reported.

Also be aware that if there is more than one PAYE scheme penalties can be charged on each!

Read HMRC users & Auto Enrolment: Manual vs. Automation

Posted byDenise CowleyinHMRCPayroll SoftwareRTI

HMRC Basic PAYE Tools users to get Automatic Enrolment tool from TPR

The tool to be provided by the Pensions Regulator for HMRC Basic PAYE Tools (BPT) users will only handle qualifying earnings schemes. It will not do communications nor will it prepare files for the pension companies. It will be an Excel spreadsheet which will need to be populated each pay period so that assessments and calculations can be performed. The results will then need to be input back into BPT. Then the BPT user will need to log in to the pension scheme's web portal and manually input the figures. There will be extra time required in this process and there will be potential for error.

This combined with the fact that HMRC Basic PAYE Tools does not prepare payslips means that the proposition for commercially available fully integrated payroll and auto enrolment software is much stronger.

BrightPay costs £89 (plus VAT) per annum* and will automatically import the file from HMRC Basic PAYE Tools meaning there is no time involved in setting up.

In addition, BrightPay will include the NEST API before January 2016 meaning NEST registered employers will not even need to log in to the NEST portal when submitting the contribution file each pay period.

* Single employer, unlimited employees. BrightPay is free for employers with 3 or less employees.

Read HMRC users & Auto Enrolment: Manual vs. Automation

Posted byPaul ByrneinAuto EnrolmentHMRCPayroll Software