In April of 2014 the UK Government introduced the Employment Allowance Scheme. This scheme offers businesses and charities a reduction of up to £2000 (max for tax year 14/15) in the amount of employer Class 1 National Insurance contributions (NICS) they have to pay every year from 6th April 2014.
Once employers process their first month’s payroll in April they are required to send an EPS (employment payment summary) to say that you as an employer are going to claim the employment allowance for 14/15. A lot of companies seem to be allowing for the employment allowance scheme in calculating the NI bill for HMRC but have not sent through their EPS which informs the HMRC that the company is taking advantage of the Employment Allowance scheme.
HMRC have announced that they will now issue generic notifications (otherwise known as GNS messages) to employers who may have failed to claim the Employment Allowance.
The intention behind these notifications is to encourage PAYE schemes to check eligibility and to claim their Employment Allowance. HMRC explain that the new notification may be sent to any PAYE scheme which has not so far submitted an Employment Summary in 14/15. HMRC anticipate that these notifications will not be issued before 25th September.
In order to assist employers keep their records up to date and avoid potential penalties, HMRC issue electronic alerts:
Message - Late Filing Note: Your full Payment Submission (FPS) has been sent late – FPS must be sent on or before the date of the earliest payment on FPS – If you have a valid reason for sending your FPS after any of the payment dates – you must complete the late reporting reason on future FPSs.
Message - Non Filing Notice: HMRC has not received the expected number of FPSs. Check whether any FPSs are still due for the tax period – HMRC works out how many FPSs you are expected to report based on previous filing data. If any FPS is still due, send it as soon as possbile and include a Late Reporting Reason if applicable.
- If you have stopped being an employer tell HMRC
- If you have not paid anyone send an Employer Payment Suymmary to tell HMRC
- If you have changed the amount of time between paying your employees e.g. from weekly to monthly, tell HMRC.
Message - Late Payment Notice – HMRC has not received your full payment when it was due
- Check your payments records against the amounts reported on your FPSs
- Pay any outstanding amounts to bring your payments up to date
- If the date that HMRC received your payment is after the date that the payment is due, make sure that future payments are made on time
- If the amount paid does not match the amount you reported on your FPSs, check your records to find out why
- If you offset anything against the FPS amount, you must send an Employer Payment Summary to correct this
- If you have made a mistake – correct payroll error.
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.
HM Revenue and Customs (HMRC) have issued new guidelines for employers explaining about late/non filing penalties, inaccurate reporting and specific charges and how to avoid penalties.
The new guidance explains to employers that penalties will be introduced from 6th October 2014 for anybody that does not report their payroll information on time (late submissions).
These penalties can arise if a Full Payment Summary (FPS) is sent late, if the employer does not send the expected number of FPSs, or if an Employer Payment Summary (EPS) is not send when the employees are not being paid in any given period.
The guidance will also set out the limited circumstances in which a penalty will not be charged.
The Chartered Institute of Taxation (CIOT) has made this submission to review the competitiveness of tax administration in the UK being conducted by the Office of Tax Simplification (OTS).
The CIOT says that their clients find that the reporting of realtime information as being, “too prescriptive, time consuming and even unworkable at times”. They are looking for a permanent concession to allow small employers to report monthly , rather than at the time of each payment of salary or wages.
They will now start from 6 October 2014. To avoid late filing penalties, you must make sure all submissions due are fully up to date by 5 October 2014.
In addition to where submissions do not appear to have been filed by the due date, a late filing penalty for a month may be issued where one of the following applies:
• payment information is not received as expected on an FPS
• you haven't told HMRC that no employees have been paid by sending an EPS
However, no penalty will arise for the first month in each tax year where there is a filing default. This means there are a maximum number of 11 fixed penalties per tax year that can be charged for filing failures.
New employers will not be issued with a penalty if their first FPS is received within 30 days of making their first payment to an employee. But after that, normal penalties rules will apply if an FPS is filed late.
The size of the late filing penalties depends on the number of employees within the PAYE scheme.
|Number of employees||Amount of the monthly filing penalty per PAYE scheme|
|1 to 9||£100|
|10 to 49||£200|
|50 to 249||£300|
|250 or more||£400|
HMRC will use the latest information available to determine the number of employees, and the size of the filing penalty for each period where a return is late. <
When the penalty notice will be issued
Ordinarily, HMRC will send employers a filing penalty notice quarterly in July, October, January and April, where appropriate. These penalty notices show the amount of the filing penalty for each tax month identified in that quarter. For example, a penalty notice in July will show any filing penalties arising in the first quarter of the tax year - that is, month 1 (6 Apr to 5 May), month 2 (6 May to 5 June) and month 3 (6 June to 5 July).
The penalty notice will advise you of the amount you're being penalised, tell you how you can pay it and what to do if you don't agree a penalty is due.
Additional penalties for returns over three months late
Where a return is late for three months or more and the information that it would have contained has not been provided on a later return, a further penalty may be charged. This additional penalty is set at 5% of the tax/NICs that should have been shown on the late return. This will be used for the most serious and persistent failures.
The HMRC deadline for 2013/14 FPS submissions has now lapsed (19th April). Therefore, if you attempt to submit an FPS for a 2013/14 pay period HMRC will reject it.
Any 2013/14 payroll submissions, including additional payments, corrections or omissions, must now be submitted to HMRC using the Earlier Year Update (EYU) submission.
HMRC published a new 2013/14 End of Year guide today, http://www.hmrc.gov.uk/payerti/end-of-year/finish-payroll.pdf
A BrightPay 2013/14 end of year checklist is also available, simply click here https://www.brightpay.co.uk/5_Steps_to_EOY.pdf.
HMRC have this week published information to help employers understand how to go about informing HMRC of errors on RTI returns for the tax year 2013/14. This includes a new flowchart (correcting 2013-14 PAYE submissions after 5 April 2014 (PDF 35K) ) which provides employers with a step-by-step guide to follow should any of the following scenarios arise after the 5th April 2014:
The employer wishes to correct amounts already sent on a Full Payment Submission:
· up to and including 19 April 2014 employers can make corrections by sending an Additional FPS for 2013-14. Employers can send more than one FPS to make corrections up to that date if needed. Employers are not required to send another Employer Payment Summary unless corrections are also needed to this.
· after 19 April 2014, employers must make any corrections to a 2013-14 FPS on an Earlier Year Update (EYU). Employers can send an EYU even if they haven't made a final FPS submission. If further changes are needed, employers can correct an EYU by sending HMRC another EYU with the corrected information.
The employer wishes to correct figures already submitted on an Employer Payment Summary (e.g. for the recovery of statutory payments):
· Employers can make corrections to an Employer EPS by sending another EPS to report the correct total year-to-date figures for all recovered payments within that tax year. Employers have up to six years from when they sent in their original EPS to do this.
Full guidance on the above can be found on HMRC’s website at correcting payroll errors - current year
HMRC has announced more than 12,950 employers in the south east are being urged to send their employees’ Pay As You Earn (PAYE) information in real time or face penalties.
For example a total of 405 employers in Portsmouth are yet to file PAYE returns in real time. Employers who have not used the system were recently sent an email from HMRC, telling them to complete it by the end of March.
As mentioned in previous blogs, RTI should be the standard for the majority of employers now but there are those who are still struggling to achieve compliance.
Last June HMRC released a statement saying they “appreciated that many employers” (over 600,000 at that specific time) “are still getting used to this new way of reporting” and provided a reminder of the PAYE payment position for reporting for compliance with RTI.
With Auto Enrolment now being phased in, the pressure on employers to comply with the law and HMRC’s RTI is growing.
BrightPay 14/15 is now available to download. Here’s a quick overview of what’s new:
BrightPay 14/15 has complete functionality to enable you to automatically enrol your employees into a qualifying pension scheme:
For more information on automatic enrolment, see our automatic enrolment blog or the guide for employers on The Pensions Regulator website.
This time last year we launched BrightPay 13/14 with full support for RTI.
In 14/15, there are some new features and improvements:
With RTI and Automatic Enrolment, the last couple of years have seen many changes to UK payroll. This in turn has required a lot of supporting development to be done on BrightPay. So with these out of the way, we are excited to get back to adding unique features and making BrightPay the best payroll software on the market. Here are the new features we've completed for this first 14/15 release:
But that's not all – we've got some great plans for what's coming next. And like previous years, you won't have to wait until 15/16 – we'll be releasing new features to 14/15 users when they are ready. Watch this space!
BrightPay 14/15 will be the same price as BrightPay 13/14 (including FREE for small employers with up to three employees). Support will continue to be free of charge for all users.