The 2013 / 2014 TAX YEAR holds many changes and challenges for employers.
Income Tax Allowances
The basic personal allowance for 2013-14 increases to £9,440 and the tax code for emergency use will be 944L.
Income Tax bands and rates
The tax bandwidths for 2013-14 are as follows:
Basic rate = 20% £1 to £32,010
Higher rate = 40% £32,011 to £150,000
Additional rate = 45% £150,001 and above
The Lower Earnings Limit, the amount of earnings which allow an employee to qualify for certain state benefits, increases to £109 per week.
The Primary Threshold, above which employees begin to pay National Insurance, increases to £149 per week. The main rate of Class1 NIC’s due on earnings above this threshold and up to the Upper Earnings Limit remains unchanged at 12%.
The Upper Earnings Limit reduces to £797 per week. The rate of employee Class 1 NIC’s on earnings above this point remains unchanged at 2%.
The Secondary Threshold, above which employers Class 1 NIC’s become due, increases to £148 per week.
The Class 1 employer rate of NIC’s remains unchanged at 13.8%.
The Statutory Sick Pay (SSP) rate increases to £86.70 per week.
The weekly rate for Statutory Maternity Pay (SMP), Ordinary Statutory Paternity Pay (OSPP), Additional Statutory Paternity Pay (ASPP) and Statutory Adoption Pay (SAP) increases to £136.78.
REAL TIME INFORMATION
From 6 April 2013 it becomes compulsory for the large majority of employers to begin reporting PAYE information to HMRC in real time – known as Real Time Information or RTI. We have written about the changes in our blog, but essentially this means:
- If you currently use commercial payroll software you will need to check that it is RTI compliant, upgrading your software if necessary. If you currently use HMRC’s free Basic PAYE Tools software be aware that it will only be suitable for employers who have fewer than nine employees during a tax year. If you are likely to exceed this number you will need to either invest in commercial software or employ the services of a payroll provider such as ourselves.
- You will need to send PAYE information to HMRC every time you pay your employees, on or before the time that you pay them, rather than after the tax year end as at present.
The new types of submission required by HMRC under RTI are as follows:
- Employer Alignment Submission (EAS): This is a one-off submission that employers with 250 or more employees, or those whose PAYE scheme is administered by two or more payroll systems / providers, have to send to HMRC to help align employee data with HMRC records.
- Full Payment Submission (FPS): The FPS must be sent to HMRC each time you pay your employees and contains key employee data plus details such as the amount you paid your employee(s) and deductions such as PAYE and NICs.
- Employer Payment Summary (EPS): This submission is required when you haven’t paid any employees in a pay period or if you need to reduce the amount of PAYE/NI due to be paid to HMRC. This may be because of things like SSP and SMP recovery, CIS deductions suffered and NIC holiday. This must be submitted within 14 days of the end of the tax month, i.e. by 19th.
- Earlier Year Update (EYU): This submission is used if you need to correct data submitted to HMRC in a previous tax year (only applicable for corrections to 2013/2014 and later years).
- NINO Verification Request (NVR): Once you have started submitting data to HMRC via RTI you can use a NVR to verify or obtain a National Insurance number for new employees.
The following forms will no longer be required to be submitted to HMRC under RTI – P14/P35 end of year return, P45 starter / leaver form (although no longer required by HMRC, a P45 should still be issued to leavers), P46 starter form, CA6855 NINO trace form, P38(s) student form.
More information can be found at www.hmrc.gov.uk/payerti/at-a-glance.pdf.
Clients taking advantage of our outsourced payroll service need not take any action, as we have updated our payroll software, successfully taken part in HMRC’s pilot scheme and are fully RTI compliant. However, if you require any further information regarding RTI please give us a call.
Making your PAYE payment to HMRC
From the 2013 / 2014 tax year there will be just one HMRC bank account for making PAYE payments (including Income Tax, NIC’s, Construction Industry Scheme and Student Loan deductions), as follows:
08 32 10
Employers who previously paid using the Shipley account will need to update to the bank details shown above.
To avoid late payment penalties it is important to make sure that payments to HMRC are made on time. PAYE/NIC’s paid electronically must be received as cleared funds by 22nd of the relevant month. If 22nd falls on a weekend or Bank Holiday the payment falls due on the last working day before 22nd , unless you make a Faster Payment. Since December 2011 HMRC has accepted payments made via the Faster Payments Service, allowing payments by internet or telephone banking to be received on the same or next day. We recommend contacting your bank to clarify any restrictions they may have on using this service. Payments made by cheque must be received by HMRC by 19th of the relevant month.
One of the most important things to remember when paying electronically is to quote the correct reference number.
In order for your payment to be allocated to the correct month or quarter it is necessary to add 4 digits, representing the tax year end and tax month of the payment, to the end of the 13 character Accounts Office reference. For example the 4 digits to be added for the month ended 5 May 2013 are 1401, for 5 June 2013 are 1402, and so on. Hence, the full 17 character reference will change each time you send a remittance to HMRC.
We have come across instances of our clients receiving debt letters from HMRC purely because their remittance was not referenced correctly leading to the payment being allocated to the wrong month or quarter.
From 6 April 2013 students will be treated in exactly the same way as other employees and form P38(s) will be withdrawn.
National Minimum Wage
The current NMW rates, which became applicable from October 2012, are as follows:
Workers 21 years old and over = £6.19
Workers 18 – 20 years old = £4.98
Workers under 18 years old = £3.68
Apprentice rate* = £2.65
*for apprentices aged under 19,
or aged over 19 and in the first
year of their apprenticeship
As you are probably aware, starting with large employers (greater than 10,000 employees), from October 2012 a new system of workplace pensions is being rolled out.Gradually, more and more people working for large and medium sized employers will be enrolled. By early 2014, everyone working for a company or organisation with a workforce of 350 people or more should have been signed up. Smaller employers will then gradually be brought in, until by 2018 everyone should finally be in the scheme.
We will cover this topic in a separate newsletter shortly, but in the meantime if you would like an overview of Auto Enrolment or would like to know your Auto Enrolment staging date, please do get in touch.
A Greener Service
As part of our effort to be as green as possible, please note it is possible for us to upload payslips / payroll summaries to the secure Clientzone area of our website for you to download at your convenience. If you would like to take advantage of this service, please let our Payroll Department know.
If you would like further advice or information on any of the above issues, then we’d be pleased to help.
Telephone - 01242 223160
Email - email@example.com.