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Catch up on the latest tax news and view the latest information from our payroll news section.
Starting from April 2012, HMRC are introducing a new system of reporting information about tax, NIC & other deductions from pay. Under Real Time Information (RTI), data that would normally be reported via year end returns P35 & P14 & forms P45/P46 will be electronically transmitted to HMRC each time an employee is paid. The purpose of this is to improve the operation of PAYE, to enable HMRC to chase late payments of PAYE / NIC’s more effectively & to enable the Department for Work & Pensions (DWP) to use this data to support the operation of the new Universal Credit benefit system.
So how will this affect employers? Employers will be required to submit a monthly RTI return to HMRC. The intention was for this to be made via the existing BACS channel, however, due to concerns raised during the consultation process, submission via the Government Gateway / EDI will be accepted until at least April 2014. Phased introduction of RTI will begin in April 2012, with a small group of employers who have agreed to take part in an initial pilot. Subject to the success of the pilot HMRC will look to increase the numbers of employers submitting RTI during 2012 / 2013, with most employers reporting by October 2013.
To reduce administrative burdens on employers, requirements to submit forms P45 & P46 will be removed, with information about new starters & leavers instead being reported via RTI. Employers will no longer be required to issue leavers with form P45, but will be able to provide the same information on a simple ‘leaver statement’. The monthly submission of RTI data will also remove the requirement to submit P14 & P35 returns, but employers will still need to issue employees with P60 end of year certificates.
To enforce the timely submission of RTI returns, penalties will be applied for late filing of RTI data. During the initial introductory period of tax year 2012 / 2013 the final RTI submission of the tax year will be treated in a similar way to the P14 / P35 return with late filing & interest charges remaining unchanged. However, from 2013 / 2014 HMRC intend to raise penalties for the late filing of monthly RTI data during the tax year.
More information regarding RTI can be found here: http://www.hmrc.gov.uk/rti/employerfaqs.htm
More information regarding Universal Credit can be found here: http://www.dwp.gov.uk/index.shtml
Employers taking advantage of our outsourced payroll service need not take any action, as we will be updating our payroll software to take account of these changes. However, if you require any further information regarding RTI please give us a call.
There are some important changes for the 2011/2012 payroll year that you should be aware of.
The most significant of these changes is that shortly after the end of the 2010/2011 tax year HMRC will begin issuing penalty letters to employers and contractors who have not paid PAYE, NIC or sub contractor deductions to HM Revenue and Customs on time and in full during the tax year. The letters will details how much the penalty is, when it has to be paid and what to do if you think the penalty is wrong.
From 6 April 2010 the following penalties became due for late or missed payments:
First late or missed payment in the tax year – no penalty (unless the payment is over 6 months late).
Thereafter, penalties will be levied in 1% steps up to 4% of the late amount depending on the number of defaults in the tax year. There are additional penalties of a further 5% for any default lasting over 6 months and a further 5% for payments 12 months late.
Therefore, it is important to make sure that payments to HMRC are made on time. PAYE/NIC’s paid electronically must received as cleared funds by 22nd of the relevant month. Further information about paying electronically can be found at www.hmrc.gov.uk/payinghmrc/paye.htm. Payments made by any other method must be received by 19th of the relevant month.
If you are unable to make a payment, you should contact HMRC straight away, as they may be able to allow you more time to pay. If you enter into a payment agreement with HMRC no penalties will be charged on amounts included within the agreement so long as the agreement is adhered to.
The basic personal allowance 2011-12 increases to £7475 and the tax code for emergency use will be 747L.
The tax bandwidths for 2011-12 are as follows:
Basic rate = 20% |
£1 to £35000 |
Higher rate = 40% |
£35001 to £150,000 |
Additional rate = 50% |
£150,001 and above |
From April 2011 the code that employers have to operate for new employees without a P45 who fail to complete a P46 form before their first pay day changes from BR (basic rate) to 0T (zero allowances).
The Lower Earnings Limit increases to £102 per week.
The Primary Threshold, above which employees begin to pay National Insurance, increases to £139 per week. The main rate of Class1 NIC’s due on earnings above this threshold and up to the Upper Earnings Limit increases to 12%.
The Upper Earnings Limit increases to £817 per week. The rate of employee Class 1 NIC’s on earnings above this point increases to 2%.
The Secondary Threshold, above which employers Class 1 NIC’s become due increases to £136 per week.
The Class 1 employer rate of NIC’s increases to 13.8%.
The Statutory Sick Pay (SSP) rate increases to £81.60 per week. From April 2010 new medical statements called fit notes began to be issued by doctors containing a new category ‘You may be fit for some work taking account of the following advice’. For information on how this affects you go to www.dwp.gov.uk/fitnote.
The weekly rate for Statutory Maternity Pay (SMP), Statutory Adoption Pay (SAP) and Statutory Paternity Pay (SPP) inreases to £128.73.
Employees may be entitled to ASPP if their partner has or adopts a baby after 3 April 2011& is entitled to Statutory Maternity Pay or Statutory Adoption Pay. This replaces their normal earnings & is designed to help them share the time off to take care of the child.
Further information on ASPP can be found at www.hmrc.gov.uk/paye/employees/statutory-pay/aspp-overview.htm
Between 6 April 2010 and 5 April 2015 the age at women reach SPa is gradually rising from 60 to 65. The changes are being phased in on a sliding scale and will affect women born between 6 April 1950 & 5 April 1955. Further information on SPa can be found at www.businesslink.gov.uk/employeepensionage.
The current NMW rates, which became applicable from October 2010, are as follows:
Workers 21 years old and over |
= £5.93 |
Workers 18 – 20 years old |
= £4.92 |
Workers under 18 years old |
= £3.64 |
Apprentice rate* |
= £2.50 |
*for apprentices aged under 19, |
|
Please note there’s now just one telephone number, replacing over 60 old numbers, for employees with tax enquiries – 0845 300 0627.
Our Payroll Department will automatically apply any of the above changes that apply to your payroll scheme, but if you would like further information or clarification on any of the above matters please do not hesitate to get in touch with us.
