All Posts By

Bob L

RTI – Fines are Coming!

Although we hope this will not affect any of our customers it is worthwhile noting that HMRC will be introducing fines for late RTI submissions from the 6th of October.  It also appears that notices will be issued quarterly, so notices will be issued in January, April, July and October.  There will still be fines for late or inaccurate payments.  There are guidance notes on the HMRC website but these are of course long and complex.

The RTI submission is supposed to give real time information and be accurate.  We need to be kept up to date with an employees situation.  Careless or deliberately false information will also be subject to fines.  This could happen if somebody leaves or joins but we are not notified.  There should not be issues with RTI as long as we play by the rules.

BUT

There have been errors.  Employees can be duplicated, tax calculations can be contested, there are problems in the system and HMRC has been struggling to get on top of them.  From HMRCs point of view the error rate is very low, and they have allowed the possibility of a ‘reasonable excuse’ for a late submission.  We do not anticipate any problems, but we will have to wait and see what HMRC wants to deliver in the New Year, when the first set of RTI fines are posted.

On a more positive note, the arrival of  the RTI lead real time tax code changes and a live ‘dashboard’ is well underway.  This will be helpful for employees and employers.  I imagine we should include the caveat of “as long as the tax code changes are accurate……”

RTI has also helped to fight benefit and tax fraud, although it is difficult to know how big an impact there has been.  Overall RTI is probably a good idea for everyone, and we should probably be grateful there have not been more issues.

The Tronc Master!

Quite an impressive title but a ‘Troncmaster’ is a slightly more mundane.  The troncmaster is an employee appointed to over see the distribution of gratuities, ie look after the tips.  The troncmaster cannot be an employer or somebody that can be shown to respond to the employers wishes, the troncmaster must be independent.  There is much more information and advice on the appointment of a troncmaster on the HMRC website.

The gratuities handled in this way are subject to tax, but usually not national insurance.  Not all gratuities are managed by troncmasters and there is a lot of HMRC guidance as to when tax and NIC are applicable for all of the different scheme variations.  What seems simple at the outset can quickly become very complicated, consider the difference between a gratuity and a service charge for instance, but it is probably worthwhile.

We think ‘tronc’ is derived from the French for ‘collecting box’.  So the sun is shining, we are eating and drinking at the bars and cafes, but if you leave a tip will it be managed by a troncmaster?

Transferable Tax Allowance

In the 2014 budget a new transferable tax allowance was proposed to be launched in the 2015/2016 tax year.  The proposal is to transfer £1050 of tax allowance from one partner to another, this includes civil partnerships and marriages.  It would appear that neither partner must be earning above the basic rate to make the transfer, and the transfer will result in altered tax codes.

For us as a payroll provider, we will just process tax code changes in the usual way, and for employers they may well not notice any impact at all.  We do not know how simple it will be for individuals to make this transfer, however, and we will have to wait until the proposals are finalised.  The government has projected an average £197 p.a. saving for married couples on basic rate tax but this will obviously very much depend on individual circumstances.

Holiday Entitlement

This is an area we frequently get asked about.  The answer is more in the realms of a Human Resources department than payroll but we do have people that can offer general guidance regarding the statutory minimum.  A worker working 5 days is entitled to 28 days paid leave, if they work for 6 days this is not increased but working less will see a pro rata reduction.

However, it can be complicated!  There will be contractual considerations.  Irregular hours can make life more awkward, as can sickness or maternity/paternity leave.  For a definitive answer you need your HR department.  If you do not have an HR department consider one of the employer legal helplines.  There is also this web link –

https://www.gov.uk/calculate-your-holiday-entitlement

Holiday entitlement should not be difficult but disputes can occur, it is much better to have a proper policy in place before you develop a problem.

Childcare Voucher Scheme Ending Soon?

The current scheme allowing tax free purchase of childcare vouchers may be coming to an end.  Currently we can make up to a £243 per month ‘salary sacrifice’ through the payroll for the purchase of recognised childcare vouchers.  The ‘salary sacrifice’, or ‘salary exchange’, is a deduction made on the gross pay before Tax and National Insurance is calculated and as such is a very efficient method for purchasing child care for most people.

The proposals are not finalised and it appears there will be some form of “tax free” childcare to replace the current scheme but what form that will take we do not know.  It is always possible that nothing will change but….

Manual Payroll

The HMRC website now has the tables for manual calculations for tax and National Insurance, so if you wish to check your payslip you can do so using pen and paper.  There are table and calculator methods, and there will usually be very small differences between the two, but both are accepted by HMRC.

AE Timebomb

We attended an auto-enrolment seminar last week with presentations from financial advisors and pension companies.  There could be trouble approaching, as the number of companies expecting to have auto-enrolment pension provision seems to outstrip the current capacity of the pension industry to provide it.  There was also a statistic presented that 30% of companies that were due to start in April and May failed to do so.

Your company should start to prepare at least 6 – 12 months prior to the staging date.  Look on ‘The Pensions Regulator’ website, and have your PAYE number to hand, and you will find that first piece of information.  Be warned – An existing pension scheme may well not meet the requirements of auto enrolment, and there is no obligation for a current provider to assist you.

As a payroll bureau we can help.  There are lots of steps to set up the pension, and an on going burden, but equally an opportunity to add to your companies employee benefit package and hopefully improve staff retention.  If a contractual pension scheme does not suit, then an auto-enrolment payroll assessment scheme is the answer.

We can help process the assessment, provide data for you and provide data for the pension company.  We hope we can be part of the solution and make life a little less complicated, while still allowing your company to comply with the most recent set of legislation.  Contact us if you need further information

PAYE Penalty Charges

HMRC has announce changes to penalties for late filing of PAYE information that will effect both 2013 and 2014 tax years.  Companies not filing their returns could face fixed penalties.

The good news is that these steps are to avoid confusion with the new ‘in-year’ penalty system to be introduced in October 2014.  The moral of this story is to not make late submissions!

The penalties were always planned and it is all part of the PAYE real time information system.  We make the submissions on our clients behalf using their PAYE and tax office reference numbers.

There is further information available on the HMRC website

 

P46 forms – RIP

The P46 forms were used when an employee arrived without a P45, this was amended to a ‘shorter’ P46 and now is no longer used at all.  It is not possible to submit a P46 to HMRC and all they need is the starter declaration information that we have included on the ‘New Starter Forms‘.  It is also possible to use an HMRC new starter declaration but the information is the same and our form keeps everything we need in one place.

The new starter form includes basic information, such as National Insurance Number, but it is the answers to the questions that have the influence on the tax code an employee will start with.  Please try and answer A, B or C as a ‘not known’ results in a 0T wk1/mth1 tax code and the employee may have an initially higher amount of tax deducted than necessary.  The following are the bands given depending on the answers (valid 2.6.14) –

A – 1000L cumulative
B – 1000L wk1/mth1
C – BR cumulative