What is a P800?

“If you’re due a tax refund or need to pay more tax, HM Revenue and Customs (HMRC) may send you a P800 tax calculation.” You can find more information here.


The P800 is in the news this week as apparently there have been a few issued in error following on from HMRC errors. These errors are related to income tax, and people are advised to contact HMRC if they receive a notice related to the 2013/14 tax year.


Only a small proportion of P800s are affected by the error, and HMRC are sorry for any worry or inconvenience caused. The interesting thing with this story is that really RTI is supposed to be just that, Real Time Information. So in the press there is considerable speculation as to just how efficient HMRC is at handling the RTI submissions.


So for most people the P800 is far too dull to be concerned with, but if you are one of the unfortunate people to be issued a demand in error, I am sure it will become of the utmost importance and interest.

Coding Notice to Recover Unpaid Tax

This is nothing new, but the current headlines are based around the maximum that can be recovered in this way. If HMRC decided you had an underpayment of income tax of less than £3000, they could change your tax code in order to recover this debt.  For high earners this is now £17000.


Tax codes are generally not complicated, the higher the code the more money that can be earned before tax is applied. The standard 1000L code gives £10000 before income tax is payable. There are a few things, such as K codes, that make things interesting and you can get more details here


Recovering an underpayment in this way is not as straightforward as it sounds, the debt can be recovered in one year or spread over three years. There is a wealth of guidelines to be applied and things like the 50% of salary maximum for K codes has to be considered. It is possible to claim to reduce the amount due to hardship for instance. You may wish to follow this link.


In essence I believe coding out underpayments is a good idea. Everybody should pay the tax they owe, and spreading the cost across the year is more humane than demanding a lump sum. The argument for the amount of tax we should pay can be made elsewhere.


There is always the possibility that HMRC will get things wrong. The big problem is that we receive a coding notice, apply this to a salary and instantly the employee receives less money and HMRC more. It is not always fast to get a coding notice put back to where it should be. There is some guidance as to what to do if you believe your tax code is wrong here.


The new legislation is giving HMRC powers to instantly start recovering larger debts. There is no need to go to court, it will be faster, cost the rest of the tax payers less money and is all good news. Mostly. The maximum amount that can be claimed in this way is graded from £3000 for those earning less than £30000pa to £17000 for those earning in excess of £90000pa.


Higher earners will see the biggest effect and in theory are most able to afford it. I imagine their rights will be the same as anyone else, and they can claim exceptional circumstances to reduce the amount payable in any one year. The issue is more that HMRC can decide there is an underpayment and apply a coding notice, and they do occasionally get things wrong.


So, if HMRC is correct then we can all be happy. Somebody has managed to underpay some tax, been caught out, and the money easily recovered through PAYE. There may be issues with drastically reduced income for some individuals, and the biggest issue will be if HMRC manages to make a mistake.


For those earning less than £30000pa there is no new issue, those earning more need to pay closer attention.


Robert Lorrimore 10.10.14

Online Payslips

In November 2013 we announced the introductions of Electronic Payslips for our clients with offerings of both PDF Payslips by E-mail and Online Payslips.
This is not only better for the environment but can also save you time in distributing the payslips and money if you post the payslips to your employees. We do not require that all of your employees receive electronic payslips, some can continue to receive the traditional payslip instead should they wish.


Online Payslips
We can confirm that our Online Payslips are now available.
With Online Payslips, on your paydate your employees would receive an email notifying them that there is a new payslip to view. Your employee can then log on to a secure website and view their new payslip along with their previously uploaded payslips. Your employee can also update their email address and their security settings without your involvement. Employees can also access their payslip using a mobile phone app.

The Online Payslip website can be branded so that it can display your company logo and a number of your corporate colours so that it looks both familiar but also professional to your employees. There is a set-up cost of £50.

If you would like to view a sample version of the Online Payslips website please email as we will send you test logon details, which has been branded as an example using our logo and corporate colours.


Automatic Upgrade from PDF Payslips by Email to Online Payslips
There have been a small number of minor issues with the PDF Payslips by E-mail which means that we will be migrating clients from PDF Payslips by E-mail to the Online Payslips system. For clients migrating from PDF Payslips by Email to Online Payslips the set-up cost will be waived, and the current charges will remain the same as below.


Cost of Electronic Payslips
Due to the extra procedures required for Online Payslips there are additional charges. We have endeavoured to keep these to a minimum by considering small savings made elsewhere by no longer printing and posting traditional payslips for the employees concerned.
We are pleased to announce that the costs previously mentioned for On-line Payslips are now the same as for the PDF Payslips by Email, which are as follows:


Payslip Type Availability Service Cost per Payday Cost per Payslip Set-up Cost
Online Now £2.50 £0.15 £50


How to join Online Payslips
If you would like to join Online Payslips please email We will need details of employees email addresses which must be typed rather than hand written. There is a simple registration process that the employees will be invited to undertake before being able to view their payslips, we will give you a step by step example of this.

NIC Changes for Under 21s

One of the announcements in the Autumn Statement 2013 concerned youth unemployment. Employers will no longer need to pay Class 1 secondary National Insurance contributions for employees below the age of 21.

This will come into force from 6th April 2015 and covers earnings up to the upper earnings limit (UEL). The government aims to encourage employers to employ individuals under the age of 21, as part of their policies to tackle youth unemployment. The UEL is anticipated to be £813 per week from April 2015.

The method will be via a new NIC letter, applied to employees below the age of 21. The government has anticipated some additional costs to business in implementing the changes, but the aim is to be overall positive for business, with a reduction in employer National Insurance contributions. There is no direct benefit to the employee but the government hopes to raise employment levels for this group.

This change should be positive for our clients, and although there may be some additional paper to be moved around, it is our systems that will deal with the new coding and the administration.

For further information you can visit here –

Minimum Wage Set to Rise

The government released details of changes in the National Minimum Wage in March. From the 1st October 2014 the minimum wage rates are set to rise. The increases are between and 2% and 3% and over a million people will be affected. This is the first real terms cash increase since 2008 and the Low Pay Commission believes will be manageable by employers and will support full employment. The changes are as follows –

19p increase in the adult rate (from £6.31 to £6.50 per hour)

10p increase in the rate for 18 to 20 year olds (from £5.03 to £5.13 per hour)

7p increase in the rate for 16 to 17 year olds (from £3.72 to £3.79 per hour)

5p increase in the rate for apprentices (from £2.68 to £2.73 per hour)

Further details are available at this address

The government released details of changes in the National Minimum Wage in March. From the 1st October 2014 the minimum wage rates are set to rise. The increases are between and 2% and 3% and over a million people will be affected. This is the first real terms cash increase since 2008 and the Low Pay Commission believes will be manageable by employers and will support full employment. The changes are as follows –

19p increase in the adult rate (from £6.31 to £6.50 per hour)

10p increase in the rate for 18 to 20 year olds (from £5.03 to £5.13 per hour)

7p increase in the rate for 16 to 17 year olds (from £3.72 to £3.79 per hour)

5p increase in the rate for apprentices (from £2.68 to £2.73 per hour)

Further details are available at this address

Auto-Enrolment @ Payroll Options

Pensions and Payroll may not be everybody’s idea of a good time but is certainly taking a lot of time and energy at the moment, and things are set to only get even more exciting as we head to the large crush of 2016.

Nothing seems straight forward about pensions and certainly we know of financial advisors that have stepped back, and there are reports of pension companies dropping the schemes or only accepting companies above a given size. Auto-enrolment should not be taking as much time and causing as much mayhem as it appears to be doing. But is there a simple solution?

Alas we do not know of one, if it exists. All we can suggest is join everyone else and muddle through. It is not actually as bad as it sounds, and it is just that everything has to be incredibly precise and well documented. From our payroll perspective we have had some headaches, but actually things are now relatively quiet.

One of our issues has been “how long is a three month postponement period?” Which you would think should have been straightforward but is actually influenced by things like pay interval ie weekly vs monthly vs 4-weekly vs 2-weekly. The reassuring thing when speaking to the pension companies is that we are all on a learning curve together.

At Payroll Options we can provide data to aid with pension or middleware requirements and we can perform the assessment. This is a small but vital part of the process, but as it can happen with no intervention from our clients and very much in the background, it is probably perceived as causing the least problems.

The actual auto-enrolment pension is just a pension that has to operate within a few defined parameters (I realise this may be a slight oversimplification). The responsibility for the parameters and the whole scheme is with The Pensions Regulator, in turn set by government.

As well as specific pensions schemes there are also minimum defined contributions. By October 2018 the minimum will be 8%, with the employer’s contribution at a minimum of 3%. This means that an employer could make the full 8% contribution if they wished, or stay with the minimum and the employee making up the 5% required.

The assessment is performed on the required date and there are four outcomes that we are aware of:

  1. Automatically enrol – Earning over £833 in a month, and between 22 years old and the statutory pension age (SPA).
  2. Has a right to opt in – Earning from £481 – £833 and between the ages of 16 and 74, or earning over £833 but aged between 16 – 21 or the SPA and 74.
  3. Has the right to a pension scheme – earns £481 and below, and aged 16 – 74
  4. No defined position – Aged over 74 or below 16

(Taken from the The Pension Regulator website 9.9.14 but please check for up to date information)

It is worth mentioning that an employee cannot “opt out” until they have been enrolled and the company cannot take any action that could be seen as encouraging employees to leave the scheme.

There is the opportunity for confusion at every stage of the process. I hope the explanation of the possible outcomes of an assessment will be useful, and help people understand a little more and maybe have more of an idea on the likely impact on their workforce. If your company has yet to make a decision, do not put it off until the last minute. Take action and remember we can help. For complete and accurate information please try

Robert Lorrimore 9.9.14

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.


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 –

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.