RTI – Client Newsletter

By March 14, 2013Uncategorized

HMRC Real Time Information (RTI)

From April 2013 all employee payrolls processed by Payroll Options will be operated in accordance with RTI and appropriate submissions will be made by Payroll Options to HMRC on your behalf.

What should I do differently?

  • Please revise your New Starter documents to indicate to Payroll Options which Starter Declarations are appropriate.
  • For each New Starter please ensure that you obtain a complete record for them such as Full Name, Address, Date of Birth and NI Number.
  • P45s can now only be accepted with an employee’s first payment.

How does it work?

  • Whenever your employees are paid we will submit details of the payments to HMRC.  This is called the Full Payment Summary (FPS) and will be submitted to HMRC just before the payment date shown on the front page of your payroll reports and the payslips.
  • By the 19th of the month following the end of the tax period we will submit details to HMRC of values of SMP,SPP etc. that you will be deducting from your payment to HMRC.  These values are contained in a submission called the Employer Payment Summary (EPS).
  • At the end of the tax year we will be submitting the statements that have traditionally been part of the P35, the values from the P35 will already be known by HMRC due to the submissions of FPS and EPS throughout the year.

Starter Declarations

  • For every new starter to your payroll you are required to ask a series of questions of the new employee to ensure that the PAYE tax and Student Loan is operated correctly for them.   The Starter Declarations are as follows:

 

  • A.This is their first job since last 6 April and they have not been receiving taxable Jobseeker’s Allowance, Employment and Support Allowance, taxable Incapacity Benefit, state pension or occupational pension.
  • B.This is their only job, but since last 6 April they have had another job, or have received taxable Jobseeker’s Allowance, Employment and Support Allowance or taxable Incapacity Benefit. They do not receive state or occupational pension.
  • C.They have another job or receive a state or occupational pension.

Student Loans

  • You must also ask if they left a course of UK Higher Education before last 6 April and they have a student loan outstanding that should be deducted via the payroll.  If ‘yes’ you must start making student loan deductions from their pay.

 

  • The existing P46 form for use when a new employee does not have a P45 is being scrapped from April 2013 and will no longer be accepted by Payroll Options.
  • The existing P38 Student Declaration is also being scrapped from April 2013, students should also complete a Starter Declaration.  This may result in a Student paying slightly more tax than normal if they work during the early part of the tax year, if they wish to recover this tax once they have finished working for you they can discuss this with HMRC.
  • If you have a P45 for your new starter please submit this to Payroll Options, along with a Starter Declaration as detailed above.  P45s can only be submitted as part of their first payroll, if it is received later it cannot be used, if the employee considers that their tax code is wrong they must contact HMRC.
  • From your new starter’s Starter Declaration, and if present their P45, a Tax Code will be allocated.
  • There is no formal HMRC form as such called a Starter Declaration Form, you are required to incorporate the above Starter Declarations into your existing employee forms.
  • You may consider it appropriate to have your new employee sign a Starter Declaration that you have prepared and retain it with their HR records.
  • We have added additional fields to the standard New Starter Form which can be downloaded from https://www.payrolloptions.com/downloads , a copy of this is also attached.  Please change the company name and payroll number at the top of the sheet and save this as your template.
  • As per our current procedures we are unable to delay the processing of your payroll due to tax documents not being received.  Your payroll will be prepared using the tax documents received at the time of starting to process your payroll.   If a Starter Declaration is not received with your payroll instructions your starter may temporarily, but not necessarily, have additional tax deducted.
  • As now once a P6 Tax Code notice from HMRC has been received for an employee we are not permitted to change an employee’s tax code even if a P45 has been presented.  In this instance the employee can discuss the situation with HMRC if they consider that their PAYE Tax is incorrect which may result in a further P6 to be issued by HMRC.

Re-runs

  • As files are to be submitted to HMRC for every payroll and for each employee, re-runs of your payroll should be avoided unless absolutely necessary, re-runs of your payroll once the pay date has passed should simply be avoided and make the necessary adjustments in the next payroll.
  • As is the case now we are unable to re-run your payroll for a change of tax code or to make changes to non-taxable expenses.

Supplier Payrolls

  • If we currently pay your suppliers via your payroll or pay people that are self-employed, and thereby not employees, we cannot continue to do so on the PAYE payroll, if you wish for us to continue paying these non-employees on your behalf we will need to establish another payroll.  The non-employees payroll will not be subject to RTI.

Payment Dates

  • If your payroll is paid monthly it must be processed before the 5th of the month following the payroll month concerned.
  • The payment date that appears on your employees’ payslips must match the actual payment date to the employees and should therefore be on or after the date the payroll is processed.
  • If you have traditionally waited until after the end of the month, prior to preparing your payroll instructions for Payroll Options which has led to your payroll not being processed until after the 5th of the following month, such processes are no longer possible with RTI.   Your cut-off date will need to be bought forward to before the end of the month to enable you to supply the information to Payroll Options allowing time for your payroll to be processed prior to the 5th of the month.   If this is the case for your payroll please contact us so we can resolve this with you.

Payroll to be processed at least every month

  • We are required to process your payroll for every tax month to ensure that we can submit appropriate information to HMRC even if nobody is being paid.
  • If your payroll has traditionally only been processed for a couple of months of each year, from April we are required to process your payroll every month even if nobody is being paid, this is to inform HMRC that nobody is being paid.  Traditionally we would only have charged for processing your payroll when employees were actually paid but from April 2013 as your payroll will be processed, just that no employees will be paid, we will be charging the equivalent to our lowest monthly payroll charge (currently £22.50).
  • Any payroll not processed by the 5th of the month following will be processed in such a way to inform HMRC that nobody has been paid, please see section Payment Dates, for this we will be charging the equivalent to our lowest monthly payroll charge (currently £22.50).

Payment to HMRC Collector of Taxes

  • By the submission of the FPS and EPS HMRC will know how much your company owes for PAYE Tax and National Insurance every month.
  • It is very important that you pay the amount of PAYE Tax and National Insurance to HMRC accurately, on-time and use the reference as detailed on your Collector of Taxes Report.
  • It is important if we operate a weekly, 2-weekly or 4-weekly payroll on your behalf that you pay the correct amount for whole tax month for all payment dates up to and including the 5th of the month.

Tax Year End April 2014 onwards

  • At the end of the tax year we will require you to indicate the correct P35 statements, as now.
  • There will be NO financial reconciliation at the end of the tax year as this must be performed throughout the tax year so that the amounts paid to HMRC agree with details submitted via FPS and EPS.
  • P60s will continue to be provided after the end of the tax year.

CIS deductions suffered

  • Please advise Payroll Options of the monthly amount of CIS deductions suffered (Column E on form CIS132) by the 13th of the month following so that we can include the amount within your EPS.

Regional employer NICs holiday for new businesses

  • If you are in receipt of the NICs holiday for new businesses please advise Payroll Options of the monthly amount by the 13th of the month following so that we can include the amount within your EPS.
  • For further details of this scheme please visit: http://www.hmrc.gov.uk/paye/intro/nics-holiday/index.htm
  • As stated previously we will be increasing our charges by 5% to cover the additional processes now required by HMRC on your behalf.

Charges

  • As stated previously we will be increasing our charges by 5% to cover the additional processes now required by HMRC on your behalf.

 

Please contact us by email to helpdesk@payrolloptions.com or by telephone 01908 630 777 if you would like to discuss RTI further.