Updated advice on penalties for not reporting payroll information on time

 

What you need to know

The HMRC has introduced penalties for employers who report their payroll information late.  These apply from:

▪   6th October 2014 for employers with more than 50 employees

▪   6th March for employers with less than 50 employees

 

 

A penalty can be charged if:

▪   Your Full Payment Submission  (FPS) was late

▪   You did not sent the expected number of Full Payment Submissions

▪   You did not send an Employer Payment Summary when you did not pay employees in a tax month

HMRC will not charge a penalty if

  • Your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday (applies from 6 March 2015 – 5 April 2016)
  • you are a new employer and you have sent your first FPS within 30 days of paying an employee or if it’s the first failure within the tax year to submit your report on time.
  • It’s your first failure in the tax year to send the report on time (not applicable to employers who are registered with the HMRC on the annual scheme).

For more information about how to avoid penalties for late submission see the HMRC website

 


Changes to Thresholds and Tax Codes for 2015/16 – are you ready?

From 6th April 2015, the new tax year begins.  This years’ changes are listed below in a quick reference guide:

Headlines

The Personal Allowance has risen to £10,600, and the Basic Rate has reduced to £31,785.

Rate                            %                     Bandwith

Basic Rate                   20%                 £1 to £31,785

Higher Rate                 40%                 £31,786 TO £150,000

Additional Rate            45%                 £150,0001 and above

Changes to Income Tax Allowances

Personal Allowance                                  2014/15           2015/16           Change

Those born after 5 April 1948                       £10,000           £10,600          £600

Born between 6 April 1938 – 5 April 1948    £10,500           £10,600           £100

Those born before 6 April 1938                    £10,660           £10,660           -

National Insurance Contribution thresholds                                                         

                                                                    2014-15           2015/16

                                                                   £ per week   £ per week

Weekly Lower Earnings Limit (LEL)                111                  112

Weekly Primary Threshold (PT)                      153                  155

Weekly Secondary Threshold (ST)                 153                  156

Upper Earnings (UEL)                                    805                  815

Upper Profits Limit (UPL)                          41,865 pa        42,385 pa

Upper Secondary Threshold for U21s (*3)     N/A                  815

Employment Allowance (per employer)          2,000 pa          2,000 pa

*3 Upper Secondary Threshold (UST) introduced from April 2015 for employees under the age of 21.  The rate of secondary NICs for employees under the age of 21 on earnings between ST and UST will be 0%.

Class 1 National Insurance Contribution rates 2015-16

Employees (primary)                                  Employer (Secondary)

Earnings                  NIC rate                      Earnings        NIC rate

£ per week               per cent                     £ per week     per cent

Below £112                 0                                 Below £156     0

£112-155                     0                                Above £156    13.8

£155-815                     12

Above £815                2

Statutory Adoption Pay

                                                          2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                     138.18             139.58

Statutory Maternity Pay

                                                          2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                     138.18             139.58

Statutory Paternity Pay

                                                          2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                     138.18             139.58

Additional statutory paternity pay        138.18             139.58

Statutory Shared Parental Pay

                                                          2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                    138.18             139.58

Statutory Sick Pay

                                                         2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                     87.55              88.45

Pay in lieu of Notice – When does tax apply?

Making a payment in lieu of notice (PILON) is a way of ending an employment contract with immediate effect meaning that the employee will not work a notice period. An employer will make a payment of the amount that an employee would normally have been paid if they had worked the notice period.

Whether tax is payable on the PILON all depends on the contractual agreement between the employer and the employee and whether it is usual

practice for the employer to make this type of payment.

If under the terms of the contract, the employer has the right to make a payment in lieu of notice then the payment is made as part of the contract and taxable.  The same would apply if it was customary for the employer to make payments in lieu of notice when terminating an employee’s employment regardless of which party chose to give notice to end the contract.

If however, PILON is not covered in the employee’s contract of employment nor customary practice for the employer to make this type of payment, then PILON would be treated as damages for a breach of contract on the part of the employer and so would not be taxable.

Other payments made at the time of leaving such as holiday pay will be taxable as they are a contractual payment.

For more information on PILON please see: http://www.acas.org.uk/index.aspx?articleid=4540

Court ruling that Overtime should count in Holiday Pay

What does this mean for your business?

In November 2014, a landmark Employment Appeal Tribunal case ruled that employees have the right to claim for overtime to be included in their holiday pay if the overtime is regular or compulsory. The Tribunal has not clarified whether this could also benefit staff who work voluntary overtime.

The ruling was based on the supposition that UK had incorrectly interpreted the EU Wide working time directive, which was implemented into law as the Working Time Regulations in the UK in 1988. The current legislation in the UK states that holiday should be paid at the basic rate.  This has now changed as a result of these test cases.

It is anticipated that due to the impact this ruling could have on business that an Appeal on this ruling is likely.  If the ruling stands or is appealed unsuccessfully, then employers must include overtime when calculating workers’ holiday pay.  Employers need to consider how they will apply the ruling until any appeal process which may take a considerable length of time, has been completed

The judgement has created a time limit on how far back employees can backdate claims of overtime on their holiday pay, which means employees must make a claim within 3 months of taking their holiday or they lose their right to make a claim.

ACAS have produced useful guidance on overtime, commission and other payments to be considered when calculating holiday pay for employees.

http://www.acas.org.uk/index.aspx?articleid=4109

Changes to HMRC requirements for employment Intermediaries take effect on 6 April 2015

The HMRC are responding to increased false self employment on the part of employment intermediaries acting on behalf of self employed workers who should legally be regarded as employed, and therefore attract the same rates of Tax and National Insurance as an employed person would do.

From 6 April 2015, Employment Intermediates must send details of workers they place with clients who are not:

  • Direct employees or,
  • Being treated as employees.

The HMRC has published Draft Reporting Regulations for which the consultation period has just ended (25 November 2014).

For more information about this change and the possible impact it might have to your business see the HMRC website

New penalties for late submission of payroll information

What you need to know

The HMRC has introduced penalties for employers who report their payroll information late.  These apply from:

  • 6th October 2014 for employers with more than 50 employees
  • 6th March for employers with less than 50 employees

A penalty can be charged if:

HMRC will not charge a penalty if you are a new employee and you have sent your first FPS within 30 days of paying an employee or if it’s the first failure within the tax year to submit your report on time.  This also will not apply to employers with fewer than 50 employees for the Tax year 2014-15.

For more information about how to avoid penalties for late submission see the HMRC website

Shared Parental Leave – Some things businesses should know.

What is Shared Parental Leave?

New regulations which affect current maternity and paternity leave and pay take affect as of 1st December 2014, and will apply to parents if:

  • Their baby is due on of after 5 April 2015
  • They adopt a child on or after 5 April 2015

Shared Parental Leave (SPL) and the Statutory Shared Parental Pay (ShPP) must be taken between the baby’s birth and their first birthday.

It effectively enables parents to make choices about how and when they take their SPL and gives them the opportunity to share the leave or the pay between them.

Some key points for businesses

  • If a baby is due on or after 5 April 2015 and born early, these new rules will be applied in the current 2014/15 tax year
  • It is the employee’s responsibility to check they are eligible for shared parental leave and/or pay and they must give their employer a written declaration confirming that they are eligible. An employer is not required to check or confirm the information given by the partner to determine whether the employee is eligible for shared parental leave and/or pay.
  • Parents have to meet the eligibility criteria to qualify for SPL and ShPP.  To view the eligibility criteria click here
  • If eligible once the Maternity or Adoption leave and pay are ended early, parents can
    • Take the rest of the 52 weeks of leave (up to a maximum of 50) as SPL
    • Take the rest of the 39 weeks of pay or Maternity Allowance (up to a maximum of 37 weeks) as ShPP.
    • NB the mother must take a minimum of 2 weeks maternity leave following the birth (4 weeks if working in a factory)

There are some formalities in terms of what information the employee must give the employer about their plans to take the SPL.

It is recommended that the employer has early informal discussions about their plans with regards to how they intend to take SLP so they can plan effectively for the period(s) of leave.

An employer cannot refuse a notification for continuous leave request. Each eligible parent can give up to 3 separate notices to book leave or to vary previously agreed leave although an employer may choose to accept more notifications from an employee.

Detailed guidance for employers is available through the ACAS website

 

Auto Enrolment is here – are you ready?

Pension legislation has changed and now requires all employers to enrol staff onto pension schemes. 

Here are some key points to be aware of:

  • Auto enrolment affects all employers with staff in the UK
  • Certain staff must be enroled into a pension scheme
  • Employers must start doing this from their staging date (there is an option to postpone for up to 3 months)
  • Employers must tell their staff how this affects them.

When does this affect you as an employer?

Your duties as an employer come into force from your ‘staging date’.

You can find out your staging date by entering your PAYE reference into the Pensions Regulator tool: The Pensions Regulator Tool

Do all staff need to be enrolled?

Employers have a duty to auto enrol all staff who are:

  • From 22 years old to State Pension Age
  • Working in the UK
  • Earning over £10,000 per annum

Staff outside of the criteria can ask to opt in and if they do, employers must enroll them.

For more information about how your staff may be affected see this link.

What else do I need to be aware of?

Once you have identified when your staging date is, and which staff you need to enroll, you need to

  • Choose payroll software
  • Choose a pension scheme
  • Enrol your staff
  • Ensure your staff are aware of how the changes will affect them
  • Complete your declaration of compliance with the Pensions Regulator
  • Maintain records & ensure you meet your ongoing responsibilities

The Pensions Regulator website has a wealth of information including Information for Employers: The Essential Guide to Automatic Enrolment

Don’t forget – there have been changes in the National Minimum Wage which came into effect this month (October 2014)

The new National Minimum Wage apply to payroll / salary periods starting on or after 1 October 2014 and are:

  • the main adult rate (for workers aged 21 and over) is £6.50 per hour
  • the rate for workers aged between 18 and 20 is £5.13 per hour
  • the rate for workers aged under 18 is £3.79 per hour
  • the rate for apprentices is £2.73* per hour.

The rates are influenced by age, and apprentices / employees must be the school leaving age to qualify for the above rates.

*The rate for apprentices aged 16 to 18 and those aged 19 or over who are in their first year of an apprenticeship. All other apprentices are entitled to the National Minimum Wage for their age.

Source HMRC

AFH Payroll can assist with your payroll needs, ensuring you naturally comply with any legislative changes affecting your business.  Contact us today if you would like an informal discussion about how we can help.

Useful links:

https://www.gov.uk/government/news/above-inflation-rise-for-national-minimum-wage

https://www.facebook.com/nmwage

http://www.acas.org.uk/index.aspx?articleid=1902

 

 

NI allowance from April 2014

From April 2014, every employer will be able to benefit from the new NI allowance. This will be worth upto £2,000 for each employer.

For the tax year 2014/15 employers will be able to reduce their payments to HMRC by the amount of employers NI included within the total amount payable for the month or quarter.

Registration to claim this allowance will be through payroll software as part of regular RTI submissions when the first submission is made to HMRC in 2014/15.

Small employers with an employers NI liability of less than £2,000 in a tax year will have their allowance restricted to the amount of the employers NI liability.