Ready for RTI?

Posted on February 7, 2013 by admin

Starting in April 2013, HMRC will be requiring employers to submit payroll information in real time (RTI) rather than making an annual submission after a tax year has ended. From April 2013 a submission to HMRC needs to be made at or before the time of payment to employees, so this may be a weekly or monthly activity depending on the frequency of the payroll runs.

Before the new tax year starts on 6th April 2013, it is important to get prepared; if an employer is running their payroll in-house they need to check that the software is RTI compliant or if the payroll is outsourced that the payroll provider is ready for RTI. Wildflowers with green

As part of the preparation for RTI, employers need to ensure that they have accurate and upto date information about all their employees including:

Name
date of birth
gender
address
national insurance number

Employee names should be their legal name and include any middle names. For example if a Frederick Simon Smith is currently included as Fred S Smith, the name should be amended to his full name.

From the 6th April 2013 additional information will need to be reported to HMRC as part of the payroll such as

hours worked
employee information for temporary, casual workers and employees paid below the national insurance Lower Earnings Limit (LEL)

The information submitted by employers (or their payroll providers) will mean that HMRC will hold current information about earnings and so there should be fewer incorrect tax codes for individuals. This information will also be used to assess payments under the new Universal credits. All employers regardless of their size will be required to operate RTI during 2013-14.

Knowvember Workshops in Eastbourne

Posted on October 10, 2012 by admin

Recently Cohub opened to provide a collaborative working space for businesses based in and around Eastbourne. We have used their meeting room for meetings and have been impressed with the space and facilities they have in the town centre.

During November, Cohub will be running a series of Knowvember workshops at lunchtimes on a variety of topics. We have been asked to do a workshop and will be looking at some of the common areas HMRC look at to establish if someone is an employee or self employed.

For further details of the workshops and to make a booking, please click the image below:

We hope to see you at our workshop on 28th November.

National Minimum Wage Increase 2012

Posted on September 18, 2012 by admin

The UK National Minimum Wage increases on 1 October 2012 for workers aged 21 and over and apprentices.

From 1 October 2012 the hourly rates are as follows

£6.19 – workers aged 21 and over

£4.98 – workers aged 18-20

£3.68 – workers above school leaving age – aged 16 – 17

£2.65 – apprentice rate for apprentices aged under 19 or if aged 19 or over and in their first year of their apprenticeship.

Pennies

Payroll Tips

Posted on May 11, 2012 by admin

People are at the heart of every successful business and it is so important to get payroll right. From April 2013 payroll departments will need to manage some of the biggest changes since the introduction of PAYE with the introduction of RTI (Real time Information) by HMRC.

Our top tips for employers are:

Taking on an employee

Ensure that the worker has the right to work in the UK as the legal responsibility lies with the employer to ensure that every worker they employ has the right to work in the UK.

A new employee will usually give the employer their P45 from their previous job which contains their tax code. If they do not have a P45, ask them to complete a P46 which will contain all the personal information needed to set them up on the payroll and for the appropriate tax code to be used when running the payroll.

Quality of Information

In readiness for RTI, all employers should check that the data they hold for each employee is accurate

Full employee name
Date of birth
National insurance number
Address
Gender

Employee leaving

Check that all payments due to the employee such as holiday pay are included in the final payment made to the employee before the P45 is issued.

Deadlines

Set up reminders for deadlines (taking into account bank holidays and weekends) for payments to HMRC, payroll processing and payroll payment dates.

Contingency Plan

Payroll must be processed on time, every time. Therefore a business should have a plan for the processing of payroll if there are unexpected absences or other unforeseen circumstances.

Keeping up to date

Legislation and regulations are constantly changing so it is important that anyone involved with payroll is abreast of current and future legislation changes and regulations that may affect the payroll.

Similarly payroll software must be kept updated and checked to ensure that the correct legislation rates are in use.

Confidentiality

Ensure access to all information is restricted and kept secure whether stored on a computer system or as physical files.

What does the letter on my tax code mean?

Posted on February 3, 2012 by admin

Tax codes are usually a combination of numbers and a letter. The numbers relate to the personal allowances to be used when calculating the tax due on the earnings being paid through the payroll. The letters also may be relevant to calculating the tax due.

Tax code with a suffix L

For the tax year 2011/12, an individual under 65 is entitled to a personal allowance of £7,475 and is represented by a tax code of 747L. A tax code may be reduced from 747L if an employee receives benefits from their employer such as private medical cover or a company car. The tax code may also be reduced if an employee has income from a source other than their employer such as a pension or a second job.

At the beginning of the tax year all tax codes ending with an L will be automatically amended to reflect any change in personal allowance. In April 2012, the basic personal allowance increases from £7,475 to £8,105. All tax codes with a suffix of “L” will automatically be increased by 63 so that a code 747L will become 810L.

Tax code with a suffix T

A tax code with a suffix “T” means that HMRC consider that there are other items that may need to be reviewed as part of the tax code and they will issue a issue a notice of coding if it is appropriate to change the tax code.

Occasionally a “NT” tax code is issued which means that no tax will be deducted from the earnings.

Tax code with a suffix P

This letter is used for an individual aged 65-74 with a full personal allowance of £9,940 for 2011-12.

Tax code with a suffix Y

This letter is used for an individual over 75 with personal allowance of £10,090 in 2011-12.

Tax code BR

This tax code means that tax will be deducted at basic rate on all earnings.

Tax codes with a prefix D

Occasionally an employee may have a D0 tax code which means that all earnings from that employment are taxed at 40%.

If an employee has a D1 tax code this means that all earnings are taxed at 50%.

Tax code with a prefix K

A tax code with a prefix of K means that an employee’s personal allowances are less than the benefits that they receive. The benefits will be shown on the copy of the coding notice received by the employee and a “K” code is often required for those with a company car.

It is always worth checking that the tax code letter makes sense and to contact HMRC if there is any doubt about a coding notice received to check that it is correct.

Received a tax code notice from HMRC?

Posted on January 10, 2012 by admin

Each year between January and March, HMRC issue tax code notices to some individuals for the new tax year that starts in April. HMRC issues a tax code notice so that an employer will deduct the correct amount of tax through the payroll.

HMRC issues a detailed calculation to the individual and a summary notification to the employer to use the tax code from a specified date.

It is always worth checking that the information shown on the tax code notice is correct and that there are no items missing or incorrect figures.

If you believe the calculation is wrong then phone HMRC (Tel: 0845 300 0627) to discuss the figures that may be incorrect. If for example you have a company car and it is not shown on the calculation by HMRC, you will not have sufficient tax deducted from your pay and will end up with a tax liability to pay at a later date unless the tax code notice is amended by HMRC.

At any time during the tax year, HMRC may issue a new tax code notice to an individual which will supersede the existing tax code used by an employer. The intention of HMRC is to issue the correct tax code to ensure that employees have the correct amount of tax deducted from their income.

AFH Payroll

Category Archives: Payroll