Tag Archives: afhpayroll

New penalties for late submission of payroll information

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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

What does the letter on my tax code mean?

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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

Capital letter LFor 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 

Capital letter KA 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.