Tag Archives: PAYE

Auto-Enrolment and New Employers

New Employer from 1st October 2017?

Are you thinking about employing staff for the first time?  If you are I’m sure you’ve considered registering a PAYE scheme, arranging contracts, sorting out employer liability insurance and all the other ‘normal’ things that you would expect to have to put in place.  But did you know that if you become an employer for the first time on or after 1st October 2017 then you will immediately have Auto-Enrolment Duties to comply with?

What is Auto-Enrolment?

Under the Pensions Act 2008, every employer in the UK must put certain staff into a workplace pension and contribute towards it. For any new employer from 1st October 2017 these duties apply from the first day the first member of staff starts working for you.  This is known as your ‘Duties Start Date’.

What do you have to do?

Compliance with auto-enrolment means getting to grip with several responsibilities and processes:

  • Initial and ongoing assessment of all staff to determine whether they are Eligible Jobholders, Non-Eligible Jobholders or Entitled Workers.
  • Ensuring mandatory auto enrolment correspondence is provided to all staff advising them of how auto-enrolment impacts on them.
  • Enrolling all Eligible Jobholders into a qualifying pension scheme.
  • Processing any ‘Opt-Ins’ for employees who do not qualify to be auto-enrolled but who choose to join the scheme, and any ‘Opt-Outs’ for employees who have been auto-enrolled and do not want to be part of the scheme.
  • Notifying your chosen Pension Provider of all relevant payroll data each pay period.
  • Paying the Contributions due to your Pension Provider.

Lots of information supporting you with complying with the Duties can be found at the Pensions Regulator website. And, of course, if you decide that personally dealing with the administrative side of these responsibilities yourself is not the best use of your time then please do get in touch – we are more than happy to help with any element of your Payroll and Auto-Enrolment responsibilities.

Employment Allowance 2016/17

Employment Allowance is £3,000 for 2016/17

Did you know that from this tax year you can now get up to £3,000 off your National Insurance bill if you’re an employer? This has increased from the £2,000 allowance which could be claimed in both 2014/15 and 2015/16.

Not sure if you are eligible?

You can claim Employment Allowance if you’re a business or charity paying employers’ Class 1 National Insurance. You can also claim if you employ a care or support worker. However, you can only claim Employment Allowance for one PAYE scheme so if you’re part of a group, only one company or charity in the group can claim the allowance.

Directors, take note!

If you are the only employee in your company who has employer National Insurance deducted then the rules have changed this year and you are no longer eligible to claim the allowance. If you have claimed the allowance previously you need to make sure that you update your payroll records you reflect the fact that the business is no longer eligible and notify HMRC accordingly.

If you’ve never claimed Employment Allowance and think that you should have been then don’t panic, you can claim for a previous tax year dating back to 2014/15. For details on how to do his, or for any other information, you can visit the the https://www.gov.uk/claim-employment-allowance or get in touch with Lisa on 01872 271655 or by email at lisa.middleton@kelsallsteele.co.uk,who will be happy to help.

PAYE: Benefits in kind

PAYE: Benefits in kind (“Payrolling Benefits”)

In his Budget, the Chancellor of the Exchequer, announced changes to the way of Benefits in Kind and expenses can be reported to HMRC.

Payrolling Benefits” means putting a value through payroll to collect tax on employer-provided benefits and expenses.

On 6 April 2016, there will be a statutory basis for the voluntary payrolling of certain benefits. Employers will no longer need to submit P11Ds after the end of the tax year for the Benefits-in-Kind they choose to payroll. You can instead payroll all benefits except living accommodation, beneficial loans and credit vouchers and tokens.

P11D (b) remains

Unfortunately, the P11D (b) process will be unchanged. The Class 1A NIC will still need to be reported and paid after the end of the tax year by 19 July, (or 22 July if paying electronically). Employers will have to report the values of payrolled and non-payrolled benefits.

If P11Ds are not produced by your payroll software, you will need to be able to extract the relevant data to prepare the P11D (b).

Registering with HMRC

Employers that wish to adopt payrolling will need to register with HMRC to let them know which employees and which Benefits will be payrolled. The deadline is 5 April 2016, after which no registrations for 2016/17 will be allowed.

To use the service you’ll need your Government Gateway ID and have enrolled for PAYE online. Agents cannot directly access the service on behalf of clients.

Once registered, HMRC will assume that an employer wishes to continue to operate payrolling in future years unless they are told otherwise.

Talking to your staff

Your employees are likely to have questions about the change. Their tax codes may still be collecting tax from previous years and this additional collection may seem confusing. Payrolling will mean earlier collection of tax for new benefits and this may affect cash flow for some employees. You will need to ensure that employees are aware of what will happen and when.

You will also need to maintain careful records to ensure that your P11D reporting is accurate at the year end.

Getting ready

First, consider and decide whether you want to participate;

  • check that your software provider can enable statutory payrolling from April 2016;
  • decide which benefits to payroll and register with HMRC;
  • develop an employee communications system;
  • check your system for record-keeping requirements – P11Ds may still be needed for some employees or for benefits that the you chooses not to payroll.
  • You should then consider how you communicate the annual value of benefits to your staff so that they can reconcile any deductions made

What happens then?

You collect the tax due on benefits and expenses by adding a notional value to your employee’s taxable pay in your payroll, rather than reporting them separately on a P11D.

Before making the first main payment to an employee in a tax year you need to calculate the cash equivalent of the benefit as you would have done when preparing P11Ds. Then work out the number of payments to be made to the employee in the tax year and divide the cash equivalent of the benefit by the total number of payments to be made. The resulting amount is the taxable value of benefit which should be added to the employee’s wage in the payroll each pay period as a notional value. You then deduct or repay tax as usual by reference to the employee’s tax code.

Is it for me?

Given the amount of work involved in setting up a system and registering for this scheme and then estimating the notional payment that will be taxable in the next year you may think you would be better off waiting until the new system proves itself fit for purpose. The scheme is voluntary and the existing scheme will continue.

However, if it is an attractive idea, time is getting short and you will need to register and make any necessary adjustments to your payroll program very soon.

HMRC Tax Codes 2015-2016

New tax year, new tax code

HMRC have been issuing new tax codes over the last few months for the 2015-2016 tax year. You may well have received a Coding Notice explaining your new tax code, particularly if you have more than one job, or income from more than one pension, or even a combination of both.

HMRC also informs your employer or pension provider of your new tax code, so from 6 April 2015 they should be able to deduct the correct amount of tax from your income.

Cracking the PAYE Code

You need to have a different tax code for each of your sources of income to ensure that you get the full benefit of your personal allowance (for those under 65 this is £10,600 for the 2015-2016 tax year). For example, if your earnings from one job exceed your personal allowance, then HMRC will offset your personal allowance fully against that income and deduct tax at basic rate (or higher rate) from your second source of income.

Difficulties can arise if both your sources of income fall below the personal allowance. If this is the case, HMRC have to apportion the personal allowance between them, for example, they may allow £6,600 against your first job and £4,000 against your second job. If at the end of the tax year, the income from your first job was less than £6,600 or the income from your second job was less than £4,000 then you will not have received the full benefit of your personal allowance and should be due a tax refund.

Additional Reliefs

As well as your personal allowance, other reliefs that you are entitled to may be included in your tax code, for example, blind persons allowancemarried couples allowance (for those born before 5 April 1935) and also the new Marriage Allowance, allowing you to transfer 10% of your unused personal allowance to your spouse, or vice versa . You may also be entitled to relief for expenses you pay that HMRC deem to be tax deductible, the most common of which is professional subscriptions or higher rate tax relief on gift aid payments.

You may also see negative entries on your Coding Notice which reduce the reliefs available against your income. These may include amounts of unpaid tax in previous years, an estimate of other income receivable in the year (for example rental income) or taxable company benefits that you receive.

Check Your P60!

Although your Coding Notice is designed to try and ensure that you pay the right amount of tax throughout the year, it is still important to look at the figures entered on your P60’s at the end of the tax year and check that you are happy that the correct amount of tax has been deducted. If you have any concerns with this, please contact us and we will be happy to help.

If you are unsure about any entries on your Coding Notice, you can contact HMRC using the contact details on the Coding Notice. For more information, please don’t hesitate to contact us on 01872 271655.

RTI Penalties Delayed


Real Time Information (RTI) came into effect in April 2013 (becoming mandatory for all UK employers in October 2013) as part of a reform of the PAYE system.

Under RTI all UK employers are required to notify HMRC in ‘real time’ of their PAYE liability, meaning before or at the time the payments are made.


Penalties for the late filing of RTI information were due to start from 6th April 2014, however HMRC decided to relax the introduction of RTI penalties until 6th October 2014.

Recently, in a further move by HMRC to ease the RTI burden on small companies, HMRC have pushed back the introduction of RTI penalties for small employers of < 50 employees until 6th March 2015.

Ruth Owen, HMRC Director-General for Personal Tax, said: “We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.

“We believe this is the best approach for HMRC and our customers, as we all get used to the new in-year penalties.”

The penalties charged for late filing will depend on how many employees you have:

  • 1 to 9 Employees: £100
  • 10 to 49 Employees: £200
  • 50 to 249 Employees: £300
  • 250 or more Employees: £400

Employers with 50 staff or more on their payroll will still face fines from 6th October 2014 should they fail to file RTI information on time. Find out more information on RTI penalties.

RTI: Why, when and how…

From April 2013 HM Revenue & Customs is introducing a new way of reporting PAYE. HMRC see RTI (Real Time Information) bringing the PAYE system into the 21st Century, making PAYE easier for employers, pension providers and themselves to administer. The following notes explain how this will impact on your business, your employees and how you should prepare for this change.

RTI Presentation Notes