Payroll Year End 2017 – What about P11D’s? Reply

By now you will have already processed your payroll year end and submitted the final RTI submissions.

You have to pay your PAYE by 19th April and issue P60’s by 31st May.

So the next main date is P11D Benefits in Kind! due by 6th July

Last year Dispensations ended and Payrolling Benefits became an option but you must be registered

If you choose to payroll you can tell HM Revenue and Customs (HMRC) online. You need to register online before the start of the tax year you want to payroll for.

You must add the cash equivalent of the employees’ benefits to their pay and then tax them through your payroll.

HMRC will make sure the value of the benefit is not included in your employees’ tax codes.

If you use the service you:

  • won’t need to use form P11D
  • still need to work out the Class 1A National Insurance contributions on benefits and complete form P11D(b)

You can exclude employees from payrolling once you’re registered, but you’ll need to send a P11D to declare the non-payrolled benefits.

Once the tax year has started you’ll have to payroll the benefits for the whole of the tax year, or until you stop providing them.

https://www.gov.uk/guidance/paying-your-employees-expenses-and-benefits-through-your-payroll

Many businesses will continue to submit P11D’s

At the end of the tax year you’ll usually need to submit a P11D form to HM Revenue and Customs (HMRC) for each employee you’ve provided with expenses or benefits.

You’ll also need to submit a P11D(b) form if:

  • you’ve submitted any P11D forms
  • you’ve paid employees’ expenses or benefits through your payroll
  • HMRC have asked you to – either by sending you a form or an email

Your P11D(b) tells HMRC how much Class 1A National Insurance you need to pay on all the expenses and benefits you’ve provided.

If HMRC have asked you to submit a P11D(b), you can tell them you don’t owe Class 1A National Insurance by completing a declaration.

https://www.gov.uk/employer-reporting-expenses-benefits/reporting-and-paying

Expenses covered by an exemption

You don’t have to report certain business expenses and benefits like:

  • business travel
  • phone bills
  • business entertainment expenses
  • uniform and tools for work

To qualify for an exemption, you must be either be:

  • paying a flat rate to your employee as part of their earnings – this must be either a benchmark rate or a special (‘bespoke’) rate approved by HMRC
  • paying back the employee’s actual costs

steve@bicknells.net

Are you ready for the changes to employee expenses? 1

Pay for woman.

From April 2016 all employee expense Dispensations agreed with HMRC will cease to apply!

You will need new systems for checking expenses, HMRC will be supply examples.

Expenses which are not covered by benchmark scale rates are likely to paid and taxed via the payroll with the employee claiming relief through P87 and Self Assessment SA100.

Expenses

Are you ready for the new regime?

steve@bicknells.net

Contact Us

Will I get £30,000 tax free? Termination Payments Reply

Dejected just fired an office worker with personal belongings in a box

Basically the current situation is that the first £30,000 of a payment which is paid in connection with the termination of employment is tax free, as long as it is not otherwise taxable as earnings. It sounds simple but can be complicated, here is a government example

 

Termination Example

The Office of Tax Simplication are currently consulting (until 16th October 2015) on changing the rules one solution is to make it more like redundancy payments, take a look at these examples

Termination 2

There will also be some anti avoidance rules that if you are re-engaged within 12 months in similar job with the same company the payments previously made would become subject to tax and NI.

It looks like we are in for some major changes, its not too late for you to have your say, click on this link

steve@bicknells.net

Are you ready for your first RTI year end? Reply

Close up of payslip

Basically you will need to:

  • Prepare P60’s (but no P14 and P35) by 31st May
  • Submit your final FPS or EPS
  • Update your Payroll Software for the New Tax Year

You can order your P60’s for free from HMRC http://www.hmrc.gov.uk/payerti/forms-updates/forms-publications/onlineorder.htm

Here is a great video from HMRC

HM Revenue & Customs (HMRC) plans to make its Basic PAYE Tools product for the 2014-15 tax year available on 3 April 2014.

The 2014-15 version of Basic PAYE Tools will be provided as an update to the existing version rather than a separate download, so existing users do not need to go to the HMRC website to get the update.

steve@bicknells.net

Can I process my payroll once a year? Reply

Pay

Yes, HMRC are now able to process requests for annual payrolls.

An annual scheme must meet all of the following requirements:

  • all the employees are paid annually
  • all the employees are paid at the same time/same date
  • the employer is only required to pay HMRC annually

Once a business is registered as an annual scheme, an Employer Payment Summary (EPS) is not required for the 11 months of the tax year where no payments are made to the employees.

We all have busy schedules………

Annual schemes are likely to be adopted mainly by very small businesses and single person companies as you can pay all your salary in one go and save yourself 11 months of RTI reporting.

steve@bicknells.net

4 Week Payrolls lead to a £12m bill for Asda Employees…. 2

Close up of payslip

Asda employ 170,000 UK staff and they have received final demands from HMRC for outstanding tax bills ranging from £72 to £160 because they all potentially underpaid income tax last year (according to the Courier and Payroll World).

Assuming each employee only has to pay back the minimum amount, then Asda employees across the UK will have to give more than £12 million back to the taxman.

May be Winston Harrigan could help them this weekend, he loves surprises…..

www.thecourier.co.uk reported

Employees receive their pay every four weeks. This means that once every 20 years they are paid 14 times a year rather than 13.

PAYE (Pay as You Earn) tax contributions were not collected in the extra pay, meaning employees had, through no fault of their own, paid less tax for the year than they should have.

Employees began receiving letters from HMRC demanding they settle their tax bills last week.

You can read Asda’s advice at http://greenroom.asda.com/news-and-info/colleagues-affected-by-underpayment-of-tax-for-year-ending-5th-april-2013

HMRC have published guidance ‘Dealing with Week 53 payments’

PAYE (Pay As You Earn) tax is deducted differently from ‘week 53’ payments. HM Revenue & Customs (HMRC) treats it as a non-cumulative payment (also known as ‘Week 1’), meaning that it is treated in isolation and tax is deducted without taking into account previous pay and tax details. So the tax code you use should be non-cumulative in all cases.

This advice has only been given since the tax year end.

steve@bicknells.net

Top 5 useful things I have learnt about RTI Reply

Payroll

Real Time Information (RTI) has now been with us for a few months and once you get used to Full Payment Submissions (FPS) and Employer Payment Summaries (EPS) its not too bad.

HMRC recently reported:

With over 1.4 million PAYE schemes successfully reporting in real time, the launch of PAYE Real Time Information (RTI) continues to go well. The vast majority of employers (83% of small & medium size employers and 77% of more than 1 million micro employers) have started reporting in real time, but we are aware that there are still some employers who have not started yet.

Given time you might even get to Love doing your RTI Payroll as much as Suzie Humphreys…

Here are some things that I have learnt that you might find helpful:

Split FPS Submissions

You can only submit each employee once for each payment period but you can make more than one Full Payment Submission, this is useful if you have Monthly and Weekly payrolls, or a late starter you have process after the FPS has been submitted, or if you split your payroll by seniority and different staff process sections.

Hashtag and Paying by BACS

At the moment if you pay employees by Direct BACS using systems such as Nat West Payaway the Direct BACS submission needs to include a Hashtag to enable HMRC to match the payment with the FPS, however, if you don’t use Direct BACS and you just pay by Online Banking, Bankline, BACS or CHAPS or any other method you don’t need the Hashtag. I am sure that will change!

Starters and Leavers

When you enter a new employee HMRC are notified on the first FPS that they appear on and you must no longer use a P46 to get starter information you need to us the new HMRC Starter Checklist

P45’s are just for the Employee to refer to and are useful to show to their new employer, don’t send them to HMRC. HMRC are notified of leavers on the FPS.

CIS

If you have deductions under the Construction Industry Scheme you need to enter them on the EPS to reduce the amount of tax payable.

NI Holiday

NI Holidays for new companies end in September 2013 but until then need to be entered on the EPS. Form E89 is used to keep track of how much has been claimed.

Here are some more useful tips and facts on RTI:

Relaxation of Rules for Small Companies

HM Revenue & Customs (HMRC) recognise that some small employers who pay employees weekly, or more frequently, but only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. HMRC have therefore agreed a relaxation of reporting arrangements for small businesses.

HMRC is planning to extend the temporary relaxation for employers with fewer than 50 employees to April 2014. This relaxation means that these businesses are still required to report through the new system, but are able to do so once a month (but no later than the end of the tax month (5th)), rather than each time they pay their employees. This gives small businesses that pay weekly (or more frequently), but who only run their payroll at the end of the month, some extra time to adjust to the new requirements.

Annual Schemes

Many micro businesses such as one person companies are switching to annual payrolls.

An annual scheme must meet all of the following requirements:

  • all the employees are paid annually
  • all the employees are paid at the same time/same date
  • the employer is only required to pay HMRC annually

Once a business is registered as an annual scheme, an Employer Payment Summary (EPS) is not required for the 11 months of the tax year where no payments are made to the employees.

But currently HMRC are unable to process requests to become Annual.

HMRC are working to rectify this position and will publish a further ‘What’s New’ message to announce when this is ready.

Late Filing Penalties

If you do not report the final payment made to an employee, for the tax year 2013-2014, by 19 May in the following tax year you will be charged a late filing penalty.

Penalties are calculated on the basis of £100 per 50 employees and accrue for each month (or part month) that a return remains outstanding after 19 May.

If you fail to report this information by 19 May, or tell HMRC no return was due by sending an EPS, they will write to you (and your authorised agent if you have one) advising that a penalty may already have been incurred and that you must report this information as soon as possible to prevent the penalty building up any further.

steve@bicknells.net

Its too expensive to become a limited company, isn’t it??? 2

I have often heard sole traders say that it will cost too much to become a limited company.

This is because many sole traders prepare their own accounts and do their own self assessment returns, but the reality is that for a basic business, just like a basic sole trader it could be done on a shoe string.

Lets look at the costs:

Company Formation this could cost as little as £16.99 by using a formation agent such as http://www.company-wizard.co.uk/

Accounting Software – TAS Books Basic is Free http://www.tassoftware.co.uk/products/tas_accounts_software/basics.html

Payroll – HMRC software is Free https://stevejbicknell.wordpress.com/2011/09/17/free-payroll-with-free-updates/

Statutory Accounts – Free webfiling at http://www.companieshouse.gov.uk – the annual return only costs £14 if filed online

Corporation Tax Returns – Free software from HMRC https://stevejbicknell.wordpress.com/2011/09/08/corporation-tax-online-its-free-its-ixbrl-complaint-and-you-can-file-accounts-too/

I appreciate that there will be things that you might need help with, just as a sole trader would, but it doesn’t have to be expensive to be a company and small companies pay 20% Corporation tax compared to sole trader paying 20% tax and 8% NI on profits.

It is worth stressing that if you need help always seek professional advice, mistakes can be costly, but if as a sole trader you were happy to prepare your own accounts why would you not be capable of preparing company accounts?

steve@bicknells.net

 

 

Free Payroll! with free updates! 3

If you have a business, the chances are you will need to operate a payroll.

When you set up in business the easiest and quickest way to register a payroll is on line

http://www.hmrc.gov.uk/paye/intro/register-email.htm

Once your payroll is registered its worth obtaining dispensations to hopefully avoid or at least reduce the need for P11D’s

http://www.hmrc.gov.uk/paye/exb/schemes/dispensation.htm

Having registered your payoll you will get a pack in the post from HMRC which will include a CD ‘Basic PAYE Tools’ this CD has everything you need to run your own payroll for free, as an alternative you can download ‘Basic PAYE Tools’

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1086949246&r.l1=1073858808&r.l2=1083106843&r.l3=1083106693&r.l4=1086857322&r.s=sc&type=RESOURCES

Its a great bit of software and you can set up multiple business and create employee databases.

The only thing it doesn’t do is produce payslips, but you can do that easily yourself  by creating your own template in Word or Excel.

steve@bicknells.net