Typically, an employee is appointed to administer the tronc and is usually referred to as the troncmaster. HMRC does not prescribe who the troncmaster should be.
Frank owns a pub and restaurant. Tips paid by cheque, debit and credit card are all passed to Sharon, the troncmaster, who has been appointed by Frank. Sharon operates PAYE on the tips that she distributes. A staff committee decides on the allocation and Frank has nothing to do with this.
Even though Frank has appointed Sharon as troncmaster he has played no part, directly or indirectly, in the allocation of the tips because he is not involved in determining who should receive tips and how much each employee should receive. In these circumstances, no NICs will be due on the tips received by the tronc members. Example from NIM02942
The Income Tax (Pay As You Earn) Regulations 2003 require an employer to
Notify HMRC of the existence of a tronc created on or after 6 April 2004
And
Give the troncmaster’s name (if known)
When you are notified of a tronc you should
Confirm that there is an organised arrangement for sharing tips and determine
How the tronc receives monies (for example employees paying in cash tips or an employer paying in credit card tips)
Who holds the tronc monies and how (for example, is there a tronc bank account and if so who operates it?)
On what basis are distributions made from the tronc and who decides that basis
Which employees are tronc members
Whether the person said to be the troncmaster accepts and understands the role (including the obligation to operate PAYE)
If you are satisfied that there is a tronc for PAYE purposes (bear in mind that a business could have more than one tronc, for example a hotel could have separate troncs for restaurant staff and housekeeping staff and each should be dealt with separately)
Arrange for a PAYE scheme to be set up in the name of the troncmaster. Further information can be found in PAYE20160
Apple and Facebook are now offering to pay for female employees to freeze their eggs!
The initiative is part of the so-called “perks arms race” as Silicon Valley firms battle to recruit top talent and it is hoped the perk will attract more women into a traditionally male-dominated sector. (Sky News)
Fertility specialist Philip Chenette is quoted as saying “providing egg-freezing coverage for employees can be viewed as a type of payback for women’s commitment in a mael-dominated industry where technology firms are often competing to attract female talent” (NBC News)
Many employers who submit mainly nil returns (ie small owner managed businesses) for RTI are likely to get a letter from HMRC with Specified Charges on them, this is because under RTI if you don’t pay any employees in a pay period you need to submit a return to HMRC, if you forget or mis a period, which with HMRC RTI Basic PAYE Tools is easily done, HMRC will create a charge.
HMRC define a Specified Charge as
These are amounts we have estimated to be due when we have not received the necessary RTI PAYE submissions. We base these on you previous filing and payment history. We do this under Regulation 75A Income Tax (Pay As You Earn) Regulations 2003.
But as its an estimate is unlikely to be correct and on top of that HMRC will probably charge interest based on their Specified Charge.
If you get a Specified Charge check your RTI Submissions to makesure that you haven’t missed any, if you have missed one, post it now
It’s time to run your first RTI PAYE year end and you have your own limited company, how do you answer this question?
Service Company
‘Yes’ if you are a service company – ‘service company’ includes a limited company, a limited liability partnership or a partnership (but not a sole trader) – and have operated the Intermediaries legislation (Chapter 8, Part 2, Income Tax (Earnings and Pensions) Act 2003 (ITEPA), sometimes known as IR35). Otherwise indicate ‘No’.
The question is now a bit more specific, which is great, because you will only answer ‘Yes’ if you have operated IR35.
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.
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.
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, by19 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.
“RTI delivers on all fronts. Business costs will be cut by £300 million a year, employees will be taxed more accurately and fraud and error in the tax credit system will be reduced by hundreds of millions of pounds every year.”
If you have 9 employees or less you will be able to use Basic PAYE Tools to comply with RTI for larger business you will need to purchase a payroll system or use a bureau.
Basic PAYE Tools will:
record your employees’ details
handle mid-year tax code changes
work out and record your employee’s pay, tax, NICs and any Student Loan deductions every payday
generate the payroll data that you need to send to HMRC in real time, including starter and leaver information
produce an Employer payment record that works out how much you need to pay HMRC
contain integrated calculators to help you to work out statutory payments such as Statutory Sick Pay and Statutory Maternity Pay
transfer employee details from one year to the next so you don’t have to re-enter their details
Basic PAYE Tools does not provide a payslip so here is a template you can use.
A key feature of RTI is to link RTI data and payment information together where employees are paid by direct Bacs. This will reduce errors and improve accuracy, particularly when Universal Credits is introduced. Employers need to use employee bank details to generate the hash cross reference. HMRC appreciate that this may result in a change to business processes for some employers.
The payroll and payment will be linked with a hash created by your payroll solution which contains:
A four character random string which is inserted in field 7 of the Bacs payment record• The sort code of the originator’s bank (6 digits);• The sort code of the recipient’s bank (6 digits)• The amount of payment in pence (-Tax and NI) (11 digits).
This will be sent alongside the tax information to HMRC.
Currently the use of the Hash Cross Reference only applies if you use Direct Bacs
The High Street Banks have not enabled Hash Tags for online banking yet, although this may well change at a later date.
Under the new rules companies submitting payroll payments to BACS will need to include additional information along with the BACS transaction including the payee’s tax code, pay to date and tax to date amongst other items of information. These new rules have been named RTI or Real Time Information by HMRC.
Migration started in April 2012 with an aim to have all companies migrated by the end of 2013.
RTI will:
make the PAYE process simpler and less burdensome for employers and HMRC; for example by removing the need for the end of year return (P35 and P14) and simplifying the employee starting and leaving processes
make PAYE more accurate for individuals, over time reducing the number of bills and repayments sent after the end of the tax year
enable HMRC to pursue late payments more effectively
To enable RTI payroll providers and BACS providers are currently rolling out new software and applications.
The Universal Tax Credit will be launched in 2013 and will replace:
income-based Jobseeker’s Allowance
income-based Employment and Support Allowance
Income Support
Child Tax Credits
Working Tax Credits
Housing Benefit.
What’s different about Universal Credit?
The main differences between Universal Credit and the current welfare system are:
Universal Credit will be available to people who are in work and on a low income, as well as to those who are out of work
most people will apply online and manage their claim through an online account
Universal Credit will be responsive, as people on low incomes move in and out of work, they’ll get ongoing support – giving people more incentive to work for any period of time that is available
most claimants on low incomes will still be paid Universal Credit when they first start a new job or increase their part-time hours
claimants will receive just one monthly payment, paid into a bank account in the same way as a monthly salary
support with housing costs will go direct to the claimant as part of their monthly payment.
