Small business payroll service
It’s been tough. But we made it through.
But we got there. All returns submitted, new files created, CIS refunds applied for.
Job done for another year 🙂
Updated Mar-17
As an employer, you may have heard something about the Employment Allowance, but what’s it for and how do you get it?
First, a bit of background: the PAYE you must pay to HMRC has three components: the income tax and the National Insurance Contribution (NIC) that you deduct from each employee’s gross pay, plus a NIC that comes from the employer.
The Employment Allowance was introduced to help toward the latter – the green piece of pie.
It effectively allows you to underpay the employer’s NIC by up to £3000 in a tax year.
Around 450,000 businesses – that’s a third of all employers – will no longer pay any National Insurance at all. Woo-hoo!
If you use a payroll agent they should take care of this. Otherwise you’ll need to use your own payroll software or HMRC’s Basic PAYE Tools to file an Employer Payment Summary (EPS) telling HMRC you are using the Allowance to cut your payments.
Medium Size Co Ltd pays employer NICs of £2000 each month.
In April the Employment Allowance will knock £2000 off their PAYE bill.
In May they’ll save £1000.
That’s the whole £3000 Allowance used up, so from June they’ll pay the full £2000 again.
On the other hand Teeny Co Ltd’s employer NICs are only £50 per month so their total claim for the year will be just £600.
Gov.uk overview and detailed guidance – the rules and regs
Employment Allowance calculator – see how much you’ll save
Article updated Mar-17
HMRC are being lobbied to delay introducing the penalties for late RTI returns planned to start from April.
A survey by The Chartered Institute of Payroll Professionals shows that employers and payroll bureaux don’t believe HMRC are currently capable of getting it right.
The survey asked just two questions:
“They don’t seem to be able to issue employees with correct tax codes or apply the correct credits to employers accounts so why should we have confidence in them issuing correct penalty notices”
“At least 12 month or until HMRC are able to correct their system to handle RTI submissions effectively without putting the responsibility back on the employer/accountant/bureau”
Shoddy administration by HMRC was the main reason given, with respondents telling tales of bureaucratic woe.
Most worryingly, many reported that HMRC’s figures often don’t add up: they fail to correctly reconcile the RTI report with the payments made. As a result the employer’s HMRC account shows an underpayment and so companies are being aggressively chased for non-existent debts.
We say:
Never take a penalty notice at face value. Always check your own records, and if in doubt refer to your payroll professional / accountant.
On 10 February 2014, HMRC announced that the penalty regime will be delayed until October. Great news for employers and payroll professionals alike.
What reason has HMRC given? “To give employers more time to adapt to reporting in real time.” Hmm.
Image credit: McKay Savage (CC0 BY 2.0)
I love this week. The stress and bustle of Christmas is over, and we get to catch our breath before New Year. Excellent!
You’re focused on planning for the future, but are you learning from the past? Reflecting on the last 12 months will bolster your confidence and lay the groundwork for 2014. You could even use the answers to start examining your Strengths, Weaknesses, Opportunities and Threats (SWOT analysis).
What were your triumphs and disasters of 2013?
Whether you run your own payroll or outsource it to a specialist, as an employer the buck stops with you. So it’s important to know your responsibilities.
Whenever you pay your staff, you must tell HMRC about the payments. This reporting is known as real-time information – RTI for short.
If you pay your employees weekly, you must report weekly; if you pay them monthly, send the RTI monthly, and so on.
Your payroll must be:
HMRC will let you off once every 12 months – so no worries the first time your RTI is late, but if you make a habit of it the penalties will soon rack up.
HMRC will send out penalty notices only once a quarter, in July, October, January and April.
So if you get a penalty notice in July it will be for a late submission in April, May and/or June. Maybe all 3!
Unlike CIS penalties (a flat £100 per month), the RTI submission fines depend on your number of employees. For 2014/15 tax year they are:
|
No. of employees |
Monthly RTI penalty |
|
1 to 9 |
£100 |
|
10 to 49 |
£200 |
|
50-249 |
£300 |
|
250 or more |
£400 |
The good news is that you can’t get more than 1 submission penalty per month. E.g. if you send a weekly RTI late for 4 weeks, you’ll only get fined once.
Those are the penalties for late submission – but remember that as well as being on time, the RTI must also be correct.
For errors, the taxman will base the penalty on the amount of potential lost revenue. If you took reasonable care, or were careless but reported the error without being prompted, you might not be penalised at all.
Whether you run your own payroll or outsource it to a specialist, as an employer the buck stops with you. So:
Take time to check your figures before paying the wages.
If your payroll service submits the RTI on your behalf, let them know any changes asap; e.g. if anyone leaves or joins, or if you’re giving someone a pay rise.
If you pay your staff every Friday, that’s your RTI deadline. Diarise it, put a reminder in your phone, stick a Post-it on your fridge, whatever works for you.
If you use a payroll service, give them your info in plenty of time.
Submission penalties come into force from October 2014, so get into good habits now!
TOP TIP: Run your payroll a week in hand. This means that next Friday you’ll pay staff for the hours they worked this week.
This gives you more time to process the payroll and to send the RTI.
HMRC – late and inaccurate payroll reporting
