Tag Archives: PAYE

How to save £2,000 in tax for your business

National Insurance Tax Allowance

The Chancellor is going to be writing to all small businesses and charities in April to tell them about a new tax allowance. They will be able to claim a £2,000 allowance on Class 1 National Insurance contributions. Basically this means that if you employ someone on £22,000 per year you will not have to pay any class 1 National Insurance Contributions for them.

The government have provided an online calculator so you can work out how much your business might save by using the allowance: http://www.employmentallowance.com/allowance-calculator/

How to claim the allowance

The new national insurance contribution has to be claimed with HMRC (they will not give it to you automatically). This can be done through your payroll software or through the HMRCs Basic PAYE tool. If you outsource your payroll to a managed payroll service then they should be able to do it for you.

Who can use the new allowance?

To take advantage of this new allowance businesses have to be paying employees through the PAYE scheme which will mean they are making the Class 1 contributions in the first place. Most businesses and charities should be able to claim the allowance but there are some specific exemptions. You cannot claim the Class 1 National Insurance allowance if:

  • You primarily provide services to public services such as the NHS or prison service (unless these services are cleaning, security or IT)
  • People who run Personal and Managed Service Companies may not be able to claim the allowance depending on how they are paid (this primarily applies to contractors)
  • You can’t claim the allowance on people you employ for domestic or home work such as a nanny or cleaner.

You can see a full list of who can and cannot use the scheme by downloading the Employment Allowance: further guidance PDF

New RTI Exemption for Some Small Businesses

Real Time Information ExemptionsThe new Real Time Information (RTI) PAYE requirements are due to roll out to all PAYE registered business from April 6th. There have been worries about how small businesses will cope with this scheme as it brings major changes to way businesses do their payroll. These worries were increased by recent research conducted by the Federation of Small Businesses (FSB) which showed that 25% of small firms did not know what RTI was. Meanwhile research from Sage found that 72% of employers were not aware that payroll was changing and 23% of micro businesses (usually defined as having less than 10 employees) did not have any payroll software and would not be RTI compliant.

The introduction of RTI will not just impact businesses with traditional employees. It will also impact on a lot of small limited companies run by contractors or other ‘one man bands’. Directors of limited companies are technically seen as employees and as such are normally registered for payroll. Where a limited company has only one director, and therefore one employee, they will still have to comply with RTI and report their salary in real time. Even if no salary is taken from the business returns will still have to be sent to HMRC at least every quarter recording the lack of payment.

Because RTI is going to be such a big change, and because it is likely to catch a lot of people out, HMRC are being fairly lenient in their approach to fines and penalties. They have said that for the first year of RTI (tax year 2013 to 2014) they will not fine people for making late monthly submissions. In the main they will keep the same penalties in place as have applied for traditional PAYE while expecting people to report in real time.

Recently HM Revenue and Customs have also announced that some small businesses will not be expected to comply with RTI at all for the first six months. Businesses with less than 50 employees who pay their employees on a weekly or casual basis will not be expected to comply with RTI until 5th October 2013. While this will not impact a massive number of companies it does mean that those with complex arrangements will have some breathing space.

While HMRC are offering some exemptions and being lenient with people on initial compliance it is still a good idea for anyone involved in running a business to understand their exact requirements. There are various ways to comply with RTI including purchasing specialist software and outsourcing payroll services. One option which is now running out is to do the RTI payroll yourself using the HMRC’s free tools. In order to make use of the HMRC’s RTI tools you will need to register for one of the new government gateway passwords. Typically these are taking around 2 weeks to arrive at the moment which will put you beyond the RTI start date.

Our Free RTI How To Guide gives details of all of the options for complying with RTI as well as details of which businesses have to comply with the new rules. You can download it from our website or give us a call on 0800 0828 727 to make sure your business is RTI compliant.

New Employers Expected to use RTI PAYE

RTI for all new employers from April 2013The introduction of Real Time Information (RTI) is part of a larger scheme being implemented by the government over the next couple of years. The idea is that employers will tell HMRC exactly how much everyone is getting paid every month. HMRC will then use this information to instantly calculate benefit and tax credit payments. The aim is to make the whole system much more responsive and to eliminate the lag and delays in payments which can currently be caused when people change jobs or get a pay rise.

RTI began to be implemented in October this year starting with a few very large employers. More companies are being encouraged to join the scheme every month. All new employers have been expected to use RTI since 6th November 2012. Every business in the UK is due to be on the RTI scheme from by April 2013. From that point HMRC will start fining businesses who provide inaccurate or late information.

For most big employers RTI will involve feeding payroll information direct from their payroll software into the HMRC’s computer systems. But obviously this involves using specialist payroll software which needs to be set-up correctly. HMRC suggest two ways for new employers to get RTI set-up. These are:

  • operate your payroll using payroll software to submit your PAYE returns – this can be commercial software or HMRC’s Basic PAYE Tools
  • use the services of a payroll bureau or agent who will submit these returns using software on your behalf

You can download HMRC’s Basic PAYE tool from their website. HMRC also have a list of commercial software suppliers who can provide RTI compatible products. For many small businesses setting up and running their own payroll systems can be a very expensive and time consuming activity. It may be easier for many start-ups to employ a payroll company, or their accountants, to do the work for them. Once of the benefits of doing things this way is that much of the responsibility and expense for implementing the RTI changes will fall onto them rather than having to take it all on in-house.

As HMRC point out you do not have to start using RTI yet, unless you are explicitly told to, but you will have to being doing it from April 2013. It therefore makes sense for new employers use RTI from the start rather than changing systems later on.

If you have not done so already we can help your business to register for PAYE and can provide fully managed Payroll services from £1.89 per employee per month.

National Minimum Wage Rates Set To Rise 2%

national-minimum-wage-question-markWith the recent change in Government and plans for the economy under the Emergency Budget there came a number of proposed changes which businesses need to be aware of. One of the most important for limited companies and other businesses employing staff is the changes to the national minimum wage levels.

From October 2010 the new minimum wage levels for the UK will be as follows:

  • £5.93 per hour for workers aged 21 and over; (currently £5.80)
  • £4.92 per hour for workers aged 18 to 20; (currently £4.83)
  • £3.64 per hour for workers aged 16 to 17. (currently £3.57)

Another new addition is the introduction of a minimum wage rate for apprentices. £2.50 an hour for apprentices aged under 19 or 19 but in the first year of their apprenticeship. This might have an effect on small businesses who rely on apprenticeships to provide low cost workers, but otherwise the changes are quite minimal.

For those carrying out a company formation or already running a small business and thinking of employing staff it is essential to register for a PAYE system and run a payroll service to properly pay staff and make the necessary NI and tax contributions. Our low cost Payroll Service is ideal for small businesses looking for an easy to manage payroll system. Fully managed with prices starting from £1.89 per employee per month!

Pay Equality Blunder – A Warning for All?

Men and Women

In recent news, Birmingham city council are being forced to pay out around £600,000 in back pay after it lost a legal battle over pay equality. Male workers on the same pay grade as their female counterparts had been receiving generous bonuses causing their overall yearly salary to swell to around £50,000, while the women were left on a rather measly £12,000. Now the council are facing a hefty legal bill as they are forced to issue back pay to all the women affected.

With the recent passing of the Equality Act 2010, the rules around equality in the workplace are being further enforced. It’s clearly important that newly formed companies who intend to employ people in running their business adhere to these rules and keep within the boundaries of the law to avoid fines.

Here at TheCompanyWarehouse we understand the difficulties of running a good payroll system and managing pay for employees. This is why we’ve been supplying new companies with a high quality, fully managed payroll system for a while now. If you intend to employ people to help run your business, let us take the burden off you by helping manage your payroll needs and allowing you to get on with the important things.

Prices starting from just £1.89 per employee per month*!

PAYE Changes Coming This Spring

HMRCChanges to the PAYE Scheme (Pay As You Earn) are due to come about this spring, the HM Revenue & Customs have announced. The changes are in line with others within the HMRC where more and more filing is moving online. For small companies with less than 50 employees, there will no longer be an option to file the returns in paper form. In fact doing so will result in a penalty.

From May, employers will be expected to register online with the HMRC and file their returns that way. Late returns will be subject fines so it’s important to make sure you are prepared.

Let the company warehouse make the whole PAYE process painless by taking advantage of our Payroll Services. Our fully managed service means you pay as little as £1.89 per employee, per month and we do all the work for you!

Our payroll service includes:

  • Updating employee details;
  • Inputting variable payments and adjustments;
  • HMRC compliant payslips;
  • Payment to HMRC report telling you how much to pay to HMRC and when to pay;
  • P45 processing if an employee leaves your employment;

And more.

*visit our payroll services page for more information.