RTI and PAYE Update 2014

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RTI & PAYE Update

25th March 2014

Nigel Gorski

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Nigel is a fully qualified chartered accountant with considerable people management and training experience. He has not only worked in industry and for one of the ‘big 4’ accountancy firms but now runs his own accountancy practice. Nigel has considerable business mentoring experience and delivers the following modules for The Business Springboard:

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Welcome

RTI – what went well and what has gone wrong

Penalties and the ‘on or before rule’

Low Paid Employees reminder and exemptions

Company Car Planning

Other PAYE issues

Back to the Future

Introduction to Auto Enrolment - if we have time!

Questions & Answers



Introduction to RTI

RTI is the new online filing process for payroll

It was driven by the need to reduce tax credit fraud

A ‘soft landing’ was given with regard to penalties

It commenced 6 April 2013 and requires a different

approach from employers

The good news is most people adopted it and it

‘seemed’ to settle down quite quickly

Some problems have arisen and care needs to be

taken with some payroll software now that the full

process is fully understood

Problems include mismatched liabilities, duplicate

liabilities, matching CIS to PAYE liabilities



The On or Before Rule

A payroll needs to be run on or before the time of

payment

Think of the practicality of this – e.g. pubs and farms

This additional work has proven significant

Get out of jail card for payrolls with 9 or fewer

employees for 2 further years

The micro business exemption does not apply to ‘new

payrolls’

Penalties will run from 2014/15 and will be set at £100

to £400 per month depending on payroll size – this is

for filing after payment made – ‘the on or before rule’



Low Paid Employees

In the old days where employees earned less than £109 per

week they are currently not required to be on the payroll

These employees must have been added to the payroll from

6 April 2013

The only exception to this is where the employer doesn’t

have any other employees who are required to be on the

payroll or there is no active payroll

This has caused problems – e.g. hospitality and agriculture

There is a new exemption for payments made to employees

for work done on the day of payment where it is impractical

to run RTI and the amount is unknown in advance



PAYE: Company Car Planning BIK rates for the next 3 years are known

In recent years companies have been incentivised to buy cars with less than 110 g/km emissions

Significant rises are planned for the lower end of the emissions scale – some are eye watering!

A car with 109 g/km emissions costing £20,000 would have a BIK of 14% - £2,600 in 2013/14 – this will rise to £3,600 in 2016/17 – 38%

Oddly the increases are not as significant at the high performance end – e.g. a 220g/km car only goes up from 35% to 37%!

Now is the time to start planning benefits packages and budgeting the additional Class 1A NI as a company car may be less attractive – not to mention tougher new capital allowance rules

Vans are excluded



Other PAYE Issues for Employers

The £2,000 NI exemption kicks in from 6 April Working from home deduction continues at £4 per week –

HMRC are checking this area as it can only be claimed in weeks WORKED

Reminder about childcare – for higher rate taxpayer joiners after 6 April 2011 and the restriction to the £55 per week tax free amount

Remember that childcare is based on PREDICTED earnings excluding performance related bonuses. For example a sales agent on £18,000 received £30,000 in commission. Using the P60 would give the WRONG answer!

Employers ‘paying student loans’ as an incentive is a recent issue HMRC have picked up on

Employment status and the ESI indicator – my annual reminder

Pensions limit gets reduced to £40k



Back to the Future

RTI was the first in a series of changes

HMRC will be using digital services in the next 3 years

This means employers (and employees) will be able to transact more online than before

New passwords and Ids

Ability to amend tax codes

Unclear how much scope employers will have versus agents / accountants

The first phase is already in test

Starting late 2014 with company cars

This is much bigger than RTI!

Watch this space for more…..



Introduction to Auto Enrolment

The new legislation came in in July 2012

The requirement is to automatically enrol certain

workers into a pension scheme

Pension schemes can range from an existing scheme

to the Government backed NEST scheme

This is an employer duty

Careful planning is required



When You Need to Act

Migrating to a scheme is called ‘staging’

It’s based on the size of your largest PAYE scheme at

1 April 2012

Employers are being written to but you can check your

own staging date

Larger employers are already ‘being staged’ by

February 2014

Medium sized employers with 50 to 249 persons in

their larges PAYE scheme will be ‘staged between 1

April 2014 and 1 April 2015 – these employers need to

start acting

Small employers will commence 1 June 2015



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RTI and PAYE Update 2014

Economy & Finance

Transcript of RTI and PAYE Update 2014