Payroll A Timely Update

2013-14 Payroll Year End

Due to the introduction of RTI submissions this year the year end submission is more straightforward and therefore the deadline is now 19 April 2014. Please note that if your pay day is a Saturday then you will have a Week 53 for Saturday 5 April 2014 which must be processed before the year end is processed.

Don’t forget that if you suffer CIS tax from your customers, this should be shown on your RTI submissions.

If we process your payroll for you, we will take care of this.  If you process your own payroll using Sage or the HMRC Basic PAYE tools then you must do an additional submission for the year end.  Please contact me if you have any queries.

HMRC guidance notes: www.hmrc.gov.uk/payerti/end-of-year/tasks.htm

PAYE Penalties

HMRC have deferred the commencement of automatic penalties for RTI as follows:

  •        Employers who are late sending their ‘in year’ submissions won’t be charged late filing penalties as long as they bring themselves fully up to date by 5 October 2014.  (However a penalty will be raised if the above year end is not submitted by 19 May 2014 being one month after the deadline date.  This would amount to £100 per month late for up to 50 employees.)
  •        Employers who are late with their ‘in year’ payments won’t be charged automatic late payment penalties until April 2015. In the meantime HMRC will assess penalties to be applied after the tax year end and this will be based on the number of times the monthly payments have been made late.

In addition to current late payment penalties, daily interest will be charged on late ‘in year’ payments from April 2014.

It is important that you have systems in place NOW so that you don’t fall foul of penalties later in the year.

HMRC guidance notes: http://www.hmrc.gov.uk/payerti/reporting/late-reporting.htm

National Insurance – £2,000 employment allowance

From 6 April 2014 the Government will introduce an allowance of up to £2,000 per year for many employers to be offset against their employer Class 1 NIC liability. The legislation confirming the introduction of this allowance is contained in the National Insurance Contributions Bill 2013.

This allowance is limited to the amount of Employers Class 1 NIC that the employer pays. Please contact me if you have any questions concerning this.

HMRC guidance notes: www.hmrc.gov.uk/nicsemploymentallowance.

The Budget 2014

On Wednesday 19 March 2014, George Osborne presented his latest 

Budget.  No one was expecting this to be a particularly revolutionary budget and whilst the cynical among us may have the opinion that this budget is a political one, designed to influence the “on-the-fence” voters ahead of next year’s election, there is something in the budget for everyone (even if it is only a little something).

Personal tax

The personal allowance (amount you can earn before paying any income tax) is being increased to £10,500 from April 2015.  This is a modest 

increase from the £10,000 allowa

n reality it won’t be that noticeable.nce in place from next month, but representing a saving of £100 to taxpayers.  While an admirable move, i

Married couples and civil partners will be allowed to transfer unused 

personal allowances of up to £1,050 from April 2015 where neither couple is a higher-rate taxpayer – this is worth up to £

210.  This is no surprise as it was announced in the 2013 Autumn Statement.

The limit for tax-free ISAs is being increased to £15,000 in July 

2014…..yes, July, we aren’t sure why!  And there will no longer be a restriction on how much is cash and how much is stocks/shares – the full £15,000 can be in cash.

Another sweetener for savers (of course, this is not a bribe from the 

Chancellor) is that the premium bond investment limit will increase to 

£50,000 from £30,000 – firstly it will go up to £40,000 in June (oh look, a different month for a change to be brought in!) and then up to £50,000 in either 2015 or 2016, they don’t seem to have d

ecided yet – it could all be theoretical, depending on whether they are still in power in 2016!

Business tax

Again, not another surprise as this was announced a while ago, but the full corporation tax rate from April 2015 will be 21%, compared to the small companies rate of 20%.  The rates will be aligned at 20% for all company sizes from April 2015 so fingers crossed we will no longer have to worry about the cumbersome “associated company” rules.

You may recall that the Annual Investment Allowance for expenditure o

n plant and machinery was increased to £2

50,000 for two years from January 2013…. well the good news is that is being further increased to £500,000 from April 2014 to December 2015.  The transitional rules on the change between the two allowances will be (as always) ridiculously complicated so if you are planning on investing a significant amount in equipment in the coming months, please CONTACT US in advance so you don’t fall foul.

Many companies that undertake Research & Development activities m

ake taxable losses due to the favourable treatment of the expenses incu

rred.  Where these losses cannot be offset against past or future taxable profits, they can be surrendered for cash at 14.5% of the loss from April 2014 (up from 11%).  While not as beneficial as offsetting against profits of 20% (if at the small companies rate), the cash injectio

n is a real benefit to these companies.

Employment taxes

Two incentives have been included in the budget in an apparent e

ffort to stimulate employment.  Again, George seems to have got a bit carried away (perhaps he was excited) as these have already been announced!  Firstly, there will be a credit for the first £2,000 of Employer’s NIC from April 2014 – this has to be shared between related employers (such as two companies with the same directors) and will probably require you ticking a box on your payroll software whether to claim it or not!  Secondly, there will be no Employer’s NIC from April 2015 on employees under 21 (except those on high incomes).

We have had RTI (Real Time Information) for reporting payroll information to HMRC for a while now and HMRC have been very generous in their lenient approach to late submissions.  Of course all things

 have to come to an end, and from October 2014 they will start applying penalties if RTI submissions are not made on time.  In addition, from April 2014 HMRC will charge daily interest on late payments on PAYE/NI where they haven’t so far.

A full overview of the Budget can be found on our website, click here.

Katie Kettle Colour