Tax-free childcare roll out

The implementation of Tax-Free Childcare, the new government scheme to help working parents with the cost of childcare, is being rolled out to eligible parents in stages.

The scheme first made its debut in April 2017 and although there have been initial systems problems, HMRC’s aim is to have the scheme open to all eligible parents by 14 February 2018. Application is made online through the Childcare Choices site www.childcarechoices.gov.uk and applications can be made for all eligible children at the same time.

Under Tax-Free Childcare, for every £8 the parent pays, the government provides a £2 top-up, to a maximum of £2,000 per child each year – with a higher limit of £4,000 for disabled children. This gives a total childcare pot of £10,000, or £20,000 for disabled children. To be eligible, parents must generally have minimum weekly earnings of at least £120 each. There is also an upper earnings limit of £100,000.

Compensation may be available in certain circumstances where a parent:

  • is unable to complete an application for Tax-Free Childcare
  • is unable to access their childcare account
  • or doesn’t get a decision about whether they are eligible, without explanation, for more than 20 days.

Those employing a nanny should be able to use the childcare account to pay their PAYE tax and National Insurance. Delays in getting this system working may also give grounds for compensation. Application is made online GOV.UK childcare-service-compensation 

If you would like to discuss any of this further then please get in touch 0116 2423400 or https://www.torrwaterfield.co.uk/contact-us 

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.