RTI payroll changes

[The Wages Room]

The introduction of RTI will affect ALL business from 6th April 2013, only 6 weeks or so away 94% of businesses however do not know about it! All business should be preparing their systems now to avoid problems with the Taxman!

The most important thing to do is to carry out an audit of all of your employees to ensure that every bit of information required is available. We are offering this as a free service to clients.

The main pieces of information that you need are:

FULL name (including any middle names)
NI Number (no temporary numbers will now be accepted)
Number of hours generally worked (it is a requirement to put the hours into a banding)
Full Address
Date of birth
Employee information for temporary and casual workers and employees
paid below the National Insurance Lower Earnings Limit

All of these pieces of information are needed so that the tax system ties in fully with the benefit system for the introduction of universal credit. Without them the revenue will reject your submissions!

If you need any help please do not hesitate to contact me

 

[appyammer]

David

How to you enter hours worked for:

Director paid minimum wage plus dividend

Non director paid minimum wage plus dividend

Non director paid dividend ( I assume as this doe not go through the payroll it is not required )

Sunny Regards AA

 

[Tom McClelland]

David

How to you enter hours worked for:

Director paid minimum wage plus dividend

Non director paid minimum wage plus dividend

Non director paid dividend ( I assume as this doe not go through the payroll it is not required )

Sunny Regards AA

Enter actual hours worked (or normally expected to be worked) weekly, in bandings 0-16, 16-30, over 30.

They aren't checking for minimum wage etc. That doesn't concern them at this point.

And yes, don't put dividends through payroll.

 

[appyammer]

Tom thankyou

So they are lulling us into a false sense of security

 

[Tom McClelland]

Tom thankyou

So they are lulling us into a false sense of security

NMW regs don't apply to office holders anyway.

 

[The Wages Room]

The hourly part is to fall in line with the new benefit system and not (as yet) to check on NMW. Tom is quite correct with his observations. This being the first year of the system, the revenue will have its hands quite full enough, I would imagine, with dealing with making sure the system works!

 

[IloveParis]

I currently work out wages for a client (monthly payroll).
The wages are for the whole month 1st - 31st
The payroll is run round about 5th following month but dated 31st
The wages are paid on 10th following month
My question is can I carry on doing that post 5th April ie March wages being in tax year 2012-2013 even though paid on 10th April 2013 or will this all have to be changed to show payslip date of 10th April and therefore falling into 2013-2014 tax year. I know there are a lot of companies who do this so I wondered what they will all do.

 

[The Wages Room]

I too have asked this question and the answer I got was that if it is paid in the tax year 2013-2014 then it becomes part of RTI for the new year. If the payment is made prior to 5th April it remains part of 2012-13.

 

[IloveParis]

If that is the case then I would not have a payroll to run for 31st March as it would be dated 10th April. If my thinking is correct then this "zero" payroll for month 12 would generate tax rebates for all of the employees in month 12?????

 

[David Griffiths]

If that is the case then I would not have a payroll to run for 31st March as it would be dated 10th April. If my thinking is correct then this "zero" payroll for month 12 would generate tax rebates for all of the employees in month 12?????

That will be because you have been using the wrong pay periods in the past.

 

[Tom McClelland]

Indeed. As David says you've been doing it wrong...

PAYE should be operated on the later of when the work was done and when payment is expected to be made. So the payment made March 10th should have been month 12, not month 11 (and so on all the way back)

 

[IloveParis]

I agree. This happened because in October the employer changed the way he paid his employees from a cheque at the end of the month to bank transfer on 10th of the following month. In order to not generate a tax rebate on the change over we left the payroll date the same. Do you think I should in fact then change this date before 5th April effectively having one month without pay (and generate a tax rebate for all employees)?

 

[Tom McClelland]

I agree. This happened because in October the employer changed the way he paid his employees from a cheque at the end of the month to bank transfer on 10th of the following month. In order to not generate a tax rebate on the change over we left the payroll date the same. Do you think I should in fact then change this date before 5th April effectively having one month without pay (and generate a tax rebate for all employees)?

Yes, the missed PAYE month caused by switching payment from month-end to the 10th of the following month means that they're entitled to the rebate.

 

[IloveParis]

Thank you very much for all of your help. This issue has been bugging me since October.

 

[Tom McClelland]

Thank you very much for all of your help. This issue has been bugging me since October.

Sort it out by processing the March payment in PAYE month 12, skipping month 11 altogether (if your software allows that). That way everything should automatically fix itself and you won't have a strange year-end issue of employees with wrong cumulative pay/tax all needing SA rebates from HMRC.

 

[David Griffiths]

Couldn't you get the payment in on 5 April and 5th monthly going forward? Problem disappears.

 

[IloveParis]

Good idea but the employer wont go for that! I will go for the month 12 processing and miss out month 11 as suggested.

 

[The Wages Room]

I have brought this question up with the policy group of the cipp and I shall come back with a definitive answer as the rules are evidently changing as we type!!

 

[The Wages Room]

I await their take on this!

 

[The Wages Room]

I agree with David that that would be the simplest solution, however it is not one that every employer would be able to arrange.

 

[David Griffiths]

Good idea but the employer wont go for that! I will go for the month 12 processing and miss out month 11 as suggested.

I suspected that, on the grounds that he wants to pay a whopping ten days later than a cheque would hve been issued! Not one to put the employees' interests first, it would seem.

 

[IloveParis]

You got it!

 

[philbanks]

One thing that is sure to catch out some businesses is the need for RTI compatible Bacs software. If you make PAYE payments directly via Bacs, your payment gateway software needs to be able to accept the new RTI sub reference. A low cost alternative to an expensive upgrade is available from these guys: http://www.unifiedsoftware.co.uk

 

[Tom McClelland]

One thing that is sure to catch out some businesses is the need for RTI compatible Bacs software. If you make PAYE payments directly via Bacs, your payment gateway software needs to be able to accept the new RTI sub reference. A low cost alternative to an expensive upgrade is available from these guys: http://www.unifiedsoftware.co.uk

The number of companies affected by the requirement RTI hashtags for BACS payments is a minuscule percentage of all employers. It only applies to companies with their own BACS Service User Number paying by direct BACS.

Lots of businesses refer to their payments as BACS when actually they use feeder systems like the internet banking software offered by most High St banks. These companies (and that is well over 99% of the type of business that typically frequents a forum like UKBF) aren't affected at all by the RTI hashtags requirement.

 

[Anonymouse72]

can anyone advise how the following scenario will play out under the new RTI rules -

i'm the only person who does our PAYE/wages (HMRC basic tools) & employees are paid weekly in arrears. if i take any time off (usually 10 days so 2 pay dates affected), i'll do the wages in advance based on a basic week & if any overtime is worked whilst i'm away, it's just added to the next weekly wage (doesn't happen very often as we state that whilst we're away it should be basic weeks working & only overtime in emergencies). we pay by BACS & i'll set the payments to be made on the usual pay day whilst i'm away.

will i be able to enter wages in advance like this when RTI comes in? or would i just prepare the wages but not enter them for reporting until i get back? RTI seems to be tied into the date that a payment is actually made, so i'm a little confused??

thanks

 

[The Wages Room]

This should be OK as the rules are on or Before the date of payment. So you can submit in advance.

Hope that helps

David

 

[Estimator]

So the pay info is sent to them every month.
But we are still able to make quarterly PAYE payments? Am I right in saying that?

 

[Tom McClelland]

So the pay info is sent to them every month.
But we are still able to make quarterly PAYE payments? Am I right in saying that?

RTI doesn't change anything about how employers pay HMRC. One of the commonest misconceptions we're seeing is that under RTI HMRC will be collecting the money automatically every month.

 

[Anonymouse72]

i've just read this on another forum, can someone explain? am i missing something or does someone not know what they're talking about??

"Realistically, weekly pay IS going to result in increased costs under RTI for most employers for a variety of reasons. My clients have been encouraged to move to monthly pay and all have agreed to do so. This must be agreed with staff in advance, for the typical £8 per hour bar staff person there is a £20 per year NI saving so this is one factor."

this person has also quoted Lin Homer, head of HMRC, as saying the transfer to RTI & first 6 months of the new system will be "an almighty mess" !

thanks

 

[Tom McClelland]

i've just read this on another forum, can someone explain? am i missing something or does someone not know what they're talking about??

"Realistically, weekly pay IS going to result in increased costs under RTI for most employers for a variety of reasons. My clients have been encouraged to move to monthly pay and all have agreed to do so. This must be agreed with staff in advance, for the typical £8 per hour bar staff person there is a £20 per year NI saving so this is one factor."

this person has also quoted Lin Homer, head of HMRC, as saying the transfer to RTI & first 6 months of the new system will be "an almighty mess" !

thanks

Low paid casual staff who work very variable hours are likely to save NI by being paid monthly rather than weekly. That is because of the smoothing effect of the 4-5 weekly average pay remaining below the earnings threshold even though some weeks they are paid above the weekly threshold and would pay NI in a weekly payroll.

 

[Anonymouse72]

Low paid casual staff who work very variable hours are likely to save NI by being paid monthly rather than weekly. That is because of the smoothing effect of the 4-5 weekly average pay remaining below the earnings threshold even though some weeks they are paid above the weekly threshold and would pay NI in a weekly payroll.

Thanks for the clarification Tom

i don't have any dealings with pay at the minimum wage or casual staff so this is something completely off my radar.

 

[Lentinus]

Something else I noticed is that you are required to report every month even if you are not paying anything. So the 1 director/employee set up that just runs £7488 at the end of the year must PHONE to get on annual reporting, or report 0 every month, or get harassed for not submitting.
Though there only appears to be a penalty/fine if you submit your month 12 EPS late (after the 19th May) as they want to keep penalties in line with existing penalties.... I think

 

[Tom McClelland]

Something else I noticed is that you are required to report every month even if you are not paying anything. So the 1 director/employee set up that just runs £7488 at the end of the year must PHONE to get on annual reporting, or report 0 every month, or get harassed for not submitting.
Though there only appears to be a penalty/fine if you submit your month 12 EPS late (after the 19th May) as they want to keep penalties in line with existing penalties.... I think

A concession has recently been announced by HMRC, in which a company where all employees get a single annual payment need only file once per year. No need for any other nil filings. Not sure about the details of how you register to be such a scheme.

 

[fattony]

Just subscribing to this thread, I need to read through it properly

 

[Lentinus]

Not sure about the details of how you register to be such a scheme.

As I mentioned .. by phone, to get on annual reporting.

This information is buried in the small print though. I know about this stuff from reading the HMRC blurb as despite 13 years in business this is the first time I don't have someone smarter than me to do it all for me
.
Not sure how many businesses are going to have no idea what is gong on but I suspect quite a few!

 

[Lentinus]

I phoned today and they took me off the pilot. Easy.

Interestingly whilst listening to the recorded announcements they pointed out something else I did not know (despite reading the website !) in that before you can make your first RTI payment you MUST have submitted your End of Year for 12/13.

That's going to catch a few people out that think they have until the 19th May, then they discover they have to do it on the day they try to do their first RTI run eek!

 

[Tom McClelland]

Interestingly whilst listening to the recorded announcements they pointed out something else I did not know (despite reading the website !) in that before you can make your first RTI payment you MUST have submitted your End of Year for 12/13.

That's going to catch a few people out that think they have until the 19th May, then they discover they have to do it on the day they try to do their first RTI run eek!

I suspect that you've misunderstood something in the recorded messages. The deadline for 12/13 P35/P14 remains at 19th May and there is no published requirement for it to be filed before first FPS in PAYE year 13/14. Many businesses (particularly larger ones) would find that not difficult, but essentially impossible because their systems aren't constructed to enable it.

In the absence of someone pointing me at written HMRC information confirming your view I'm going to assume that it is mistaken.

 

[spencergate]

If you are currently using HMRC's Basic PAYE Tools, and planning to use the new version of Basic Tools for RTI, then apparently you will not be able to calculate or submit the first payroll run until you have submitted your year-end for 12/13.

This notice has come up when opening the current version of Basic Tools for the last 2 months.

 

[David Griffiths]

It would be practically impossible to do it. That's less than a seven day turnround to finalise the year, send it to the client, get it back (the tricky bit in many cases), and then file.

 

[Tom McClelland]

If you are currently using HMRC's Basic PAYE Tools, and planning to use the new version of Basic Tools for RTI, then apparently you will not be able to calculate or submit the first payroll run until you have submitted your year-end for 12/13.

This notice has come up when opening the current version of Basic Tools for the last 2 months.

Aha, that makes sense as a possible problem. A Basic PAYE Tools design problem rather than a problem with RTI/P35 filing.