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IT IS IMPORTANT TO NOTE THAT WITH THE INTRODUCTION OF RTI THERE HAVE BEEN SOME KEY CHANGES TO THE RESPONSIBILITIES OF BOTH YOU THE EMPLOYER AND US THE PAYROLL AGENT.
What has changed
- An employer is required to inform HMRC electronically every time an employee is paid, as to the salary and tax deductions ie weekly, fortnightly, 4-weekly or monthly. This includes employees who earn more than the lower earnings threshold of £109 per week but where no tax or national insurance is payable.
- This means that weekly paid employees need 52 submissions per annum and monthly employees 12 submissions per annum, rather than a single submission of a P35 that used to be submitted annually.
- Taxing Nannies make the submissions to HMRC automatically on the relevant pay dates and we do not need specific confirmation from the employer before submission. However, if there are any changes to the normal pay for a particular pay date, or the salary is variable, we need to be informed at least 4 days in advance of the pay date to ensure we can process the changes in time.
- Taxing Nannies now email payslips as a matter of course, rather than sending them in the post. The employer can either forward the payslips by email to the employee or print off a hard copy to pass on to the employee. It is important that clients check their email accounts regularly and ensure that the email address that they advise Taxing Nannies to use is one that is easily accessible.
- HMRC match the data we submit to their PAYE records. It is therefore essential that the names of employees match to official documents, and that national insurance numbers are correct. We are also unable to submit any employee records without dates of birth and any submissions will be rejected for the whole payroll if one date of birth is missing.
- HMRC will know from the Full Pay Submissions (FPS) how much PAYE and NI is owed at any one time rather than estimating an amount that is overdue.
What has not changed
- The Taxing Nannies payroll service to our clients remains unchanged in all other respects and we will continue to provide our high level of personal service.
- PAYE and NI remain payable quarterly (if the monthly liabilities are less than £1,500) on the due dates of 19th July, 19th October, 19th January and 19th April. We will continue to write to all our clients during the month preceding the due date advising them of the liability. The liabilities continue to be payable in the normal way i.e. by cheque or electronic banking and the payment information will continue to be detailed in our letter.
If an employer is caught evading PAYE for their nanny, they will be required to pay all the under declared tax and national insurance and will have to pay a 100% fine in addition to the current penalty regime for late payment and filing of returns. Certain employers should be aware of these rules, because as professionals (solicitors, accountants etc) they could be prosecuted in addition to the above.
FASTER PAYMENT SERVICE
UK tax and NI payments to HMRC can now be made via the Faster Payment Service so that electronic payments should clear HMRC’s account the same day. Taxpayers are advised to contact their own bank or building society before making a payment to confirm that their own bank can process Faster Payments, whether there are any daily limits and the cut off time to make a payment to clear that day. It is also important to ensure that the correct bank account details and PAYE collection reference are used. In most cases the bank account details will be Account 12001039, sort code 08-32-10. Please note that the bank account details have changed.
TAX CODING CHANGES
The implication for employers who pay a net salary is that any change to an employee tax code means that the liability will automatically fall on the employer unless they change their nanny’s salary to a gross salary.
As payroll agents we are not entitled to receive a breakdown of a tax code amendment although this will be sent to the employee. It is therefore essential that the nannies are advised to let us have any communication from HMRC immediately regarding their tax code so we can confirm whether the adjustments are correct.
ACCOUNTING SERVICES AND TAX RETURN SERVICE
Please note that Sara Graff is a qualified Chartered Accountant and Chartered Tax Advisor and provides accounting and tax services in addition to the general Taxing Nannies service. Any UK taxpayer who has income over £100,000 is now required to file a tax return regardless of whether all their income is taxed under PAYE and Sara would be happy to provide this service for anyone in this position for a reasonable fee. Sara would be happy to assist you in preparing your 2013 tax return or assist you with other accounting services and can be contacted on 020 8882 6847.