PAYROLL ASSURANCE SCHEME DON’TWAIT UNTIL IT’S TOO LATE Can you afford penalties of up to £10,000* per day for non- compliance? Make sure your people and processes are working, and get ahead of any non-confirmities before they become a problem.
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claimed once across all PAYE schemes and connected companies, and employers will need to decide which PAYE scheme to set the claim against. Q: I have just taken over payroll processing from another bookkeeper who hasn’t passed me any new tax codes to be used in the 2020/21 tax year. One of the employee’s tax codes is 18T, so when I am moving her to the new tax year can I keep the old tax code or should I change it to BR? A: You would carry over this 18T tax code to the new year and you wouldn’t change this to BR. Note that there is also no uplift; any change to the code will be advised by HMRC. Q: We operate a two-weekly payroll, with pay day for week 52 falling on 20 March 2020. There will be another pay day on 3 April 2020. I am unsure which tax week to use; please advise. A: In some tax years where employees are paid fortnightly there will be 27 pay periods, so in the scenario you outline for tax purposes a ‘week 54’ is to be processed for pay day 3 April 2020. Regulation 31 of the Income Tax (Pay as You Earn) Regulations 2003 determines what happens in these circumstances. If the employee has earned above their income tax personal allowance, apply tax week two free pay on a non-cumulative basis. If earnings are not above this threshold, apply their normal tax code. The employer will also need to indicate that tax week ‘54’ is being operated in the FPS return. Q: We paid an employee an enhanced company redundancy payment of £26,000 in March 2020 (month 12) and sent the employee a form P45. We have been informed that an additional £8,000 of company redundancy pay is due to this employee and will be paid after 6 April 2020. Can you please advise on the tax and NICs implications? A: As the termination took place in tax year 2019/20 and the payment is for the redundancy in the same employment, you would aggregate the two payments. As the total package would be £34,000, the first £4,000 of this additional £8,000 would not be subject to PAYE, and the balance of £4,000 would be taxed as a payment after leaving using tax code 0T on a month
one basis. Note that there would also be no class 1A NICs due on this additional payment as NICs liability does not arise on termination payments made or issued prior to 6 April 2020. Q: We currently have several workers who have been assessed as within the off-payroll working rules from April 2020 and will be processed via our normal payroll. How will HMRC know that they are off-payroll workers rather than employees? Also, when entering them onto our payroll system, what tax code would be used to operate PAYE? A: During your software update for the tax year 2020/21, you will notice that there will be a new indicator field. You must make sure that this indicator is ticked to ensure that HMRC does not send any generic notification service messages for student loan notifications When entering the off-payroll workers onto your payroll system for the first time, you should treat them as you would a new employee, using tax code BR and applying class 1 NICs using category A. When setting them up on your system, use their National Insurance number and not the company’s UTR (unique tax reference). Q: Our company cars are payrolled. As we have a new fleet delivered this April, mainly consisting of ultra-low emission cars, how will these be taxed? A: From 6 April 2020, if a car has a CO2 emission figure of 1–50g/km employers must provide the car’s zero emission mileage figure in the new field available. This is the maximum distance in miles that the car can be driven in electric mode without recharging the battery. The reason that this needs to be submitted is because cars with less than 50g/km will now have the benefit charge based on how many miles travelled before the requirement to be recharged. As per the December 2010 issue of HMRC’s Employer Bulletin , further advice will be issued. n
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*correct at time of publication
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| Professional in Payroll, Pensions and Reward |
Issue 58 | March 2020
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