`The Chartered Institute of Payroll Professionals
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January 2023 came from transport, restaurants and hotels. However, food, alcoholic beverages and tobacco prices continue to rise.
How will interest rates change in the future? Keep an eye out for our update on the upcoming Bank of England bank rates, set to be released on 23 March.
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Give the gift of marriage allowance
Published: 15 February 2023 Emailed: 22 February 2023
Married couples or those in a civil partnership could save up to £252 a year by claiming marriage allowance.
Marriage allowance allows employees to transfer £1,260 of their personal allowance to their husband, wife or civil partner.
HM Revenue and Customs (HMRC) published that more than 2.1 million couples currently benefit from marriage allowance. However, HMRC estimates that thousands of more couples are missing out because they don’t realise that they may be eligible, particularly couples where one partner has retired, has given up work to take on caring responsibilities, or is unable to work due to a long-term health condition.
More information on marriage allowance can be found at GOV.UK. Couples can also use the marriage allowance calculator to check eligibility for tax relief.
Upon an employee’s successful application, HMRC will issue both individuals new tax codes to reflect the new allowances. The employee receiving the extra allowance will be issued with an ‘ M ’ tax code and the employee giving up some of their allowance will be issued with an ‘ N ’ tax code. Payroll professionals should remember to check tax code notices received from HMRC and apply appropriately to employee records. You can read more on tax codes here.
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P45 form: did you know? Published: 14 March 2023 Emailed: 15 March 2023
A P45 form is issued by an employer when an employee stops working for them. However are the previous pay and tax figures on the P45 still applicable on an employee record when a tax code notice from HM Revenue and Customs (HMRC) is received? A P45 shows how much tax has been paid on an employee’s salary so far in the tax year (6 April to 5 April). An employer may also use the information on the P45 to apply the correct tax code for an employee, before the first payday. However, previous pay and tax figures from a P45 should not be removed when these have been received and operated, prior to an employer receiving a tax code change (P6) from HMRC. If the tax code notice has ‘ 0.00 ’ or blank figures then this is not be entered and instead the figures should remain as per the P45. Though the new tax code received from HMRC should be operated. What happens with a late P45 received? Employers may need to update the payroll records if an employee gives a P45 after they have been registered with HMRC. If HMRC has sent a tax code, then use this tax code if the employee gives a P45 after they have first been paid. If HMRC has not sent a code, then use the employee’s P45 to work out their tax code and update their details in the payroll software.
If the employee has more than one P45, then the P45 with the latest date should be used. In addition, if the leaving date is the same then the P45 with the highest tax free allowance (or least additional pay for a K code) should be used.
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