PAYE FOR EMPLOYERS - 'WEEK 53' PAYMENTS AND POTENTIAL EMPLOYEE TAX UNDERPAYMENTS
22 July 2013
HMRC has clarified the guidance for employers whose employees might be affected by 'week 53' payments where they are paid weekly, 2-weekly or 4-weekly and the last payday for 2012-13 fell on 5 April 2013. PAYE tax is deducted differently from 'week 53' payments. HMRC treats it as a non- cumulative payment (also known as ‘Week 1’), meaning that it is treated in isolation and tax is deducted without taking into account previous pay and tax details. So the tax code you use should be non-cumulative in all cases. The amount of extra ‘tax free pay’ equates to:
week 1 for employees paid weekly (1/52 x the Personal Allowance) week 2 for employees paid fortnightly (2/52 x the Personal Allowance) week 4 for employees paid four-weekly (4/52 x the Personal Allowance)
It is important to note that these payments may result in an underpayment of tax for your employees due to the extra Personal Allowance (tax free pay) provided to protect the level of take home pay they receive in that pay period. For this reason HMRC suggests you advise your employees of the potential position if a 'week 53' payment is made.
All other deductions, such as National Insurance contributions are deducted as normal from pay on 'week 53' payments.
CHANGES TO PAYE MANUAL GUIDANCE ESC A19
16 August 2013
Further to the ESC A19 review, HMRC has updated the PAYE Manual guidance to reflect policy and process changes.
As published in Agent Update 37 HMRC has updated the PAYE Manual guidance to reflect policy and process changes following the recent consultation on the application of ESC A19.
This includes new guidance describing the specific circumstances under which HMRC will consider refunding tax paid, the circumstances under which forms P14 may be considered relevant for the purposes of ESC A19, and an expanded definition of ‘repeated failures’.
LIBDEM TAXATION POLICY
22 August 2013
The conference season is fast approaching for the political parties, and as part of their preparations the LibDems have published their taxation policy which will be discussed at their conference.
The CIPP was invited to feed into this policy back in April 2013 and the CIPP’s policy team issued a survey to give members a unique opportunity to have their say.
CIPP Policy News Journal
16/04/2014, Page 291 of 519
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