Calipsus can take the headache out of your payroll for you by producing weekly or monthly payroll reports on how much to pay your staff and HMRC, as-well as producing payslips, and submitting your end of year payroll reports. When you take on your first employee you may wish you hadn't when faced with all the forms and regulations that need to be followed. The tax rates, allowances and regulations also all change on a regular basis and it can be hard to keep up to date. If you just have a few employees it is often simpler to get your accountant or a payroll agency to do the payroll for you. Below we have provided some information that may be useful to you.
PAYE stands for Pay As You Earn and is the system used by HMRC to collect income tax and national insurance from employees as well as the employer's national insurance. The employer makes the necessary deductions from the pay of the employee and pays them over to HMRC. It is the employer's responsibility to make the correct deductions before paying the employee and this applies to all employees including directors of their own limited company. The deductions must be paid to HMRC by the 19th of every month, unless paying electronically when the money must reach HMRC by 22nd. If however you have average monthly payments of less than £1,500 you can pay quarterly. In addition Class 1A NIC is payable by the employer on benefits and is payable by the 19th of every month, unless paying electronically when the money must reach HMRC by 22nd after the end of each tax year.
PAYE applies to all types of payments you make to your employees including...
- salary and wages;
- bonuses and commission;
- expense allowances and claims when paid in cash;
- Statutory Sick Pay;
- Statutory Maternity/Paternity/Adoption Pay;
- lump sum and compensation payments including redundancy unless they are exempt from tax;
- payments other than in cash, such as shares or vouchers;
Certain benefits provided to employees may be exempt from tax but most are taxable and must be declared to the HMRC by means of an end of year benefits form P11D or P9D.
There are numerous forms and submissions in the PAYE system but there are certain core forms/submissions which are used by all employers, the most common of which are as follows...
Pay slips - which are your own forms you supply to your employees to show how their pay has been calculated and the deductions made.
Form P45 - as explained above, new employees with a previous job give you a copy of this from their previous employer and you provide employees who leave your employment with one.
RTI Full Payment Submission (FPS) - filed on or before each pay day. It deals with pay details as well as starters and leavers.
RTI Employer Payment Submission (EPS) - to notify HMRC of any reductions to the monthly tax, NI and student loan values submitted via the FPS.
P60 - this is the end of year summary which is given to the employee. From 2013/14 no P14's are needed but P60's continue.
P11D - used at the end of each tax year to provide details of benefits and expenses paid to employees who earn over £8,500 and all directors.
RTI (Real time information) came into effect for most employers from 6 April 2013 and is a new system for reporting pay, tax, National Insurance and other details to HMRC. It does not change how PAYE is calculated. You need payroll software or a payroll service provider in order to file RTI returns.
Contact us for more information, we are happy to arrange a face to face meeting to discuss further.