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What's new in payroll and claiming the £2,000 Employment Allowance

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15 April 2014
With the new tax year upon us this inevitably brings changes to the payroll world.
 
Employment Allowance
 
You may have recently received a letter from David Cameron regarding the Employment Allowance.
 
You could reduce the class 1 National Insurance you pay to HMRC for your employees by £2,000. However, you cannot claim the Employment Allowance if you:
  
  • employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker
  • already claim the allowance through a connected company or charity
  • are a public authority; this includes local, district, town and parish councils
  • carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:
    NHS services
    – General Practitioner services
    – the managing of housing stock owned by or for a local council
    – providing a meals on wheels service for a local council
    – refuse collection for a local council
    – prison services
    – collecting debt for a government department
 
If more than 50% of the work carried out by a dental practice is for the NHS, the practice is not eligible for the allowance. When considering the proportion of the business which relates to the NHS you could consider turnover, number of patients, time spent dealing with patients or any other appropriate measure. In reality, turnover will be easier to calculate, however for borderline cases other measures may be appropriate.
 
The Employment Allowance needs to be claimed through your payroll software, this will also need to be updated to reflect these changes. Your payroll provider will be able to assist you with this.
 
More information can be found by clicking here.
 

Other changes

 
Below are some further changes for the new tax year:
 
Personal Allowance increase
 
From 6 April 2014 the personal allowance is changing to £10,000 per annum. The new emergency tax code for 2014-15 will be 1000L. In the first pay run of the tax year all standard codes will have been uplifted automatically unless individual notifications have been received from HM Revenue and Customs.
 
Statutory Sick Pay Recovery
 
In previous years employers with a high level of Statutory Sick Pay have been able to recover part of the payments under the Percentage Threshold Scheme. From April 2014 the PTS has been abolished.
 
Recovery of Statutory Maternity, Paternity and Adoption pay remain as before.
 
Payments to HMRC
 
HMRC have recently merged their PAYE accounts offices, please ensure you are using the correct bank details when making PAYE payments.
 
The details are as follows:
 
Sort code: 08-32-10
Account number: 12001039
 
Your reference remains the same.
 
Real Time Information
 
You will now be submitting RTI submissions for a year. 2013-14 was the first year that HMRC have made RTI submissions compulsory and both employers and HMRC are still experiencing teething problems with the system. The main issue we have seen is where the PAYE liability has been reduced to take into account a Statutory Payment recovery. HMRC’s records do not recognise these payments and underpayment notices are being issued. You will need to contact HMRC to sort out the issue.
 
Moving into 2014-15 HMRC will reject submissions that do not contain adequate information and subsequent penalty notices may follow. It is important that complete information is submitted.
 
From April 2014 form P46 which is currently used for new starters without a P45, will no longer be available. Instead the P46 will be replaced online by a ‘Starter Checklist’. Employers can either use the Starter Checklist provided by HMRC, or include the information on their own documents.
 
If you have any questions in relation to Employment Allowance or any of the other changes, please contact us on 01242 680000 for further assistance.