PAYE & Taxation 2015

This fact sheet is designed for people who are already operating PAYE, registered for VAT and or prepare Corporation tax returns. This fact sheet does not explain technical terms.

Payroll Changes 6th April 2015 Working Tax Credit:The way Working Tax Credit is paid to employees has changed, HM Revenues & Customs now pay the tax credit directly to claimants' bank accounts and employers will no longer be required to make these payments.

(Contact Tax Credit Helpline 0345 3300 3900)

 

 Basic element £1,960 
Couple and lone parent element £2,010
30 hour element £810
Disabled worker element £2,970
Severe disability element £1,275

 

Childcare elements of the Working Tax Credit

Maximum eligible cost for one child  £175 per week 
 Maximum eligible cost for two or more children £300 per week
 Percentage of eligible costs covered  70%

 

Child Tax Credit (CTC) £ Per Year

Child Tax Credit Family element   £545
Child element  £2,780
Disabled child element  £3,140
Severely disabled child element  £1,275

 

Tax Credits Income Thresholds

(Income thresholds and withdrawal rates)

 

First income threshold   £6,420
First withdrawal rate (per cent)  41%
Threshold for those entitled to Child Tax Credit only  £16,105
Income disregard  £5,000
Income fall disregard £ 2,500

 

Child Benefit Rates - £ Per week

Eldest / Only Child  £20.70 
Other Children £13.70

 

Guardian’s Allowance Rates 

 Guardian’s Allowance £16.55 

National Minimum Wage:

(The rates below are from 1 October 2014 and are likely to change again on 1 October 2015)

Enforcement and penalties

HMRC enforces the national minimum wage. If HMRC finds the employer has underpaid the national minimum wage they will issue a notice of underpayment. This will show the arrears the employer must pay to the workers and the penalty the employer must pay to HMRC.

£ per hour

Main rate for adult aged 21 and over   £6.50
Aged 18 – 20 year olds  £5.13
Under 18 but above school leaving age  £3.79
Apprentice rate under 19  £2.73
Apprentice rate under 19 and over (first year)  £2.73
Apprentice rate under 19 and over (completed first year)  £6.31

 (For further information call Pay and Work Rights Helpline or visit www.berr.gov.uk for the latest guidance).

Student Loan Recovery

HMRC will send the employer form SL1 when they (HMRC) identify a new employee who is or should be repaying a student loan. The employer must apply that notice as soon an employee’s pay, liable for national insurance contributions (NICS), exceeds the student loan threshold.

Rate or Threshold

  • £17,335 per year
  • £1,444.00 per month
  • £333.00 per week

Rate of student loans deductions 9%

Personal and Age-related Allowances: 2014/15

Basic personal allowance (age under 65)   £10,600
Personal allowance (age 65 – 74)  £10,600
Personal allowance (age 75 and over) £10,660 
Blind Person’s allowance £2,290
Married couple’s allowance (age 75 and over) £8,165
Married couple’s allowance – minimum amount £3,140 
Income limit for age-related allowances £27,000

Age-related allowances are reduced by £1 for every £2 that income exceeds the income limit until the level of the basic personal allowance or minimum amount of the married couple’s allowance is reached.

Income limit for personal allowance: £100,000

Personal allowance reduced by £1 for every £2 income exceeds income limit. Abatement applies to all taxpayers regardless of age. Relief for married couple’s allowance at 10%.

Pensions:

Registerd Pension Schemes

  • The lifetime allowance for 2015/16 is set at £1,250,000
  • The annual allowance for 2015/16 is set at £40,000
  • Unused allowances can be carried forward for up to three years.
  • Maximum tax relieved contributions to registered pension schemes: higher of 100% of earnings and £3,600.
  • Contributions in respect of a person who has no earnings can be made to a maximum of £3,600 (gross) (£2,880 net).

Pay As You Earn – Thresholds

The PAYE thresholds (i.e. the level of earnings at which tax becomes payable) are

  • £204 Weekly
  • £883 Monthly
  • £10,600 Annually

Tax Codes

All tax code changes for 2014/15 will be notified to employers on individuals forms P9 (T).

Emergency tax code  1060L W1/M1 
Single Persons Tax Code  1060L 

Tax Rates: 2015/16

From 6th April 2015

Basic rate tax  20%   £0 to £31,785
Higher rate tax  40% £31,786 to £150,000 
Additional rate  45%  Over £150,000 
Savings Income 10% £0 - £2,880 

* The 10% starting rate applies to savings income only up to the saving rate limit provided non-savings income does not exceed that limit. From April 2016 Savings income up to £1000 will be tax free.

National Insurances Rates: 2015/16

Employers will not be required to pay Class 1 Secondary National Insurance Contributions on earnings up to a new Upper Secondary Threshold (UST), for employees who are under the age of 21. Class 1 secondary NICs will however continue to be payable on all earnings above the UST. For tax year 2015-16:

  • The value of the UST and the Upper Earnings Limit (UEL) will be the same
  • UEL is £815 per week  
  • UST is not reportable to HMRC on RTI returns
  • There will be 4 new NI category letters: • Letter M - Current Letter A. Not contracted out standard rate contributions for under 21s
  • Letter Z - Current Letter J. Not contracted out deferred rate contributions for under 21s
  • Letter I - Current Letter D. Contracted out Salary Related standard rate contributions for under 21s
  • Letter K - Current Letter L. Contracted out Salary Related deferred rate contributions for under 21s

Lower Earnings Limit (LEL)

Weekly  £112
Monthly  £486 
Annual  £5,824

Primary Threshold (PT)

Weekly  £155
Monthly  £672
Annual 
£8,060 

Secondary Threshold (ST)

Weekly £156
Monthly £672
Annual £8,112

Upper Accruals Point (UAP)

Weekly  £770 
Monthly  £3,337 
 Annual £40,040 

Upper Earnings Limit (UEL)

Weekly  £815 
Monthly  £3,532 
Annual £42,385 
Employers NIC rate    13.8% 
Employees NIC rate    12% 
Class 1A  (employers)  13.80% on employee taxable benefits 
Class 1B  (employers) 13.80% on PAYE Settlement Agreements 
Class 2 (self employed) Flat rate per week £2.80 - £145.60 per year
Small earning exception £5,965 per year.
Special rate for share fisherman £3.45
Special rate for volunteer development workers £5.60
Class 3 (voluntary) flat rate per week £14.10pw – £733.20 per year
Class 4 (self employed) Lower profits limit profits £8,060
Upper profits limit £42,385
Rate between lower & upper profits limit 9% Rate above upper profits limit 2%
Additional primary Class 1   Rate on deferred employments 2%
Additional Class 4   Rate where deferment has been granted 2%

Class 1A NICs are payable in July and are calculated on the value of taxable of benefits
provided in the previous tax year, using the secondary Class 1 percentage rate appropriate to that tax year.

Statutory Sick Pay (SSP)

SSP is payable for each qualifying day that the employee is off work. The daily rate depends on the number of qualifying days in the week: 

The SSP rates are for employees with average weekly earnings of £112 or more

  • Standard Weekly rates - £88.45
1 qualifying day:  £88.45 
2 qualifying days:  £44.23 
3 qualifying days:  £29.49 
4 qualifying days:  £22.12 
5 qualifying days: £17.69
6 qualifying days: £14.75
7 qualifying days: £12.64

SSP payable for a maximum of 28 weeks for any linked periods of incapacity for work.

Recovery of SSP

From 6 April 2014 the recovery of SSP was abolished. The employer cannot recover any SSP for any tax years from 2014-2015.

New SMP rates

This is a legal entitlement to a certain amount of pay to help a mother take time off around the time of birth and last up to 39 weeks. The SMP pay period may start on any day of the week where the mother continues to work beyond the 11th week, before the week the baby is due. To work out if your employee is entitled to SMP look at the date the baby is due, not the date the baby is born. She can choose the date she wants her SMP to start. The start date can also be trigged by the birth of the baby or a pregnancy related absence.

Lower Earnings Limit (LEL)

This is the minimum level of earnings that an employee needs to qualify for some benefits. It is also the minimum level that an employee’s Average Weekly Earning (AWE) must reach in a specific period to qualify for SMP. For 2015/16 the LEL is £112.00 per week.

New SMP rates from 6 April 2015 Pay period started on or after 6 April 2015, the first Sunday in April:

  • First 6 weeks of payments at 90% of average weekly earnings, then
  • The lower of
    • 90% of average weekly earnings or
    • £139.58

Maternity Leave

All employed women are legally entitled to a total of 52 weeks Maternity Leave regardless of their length of service. Women do not need to qualify for SMP to be able to take maternity leave.
There are two types of maternity leave:

  • Ordinary Maternity Leave (OML) – the first 26 weeks maternity leave
  • Additional Maternity Leave (AML) – the second 26 weeks maternity leave

For more information go to www.businesslink.gov.uk/workandfamilies Statutory Paternity Pay (SPP)

Your employee may be entitled to Statutory Paternity Pay (SPP) if their partner has a baby or adopts a child. This replaces their normal earnings and helps them take time off to care for the child or support the mother.

As their employer, whether you have to pay them SPP depends on how long they’ve worked for you, how much they earn and when the baby is due or the date of adoption. They’ll also have to provide you with a declaration covering family commitment and give you notice of when they want you to start paying their SPP.


Payments of SPP count as earnings. You must deduct tax and national insurance (NICs) from them in the usual way and you will normally be able to recover some or all of the SPP you pay.


Your employee may be entitled to paternity leave and SPP if they have responsibility for their baby’s upbringing and they’re either:

  • The baby’s biological father
  • The mother’s husband or partner – including a female partner in a same sex couple
  • Where a couple adopts a child, the partner, male or female, who is not claiming Statutory Adoption Pay (SAP) may be able to claim SPP.

Paternity Leave

Your employee is entitled to paternity leave if both of the following apply:

  • They’ve worked for you continuously for at least 26 weeks up to and into the 15th week before the date the baby’s is due, or the date an adopted child is expected to be placed
  • They continue to work for you until the date the baby is born, or the date the adopted child is placed.

The date an adopted child is expected will be shown on the matching certificate from the adoption agency.

Your employee is entitled to take one or two weeks’ paternity leave within 56 days of the date the baby’s birth or the date an adopted child is placed with the adopter. They cannot take odd days off and if they take two weeks those days must be together.

If your employee is entitled to paternity leave they may also be entitled to SPP for the period of their leave. They will be entitled to SPP if they have an average earnings at least equal to the NICs Lower Earnings Limit (LEL) - £112 a week or £486 a month for tax year 2015/16.


Pay period started on or after 6 April 2015, the first Sunday in April. If your employee is entitled to SPP, you (employer) must pay them the lower of:

  • 90% of average weekly earnings or
  • £139.58 

Statutory Adoption Pay (SAP)


Employees who are adopting a child and are notified that they have been matched with a child or received official notification that they are eligible to adopt a child from abroad on or after 5 April 2015 who satisfy the qualifying conditions are entitled to a maximum of 39 weeks SAP. These include having average weekly earnings of:

  • £90 if they are notified that they have been matched with a child or received official notification that they are eligible to adopt a child from abroad on or before 5 April 2015
  • £95 if they are notified that they have been matched with a child or received official notification that they are eligible to adopt a child from abroad on or after 6 April 2015

This is available to:

  • Individuals adopting a child on their own, or
  • One member of a couple adopting a child together.

Adoption Leave

The adopter is allowed to take up to 26 weeks ordinary leave and 26 weeks additional leave but only the first 39 weeks are covered by SAP. The adopter is entitled to 52 weeks statutory adoption leave regardless of any entitlement to SAP. It lasts up to 39 weeks.

  • The weekly rate is the lesser of £139.58 or  
  • 90% of employee’s average weekly earnings.

 

Funding of SMP / SPP / SAP

From 6th April 2015 employers who do not qualify for Small Employer’s Relief (SER) can recover 92% of the SMP / SPP /SAP paid to their employees.


Employers who do qualify for Small Employer’s Relief (SER) can recover 103% of the SMP / SPP / SAP paid to their employee.

The Small Employer’s Relief Threshold is £45,000 or less based on their total employees and employers Class 1 NIC bill for the previous year (2014/15).

 

PAYE LATE PAYMENT PENALTY

Penalties are charged if PAYE is paid late on more than one occasion in the tax year. The amount charged is a percentage of the PAYE paid late (excluding the first payment).

The penalty percentage depends on the number of late payments in the tax year, as follows:

  • 1 late payment: no penalty charged unless payment more than six months late
  • 2, 3 or 4 late payments: 1%
  • 5,6 or 7 late payments:2%
  • 8,9 or 10 late payments: 3%
  • 11 or more: 4%

A surcharge of 5% is charged for payments outstanding after 6 months, with a further 5% surcharge applying for payments outstanding after 12 months.

Corporation Tax

Rates and Thresholds

Corporation tax rates and thresholds from 1 April 2015 as follows:

Small Profit Rate  20% 
Small Profit Rate can be claimed by qualifying companies with profits at a rate not exceeding £300,000 
Marginal Relief Lower Limit £300,000 
Marginal Relief Upper limit £1,500,000 
Standard fraction 1/400
Main rate of Corporation Tax 21%
Special rate for unit trusts and open –ended investment companies 20%

Due Dates:

Corporation tax is payable 9 months and 1 day after the end of the accounting period. Where profits are £1.5m or more, corporation tax is payable in instalments due on the 14th of the 7th, 10th, 14th and 16th month after the start of a 12 month accounting period.

Company tax returns are due within 12 months of the end of the corporation tax accounting period.

Company tax returns and accounts filed after 1 April 2011 for accounting periods ending after 31 March 2011 must be filed on-line using iXBRL format.

Automatic flat-rate penalties for late Company Tax Returns

If you file your Company Tax Return late, your company or organisation will be charged a flat-rate penalty of £100. HMRC will charge a further £100 penalty if you file your return more than three months late.

If your Company Tax Return is late for three or more accounting periods in a row, the initial flat-rate penalty increases to £500 with a further £500 charged if you file your return more than three months late.

Valued Added Tax (VAT)

  • Standard rate 20%
  • Reduced rate 5%
  • Zerorate 0%

VAT Fraction 1/6 of Gross (eg – Gross £120 - VAT element = 120/6 = £20)

Registration and De-registration Thresholds

As from 1 April 2014

  • Annual Registration Limit - £82,000
  • Annual De-registration Limit - £80,000

Flat Rate Scheme

Turnover limit for flat rate: £150,000

If you use standard VAT accounting, you have to record the VAT on every sale and purchase you make. You could simplify your VAT accounting by using Flat Rate Scheme if both of the following are true:
Your estimated VAT taxable turnover- excluding VAT – in the next tear will be no more than £150,000
Your estimated total business income – includes VAT – in the next year will be no more than £191,500
If you use a Flat Rate Scheme, you don’t have to keep a record of the VAT that you charge on every sale or pay on every purchase. You calculate your VAT payments as a percentage of your total Vat-inclusive turnover.
Once on the scheme you may continue to use it to account for VAT until your business income exceeds £230,000.

Cash Accounting Scheme

If you use standard VAT accounting, you have to pay HMRC the VAT you charged on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. However, you can only reclaim VAT once you’ve paid your suppliers.
You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.
Once you’re using cash accounting, you can keep using it until your turnover exceeds £1.6 million.

Annual Accounting Scheme

If you use standard VAT accounting, you’ll have to complete a VAT Return and pay any VAT due, or get any refunds, quarterly. You can reduce your paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.
If you use the scheme then you:
Make nine monthly, or three quarterly, interim payments during the year
Only need to complete one return at the end of the year
Either make a balancing payment or receive a balance refund at the end of the year
Can use annual accounting if you estimate that your turnover


Once you’re using annual accounting, you can keep using it until your turnover is more than £1.6 million.

Cash Accounting and Annual Accounting Schemes

Turnover limit for cash and annual accounting schemes: £1,350,000

Mileage Allowance Payments

Where a person uses his or her own vehicle for business journeys, mileage and passenger payments can be made tax-free to the approved amount. Where payments exceed the approved amount, the excess is taxable and must be returned on the P11D.

Cars and vans – Up to 10,000 miles  45p per mile 
Subsequent miles: Over 10,000 miles  25p per mile 
For NICs purposes:  45p for all business miles 
Bicycles  20p per mile 
Motorcycles 24p per mile
Passenger payments 5p per mile*

* Passenger payments in respect of each passenger who is also an employee undertaking the same business journey.

These rates represent the maximum tax-free mileage allowances for employees using their own vehicles for business. Any excess is taxable.

Employment Allowance – National Insurance rebate of £2,000

From 6 April 2015 eligible employers can claim a reduction of up to £2,000 per year in their liability for Employer Class 1 National Insurance Contributions (but excluding any class 1A liability). Most businesses and charities are eligible, but non-charitable bodies carrying out functions wholly or mainly of a public nature are excluded, for example tenant management organisations managing housing stocks for a local authority. Where two or more employers are connected, only one employer can claim the allowance. Eligible employers should either use their payroll software to claim the allowance or use HMRC’s basic PAYE tools.


Detailed guidance on the allowance is on the HMRC website.

Key Dates

Employers Deadlines:

Every Month

6th - 5th:  PAYE month 
19th: PAYE and NIC due to HMRC unless paid electronically 
22nd:  AYE and NIC due to HMRC if paid electronically 

(Penalties are charges if PAYE/NIC is not paid on full and in time on more than one occasion in the tax year)

Accounts Office reference formatting and dates for electronic payment


When you pay your PAYE deductions electronically it is important that you use your Accounts Office reference with no spaces between the characters. If you don’t there may be a delay in updating your record to show that HMRC have received your payment.
The table below will help you to decide if you need to add numbers to your reference to make sure your payment is allocated correctly.
If you make just one payment between the dates shown in column 4 for the period ended shown in column 1 then you don’t need to add anything to the 14-character Accounts Officer reference.
If you pay earlier or later than the dates shown, or send more than one payment for the same period, you need to add the relevant four numbers from column 5 to the end of your Accounts Officer reference to tell HMRC what tax year ending and tax month your payment is for. Your reference should then be 13- characters long with no spaces between.

1 2 3 4 5
5th May MO1 22 May 6 Apr -5 May 1601
5th Jun MO2 21 Jun 6 May - 5 Jun 1602
5th Jul MO3/Q1 22 Jul 6 Jun - 5 Jul 1603
5th Aug MO4 22 Aug 6 Jul - 5 Aug 1604
5th Sept MO5 20 Sept 6 Aug - 5 Sep 1605
5th Oct MO6/Q2 22 Oct 6 Sept - 5 Ocy 1606
5th Nov MO7 22 Nov 6 Oct - 5 Nov 1607
5th Dec MO8 20 Dec 6 Nov - 5 Dec 1608
5th Jan MO9/Q3 22 Jan 6-Dec - 5 Jan 1609
5th Feb MO10 21 Feb 6- Jan - 5 Feb 1610
5th Mar MO11 21 Mar 6 Feb - 5 Mar 1611
5th Apr MO12/Q4 22 Apr 6 Mar - 5 Apr 1612

Note 1

The Bacs system does not operate on weekends or bank holidays. So if you are paying by Bacs, you should check with your banking provider about the cut-off times for making payments to reach HMRC by the date shown in the table above. You may also be able to make a payment using faster Payments but you should check with your banking provider in advance to see if this option is available and to check any cut-off times for each payment.

Note 2

Any additional payments received in this period without the extra four numbers will be incorrectly allocated to the following month.

Note 3

To make a payment for previous tax year add the relevant year and number 12 for example for year 2014-15 add 1512 (for a BillPay Payment add the year and number 12, for example for year 2014-15 add 1254).

When no payment is due for a month or quarter

Real Time Information (RTI) Employers

An RTI employer is one that has submitted a Full Payment summary (FPS) and / or an Employee Alignment Submission (EAS). RTI employers who have no payments to make for a single or multiple months should tell HMRC by completing and submitting an Employer Payment Summary (EPS) for the period(s) concerned. Fill in the box for No payment due as no employees or subcontractors paid in this pay period and enter the relevant dates at the No payment dates boxes and / or the Period of inactivity date boxes as appropriate. If the employer does not do this then HMRC may ask the employer to pay what they (HMRC) think is due based on the employer previous history.

Non-RTI employer and contractors

Non-RTI employers and contractors should still tell HMRC on or before the payment date if they have no Pay As You Earn (PAYE) or National Insurance Contributions (NICs) payment to make for any tax month or quarter. If the employer or contractor does not do this then HMRC may ask the employer or contractor to pay what HMRC think is due based on the employer or contractor previous history.

Tax Year:

April 2015

  • 5th April 2015 – end of 2014/15 tax year
  • 6th April 2015 – start of 2015/16-tax year
  • 19th April 2015 – small employers paying PAYE/NIC for quarter 5th April due to HMRC unless paid electronically.
  • 19th April 2015 last day for outstanding PAYE/NIC for 2014/15 to reach HMRC unless paid electronically
  • 21st April 2015 - small employers paying PAYE/NIC for quarter 5th April due to HMRC if paid electronically

Self Assesment

6 April 2015 

Start of 2015/2016 tax year 
31 July 2015  Second payment on account 2014/15
5 October 2015  Deadline for notifying HMRC of new sources of income if no tax return has been issued for 2015/15 
31 October 2015  Deadline for submission of 2014/15 non-electronic returns. Also the deadline for submission of 2014/15 returns requiring HMRC calculation and where the taxpayer wants a balancing payment (below £3,000) collected through their 2015/16 PAYE code. 
31 January 2016 Deadline for filing electronic tax returns for 2014/15. Balancing payment due for 2014/15.

Where a notice to file a return is received after 31 October 2015, the filing deadline is three months from the date of the notice.

Undeclared Income

HMRC is closing in on undeclared income. If you are already doing the right thing and paying tax on all of your income, then there’s nothing more you need to do. But if you have any income you haven’t told HMRC about, you need to declare it before they catch up with you.

Find out about undeclared income and how to put it right at: (http://www.hmrc.gov.uk/undeclaredincome/?WT.mc_id=govuk2)

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