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.
|Couple and lone parent element||£2,010|
|30 hour element||£810|
|Disabled worker element||£2,970|
|Severe disability element||£1,275|
|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 Family element||£545|
|Disabled child element||£3,140|
|Severely disabled child element||£1,275|
|First income threshold||£6,420|
|First withdrawal rate (per cent)||41%|
|Threshold for those entitled to Child Tax Credit only||£16,105|
|Income fall disregard||£ 2,500|
|Eldest / Only Child||£20.70|
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).
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 of student loans deductions 9%
|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%.
The PAYE thresholds (i.e. the level of earnings at which tax becomes payable) are
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|
|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.
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:
|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.
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
|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.
From 6 April 2014 the recovery of SSP was abolished. The employer cannot recover any SSP for any tax years from 2014-2015.
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.
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:
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:
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:
Your employee is entitled to paternity leave if both of the following apply:
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:
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:
This is available to:
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.
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).
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:
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 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|
|Main rate of Corporation Tax||21%|
|Special rate for unit trusts and open –ended investment companies||20%|
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.
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.
VAT Fraction 1/6 of Gross (eg – Gross £120 - VAT element = 120/6 = £20)
As from 1 April 2014
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.
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.
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.
Turnover limit for cash and annual accounting schemes: £1,350,000
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.
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.
|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)
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.
|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|
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.
Any additional payments received in this period without the extra four numbers will be incorrectly allocated to the following month.
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).
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 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.
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.
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)