Payroll changes – keeping up to date
If you employ people, you must submit the end of year PAYE returns for the tax year to 5 April 2010 (and for subsequent years) by electronic means, such as online using the HM Revenue & Customs (HMRC) website. You can be exempted only if you:
Operate the simplified PAYE deduction scheme for staff who work for you personally.
Are a member of a religious society whose beliefs are incompatible with electronic communications.
Employ one or more care workers to assist yourself or a relative who is elderly or disabled.
In all cases, you need to write to your HMRC office to claim the exemption, but if an agent submits the PAYE forms on your behalf, the exemption will not be granted.
You can now be subject to a penalty if you are late with any payroll deductions that are due to be paid to HMRC after 18 May 2010, such as PAYE, NICs, Construction Industry Scheme (CIS) and loan repayments. All employers and CIS contractors can be subject to these new penalties, even those who only employ domestic or care workers in their own home.
No penalty is due for the first late payment, although the employer may receive a warning letter. The penalty for the second and subsequent late payments in the same tax year increases from 1% to 4% of the total amount paid late. Further 5% penalties may be applied where a payment is more than six months late and over 12 months late.
If the total paid for the tax year agrees with the total of the monthly payments, and these are all paid on time, then any discrepancy between months may not be discovered unless HMRC undertakes a PAYE audit. There is also no penalty where an employer has a reasonable excuse for being late.
Former students can now arrange to repay their student loan directly to the Student Loan Company (SLC), in place of deductions made through the payroll. An arrangement to repay the loan within 23 months by direct debit to the SLC must be made. When this arrangement is in place, the SLC will send a stop notice to the employer and payroll deductions for the student loan will end.
If the SLC is aware that a loan may be repaid by way of payroll deductions within the next 23 months, it will attempt to contact the borrower to offer the direct debit facility.