Are you ready to report PAYE in real time (RTI)?
In April 2013, employers must start sending PAYE information to HMRC in real time. This means sending details to HMRC every time you pay an employee, at the time you pay them.
Unless HM Revenue & Customs (HMRC) has notified you otherwise, changing to PAYE in real time is mandatory. Each time you pay an employee after
6 April 2013 you must submit details about employees' pay and deductions to HMRC using payroll software.
This checklist will help you to start sending your PAYE information to HMRC in real time from 6 April 2013. Start preparing your business by doing these things now, ticking them off as you go.
You need to change some of the ways you report PAYE, including:
- providing new information in your payroll records, such as hours worked
- completing employee information for temporary and casual workers and employees
paid below the National Insurance Lower Earnings Limit
- letting HMRC know whenever you change a payroll ID – otherwise HMRC will treat the change as a new employment, which will result in duplicate employment and incorrect tax codes
- how you tell HMRC about starters and leavers.
Ensure you or your payroll service provider use RTI ready payroll software to send your real time PAYE information because you won’t be able to use HMRC’s PAYE Online service (sometimes called the ‘portal’) for this.
You still need to send your end-of-year return (P14s and P35) for the year 2012-13 by 19 May 2013.
What do I need to tell my employees about the new pension regime?
Auto Enrolment – what does it mean for employees?
It is more than likely that you will have seen the television adverts relating to pensions auto enrolment. This document is designed to give you an overview of auto enrolment, what it means for you in practice and what you should expect from your employer.
What is Auto Enrolment?
It’s a process where employers have an obligation to automatically enrol eligible employees into a pension scheme without any action on the part of the employee. Eligible employees will have no option at first other than to become members of the scheme. Only once they have been auto enrolled will employees then have the choice to opt out. However, provided the employee opts out within one month of the date they are auto enrolled, they will be entitled to a full refund of their own contributions.
How do I know if I am eligible?
Employers will have to automatically enrol workers who:
• Are not already in a qualifying workplace pension scheme;
• Are at least 22 years old;
• Are below state pension age;
• Earn more than £8,105 a year; and
• Work or ordinarily work in the UK (under their contract)
When will this happen?
This will depend on the size of the workforce at your place of work. The largest employers had to enrol their employees from October 2012, with the smaller employers not having to deal with it until between 2013 and 2016.
The Pensions Act 2008 specifies a timetable which begins with the largest employers. Each employer in the UK with at least one employee will have to comply with the new pension rules from their own ‘Staging Date’ (this is the date when they must meet the new requirements to provide employees with a qualifying pension scheme) but smaller companies have longer to prepare.
The number of employees and the associated staging date is given in the table below.
Number of Employees Year of Staging Date
Over 50,000 2012
500 to 50,000 2013
59 to 500 2014
1 to 58 2015 to 2016
What will my employer and I have to contribute to my pension scheme?
Employers will have an obligation to contribute to your pension. By October 2018 your employer will have to make a contribution to your pension of 3% of your gross salary, and this amount is phased in between now and October 2018. By October 2018 minimum total contributions into your pension will total 8%, with you as an employee making a net contribution of 4%, and 1% being paid by the government via tax reclaim. Obviously both you and your employer can contribute in excess of this level if you wish. The initial phasing in period for contributions starts at your employers staging date. The phasing dates and the minimum contributions you and your employer must make are outlined below.
Employer Employee Total
Payment Period Minimum Minimum Minimum
Contribution Contribution Contribution
Staging date to 0.8% net
30 September 2017 1.0% (1.0% gross) 2.0%
1 October 2017 to 2.4% net
30 September 2018 2.0% (3.0% gross) 5.0%
1 October 2018 4.0% net
onwards 3.0% (5.5% gross) 8.0%
Do I have any choice?
Should you decide that auto enrolment is not for you, it is possible to “opt out”. If you opt out you will not be obligated to make a contribution of your net salary to your pension scheme, and thus your employer will not be obliged to contribute on your behalf. The decision of whether to remain in the scheme or opt out is the sole decision of you as an employee.
Your employer will be notifying you of the staging date that is applicable to your workplace and will let you have details of which pension scheme is being offered in due course. There will be no action required on your behalf to become a member of the scheme (as long as you meet the eligibility criteria as outlined above).
THIS BULLETIN HAS BEEN REPRODUCED BY KIND PERMISSION OF HENWOOD COURT INDEPENDENT FINANCIAL ADVISORS TEL : 0121 313 1370 www.henwoodcourt.co.uk
IR35 Business Entity Tests
HMRC has started the process of overhauling its operation of the IR35 regime for personal services companies with new guidance issued in May 2012 that sets out basic risk factors which they say will potentially increase a contractor's chance of being investigated.
This overhaul is clearly designed to facilitate an increase in IR35 investigations. As expected following leaks last month, the 12 business entity tests set out in HMRC's 47-page intermediaries legislation guidance notes are illustrated by six example scenarios. HMRC said the tests are designed to build up a picture of how a contractor's business works and how they provide their services. The tests include the following:
- Business premises test - Does the business utilise business premises separately from the contractor's home or end client's premises?
- PII test - Does the contractor need professional indemnity insurance?
- Efficiency test - Has the business had the opportunity in the past two years to increase its revenue by working more efficiently?
- Assistance test - Does the business employ any workers who bring in at least 25% of annual turnover?
- Advertising test - Has the business spent over £1,200 on advertising in the past year; entertainment does not count as advertising?
- Previous PAYE test - Has the end client engaged the Director during the previous 12 months with no obvious changes in the working arrangements?
- Business plan test - Does the company have a business plan with a regularly updated cash flow forecast, and does it have a separate bank account?
- Repair at own expense test - Does the business have to bear the cost of rectifying any mistakes?
- Client risk test - During the past two years, has the business been unable to recover payment amounting to more than 10% of yearly turnover.
- Billing test - Does the business invoice for work carried out before being paid and negotiate its payment terms?
- Right of substitution test - Does the business have the right to send a substitute?
- Actual substitution test - Has the business hired anyone in the previous two years to do the work it has taken on?
The HMRC guide explains that the tests are not set in stone, and are an extension of the risk-based approach it extends to all of its investigations.
The business entity tests are something against which you should be able to self-assess to see how you scored by their internal rating. But HMRC aren't revealing what the detailed risk criteria are because of the fear people might arrange their affairs accordingly.
In any event the business entity tests are just a diagnostic tool. The actual application of IR35 will always come down to employment status factors that must be tested against case law going back over 40 years and will always take into account contractual terms.
HMRC is apparently seeking to appoint specialist IR35 teams at offices in 3 areas of the UK to pilot the new diagnostics. Anyone with concerns about the tests and the risk of investigation can contact us.
Walker Thompson advises shareholders in sale of major local travel agency
Walker Thompson is pleased to have been involved recently in the sale of Carrick Travel Ltd to its Directors, Tina Nason and Tracey Carter, as part of a Management Buy Out. Award winning travel agency Carrick Travel has been trading for over 35 years and has numerous offices throughout Warwickshire, the Cotswolds and the M40 corridor. The company operates eight Travel Agencies, a Corporate Travel Division and an Australasia Division. It has retail outlets in Leamington Spa, Cheylesmore in Coventry, Kenilworth, Stratford-upon-Avon, Bourton-on-the-Water, Chipping Norton, Evesham and Pershore.
Sherod Williams, a Director at Walker Thompson represented the Carrick family in relation to the sale and worked alongside Lodders Solicitors of Stratford-upon-Avon who dealt with the Sale and Purchase documentation. Sally Carrick will continue her work locally as a Director of Shakespeare Country, an organisation promoting tourism in the Stratford and South Warwickshire area. Sherod said, "In the current environment people still want a quality service which cannot be delivered through the internet or larger travel agencies. Anyone seeking the personal involvement of a travel advisor with specialist knowledge should give Carrick Travel a call.
Carrick can be contacted through their website www.carricktravel.com.
2011 closes with another success
On 15 December 2011 Walker Thompson were successfully re-assessed against the IIE Standard, first achieved by the firm in 2007 and again two years later.
Walker Thompson is the only firm of accountants in Coventry & Warwickshire to have achieved successful certification so to have done so three times is really something we are proud of.
"Walker Thompson have a genuine commitment to quality and high standards of performance"
"People development within the practice has a high profile"
"The firm embraces external perspectives and is committed to continuous improvement"
These are just a few comments highlighted within the assessment.
The assessment involves a rigorous process of a documentary submission, desk top review and an on site assessment by external assessors.
The IIE Standard applies to the practice as a whole business and includes areas such as policy and management, people and processes and most importantly results. Working within the IIE framework has become an integral part of the way we work at Walker Thompson.
Other well known organisations using the standard include familiar names like: 3663 First for Food, Orbit Housing Heart of England, G4S, TNT Logistics and BMW Hams Hall. Everyone is absolutely delighted with the outcome from this latest assessment.
Solutions for Clients: Insolvency
Walker Thompson does not provide an insolvency service, but works closely with specialist Insolvency Practitioners who are highly regulated and share similar values to ourselves. These firms will provide clients with initial advice free of cost and work alongside us to ensure the best possible outcome for clients who unfortunately require insolvency services.
Problems Raising Business Finance?
If your business is finding finance difficult to obtain in the current financial climate then the Enterprise Finance Guarantee could provide a much needed source of funds. Follow the link for more information regarding the Enterprise Finance Guarantee.
Problems Paying Tax, National Insurance or VAT Liabilities?
HM Revenue & Customs (HMRC) have a dedicated Business Support Service designed to meet the needs of businesses who may be affected by the current economic conditions. For Company Directors there may be hidden dangers however. Follow the link for more information regarding the Business Support Service.
Grant and Support Funding
You may be able to obtain grant or support funding to help with your business start up or development. Follow the link for more information regarding Grant and Support Funding.