The first full year of RTI is coming to a close, for Keytime I'm pleased to say that on the whole the year has been a success. There are some changes coming up for the April 2014/15 tax year and these are summarised below. We are aware that some clients have experienced difficulties with RTI and so we've included some guidance on areas where we have had problems reported and how to avoid them in the future.
Here is a summary of changes to RTI for the tax year April 2014/15:
HMRC will be accepting 2014/15 RTI submissions from 6th March 2014
You will be able to enter your bank account details in an EPS where you are due a repayment from HMRC
Normal hours worked (employee record), there are changes to the categories: (A) up to 15.99 hours (B) 16 to 23.99 hours (C) 24 to 29.99 hours (D) 30 hours or more (E) Other
The percentage threshold scheme (PTS) is being abolished. From April 2014 you won't be able to reclaim SSP under this scheme.
A late PAYE reporting reason has been added to the FPS - if you file an FPS late you will need to say why
'No payments made' dates within the current tax month can be entered in the EPS from April 2014
HMRC did not impose penalties for late or inaccurate submissions in the tax year 2013/14, however, from April 2014 this is set to change.
Last FPS of the Tax Year
HMRC haven't imposed any late filing penalties in the years 2012/13 and 2013/14 unless it is the final FPS of the year. The final FPS for tax year 2013/14 is due by 19 APRIL 2014, after that date you will not be able to file an FPS for the 2013/14 tax year. If you haven't submitted your final FPS by that date and you need to report PAYE details for 2013/14 you will need to submit an earlier years update (EYU); you must do this by 19 MAY 2014. The EYU is part of HMRCs PAYE basic tools and is available to download from their website.
What constitutes a final FPS? - A final FPS is obviously the last FPS of the tax year and contains pay details in the final pay period. However, the final FPS differs in that it also contains end of year declarations (similar to the old P35 declarations). In Keytime Payroll the final FPS is triggered by ticking the 'final FPS of the year' box in the FPS submission screen; until this is done the final FPS of the year will remain outstanding with HMRC. You can make as many final FPS submissions as you like prior to the 19 April. After that date, if the submission is still outstanding but you have filed all PAYE details for the year you can use an EPS to file the end of year declarations (you will find the same 'final FPS of the year' box in the EPS).
No payment due
If you don't pay anyone in a tax month you must tell HMRC about it by submitting an EPS, if you don't, HMRC may ask you for payment. From April 2014 you will be able to tell HMRC that no payments are due for the current tax month (up until now you have only been able to tell HMRC there were no payments in previous periods or future periods).
Late filing of an FPS
If you don't report a payment to an employee for tax year 2013/14 by 19 May 2014 you will incur a penalty. From April 2014 new late filing penalties will apply for late FPS submissions. You won't have to pay a penalty if HMRC you have a reasonable excuse and you will be able to file a late filing excuse when you make an FPS submission. Find out more about late filing penalties at what may be accepted as a reasonable excuse by clicking here.
Late payment - Form April 2014 HMRC will issue in-year late payment penalties. You will incur a late payment penalty if you fail to make payment to HMRC by the deadline (even though you may have filed the FPS on time). Read more about late payment penalties and deadlines by clicking here.
EDIT: 12 February 2014: HMRC have updated their timelines for the introduction of filing penalties:
• April 2014: in-year interest on any in-year payment not made by the due date
• October 2014: automatic in-year late filing penalties.
• April 2015: automatic in-year late payment penalties
Abolition of the Percentage Threshold Scheme (SSP Recovery)
The percentage threshold scheme (PTS) is being abolished from April 2014. The percentage threshold scheme is more commonly known as SSP recovery and it provides a measure of compensation for some employers with high levels of sickness absence. From April 2014 employers will no longer be able to submit claims under the scheme. Employers will have until the end of the 2015-16 tax year to recover SSP paid before the end of the 2013-14 tax year.
In place of PTS will be the new Health and Work Service, which will provide independent occupational health advice to all employers. The service is expected to be introduced from late 2014.
Details of the Health, Work and Wellbeing initiative can be found by clicking here.
PAYE Payment Discrepancies
We are aware that a number of clients have experienced discrepancies between what they think is due to be paid to HMRC and what HMRC are expecting. Here are the two most common causes of discrepancies:
Incorrect payment date - If you enter a payment date outside of the intended tax month (a tax month is 6th of a month to the 5th of the following month), HMRC will allocate the FPS to the wrong tax month. For example, if you enter a payment date of 1 May for an FPS that relates to the month of May you will find HMRC will allocate the FPS to the April tax month - this is because tax month April goes from 6 April to the 5 May.
Change of employee ID - HMRC uses an employee ID to identify an employment for an individual, in Keytime Payroll this ID is the clock number. Any inconsistency with this ID can create duplicate employments in HMRCs system. Inconsistency with IDs commonly arises after a change of payroll software part way through the year, or for payroll bureaux and agents, after taking on a new payroll client.
Keytime Payroll submits a change of employee ID indicator where the actions taken by the operator indicate there has been a change of ID. When creating a new payroll the system will ask whether this is an existing payroll scheme, if it is you must tick the 'existing scheme' box. Ticking this box gives an additional ID and a set of options in the employee record. If the original employee ID for RTI purposes is being retained you must enter it as the clock number and answer Yes in the ID options (the original ID is being retained). If the ID is not being retained answer No and enter the original ID in the box, alternatively, if it is impractical to enter the original ID (it may be extremely long) answer 'Did not have one'. Answering 'No' or 'Did not have one' will indicate that there has been a change of ID and the changed indicator will be submitted with the next FPS:
Auto enrolment is well underway, with large employers already operating the scheme. April 2014 onward sees staging dates for employers with less than 250 employees. Auto enrolment features will become available from April 2014, for more information click hereor contact your account manager on 0161 484 3500
The 2014/15 version of Payroll will be available from March 2014. Further guidance and instructions will be issued with the release.