What are your PAYE commitments under RTI?
For all commercial business owners with employees, whether that includes 1 employee or over 100, it is vital to understand the payroll system and your attached responsibilities. HMRC are tightening up their rules and regulations around payroll, especially with the introduction of Real Time Information (RTI) Reporting, which came into play this year. As it is a legal requirement to comply with RTI, businesses can be subject to penalties and interest for failure to report accurately and timely.
It may not be you as the business owner who takes care of the payroll, so why not pass this article on to whoever is responsible or anyone you think may find this of use.
When and how to report on PAYE
The Full Payment Submission (FPS) Form
Reporting income and deductions on all employees is a requirement of the employer, even if the income of the employee falls under £111 per week, which is the point where their income will be taxed. “All” also includes all directors who are receiving a salary.
Your payroll system will generate a form FPS to enable your communication with HMRC to be consistent and in the format they require.
Deadline:
On or before each pay day if the filing date for the FPS.
Exceptions:
There are a few exceptions to this, visit the
HMRC webpage.
- Avoid using these exceptions unless you genuinely have to though – HMRC don’t allow you to use them repeatedly so save your “get out of jail free” card for when you really need it.
The Employer Payment Summary (EPS) Form
This secondary part of the payroll process is the EPS that enables your business to account for maternity and paternity pay as well as CIS deductions and the Employment Allowance. Form EPS can also be used to instead of the FPS when no employees are paid in the month, for whatever reason.
This form is also produced through your payroll software and the necessary deductions will be taken from your FPS.
Deadline:
By the 19th of the following tax month is the filing date for the EPS.
Penalties for late filing of payroll information
Penalties are incurred for missed deadlines. This includes:
1) Late submission of your FPS, without a valid reason
2) Submitting too few or too many FPS’s
3) Failure to submit an EPS if one is required
Penalties:
The charges apply monthly and are related to the number of employees.
| 1-9 |
£100 |
| 10-49 |
£200 |
| 50-249 |
£300 |
| 250+ |
£400 |
Additional penalties:
Failure to report within 3 months of the deadline can incur an additional penalty based on the tax and NI outstanding at 5%.
Automatic penalties:
From 6 October 2014, penatlies are automatically issued to businesses with 50+ employees.
For businesses with 50 or less employees they will have the same treatment as from 6 March 2015.
Exceptions:
There are a few exceptions, including an extension of the first deadline for new employers. Or if it is your first offence, HMRC will sometimes be lenient.
Also worth noting:
- July, October, January and April are when penalty notices are issued
- There is a 30 day term for payment
- Failure to pay the penalty notice on time results in interest too!
- Appealing your penalty notice is possible if you have a valid reason
If you are an employer with fewer than 10 employees relaxed rules apply until April 2015 – use late reporting code “E”
When and how to pay your PAYE
To calculate the payment due to HMRC each month, it is a case of deducting the amount on the EPS from the amount on the FPS.
Deadline:
Ensure you pay by 22nd (or by 19th if sending payment by post) to avoid interest. Interest at 3% is typically applied for late payment
Penalties:
If you pay consistently late or if your payroll liability is considerable in value then HMRC may apply a penalty. However, automatic penalties will also apply for late PAYE payments from April 2015!
Keeping your payroll records
Deadline:
You are required to keep your records for three years from the end of the tax year.
Penalties:
A penalty of up to £3,000 could be applied.
Summary
Many of our commerical clients use an efficient payroll bureau to take the hassle and responsibility away from managing payroll.
To disucss your payroll commitments, contact one of the Figurit team:
T: 020 7376 9333
