Happy New Year

No, I am not running a couple of months late, I am actually a little early. I am talking about the most important ‘new year’ in my calendar, the New Tax Year! 6th April is the big date in all payrollers calendars and impacts every employer. It is the date that can not be selected by the employer, as a financial year can, and all employers and employees have to report income subject to PAYE in line with this date.

So what changes do we have to look out for?
• Personal allowance increasing by £350 from 1150L to 1185L
• 20% tax banding increasing by £1,000
• Minimum Auto Enrolment Pension contributions increasing to 2% for the employer and 3% for the employee
• Living Wage increases to £7.83ph for those 25yrs and over
• All other minimum wage rates also increase £7.38ph 21-24yrs, £5.90ph 18-20yrs, £4.20ph 16-17yrs

So what impact are the changes going to have on the average employee? The average salary in the UK is £28,758, if their salary remains unchanged then they will take home £261.10 less over the course of the year and will cost their employer £189.86 more.

2017-18 2018-19 Difference
Income Tax £3,451.60 £3,381.60 -£70
Employee NI £2,471.28 £2,440.08 -£31.20
Employee Pension £183.12 £545.42 +£362.30
Net Pay £22,652 £22,390.90 -£261.10
Employer NI £2,841.97 £2,806.09 -£35.88
Employer Pension £228.78 £454.52 +£225.74
Employer Cost £31,828.75 £32,018.61 +£189.86

A living wage employee on 40 hours a week contract will be paid £686.40 more gross per year, receiving an extra £399.74 in their pocket, the cost for the employer will increase by £854.07 for the year.

2017-18 2018-19 Difference
Gross Salary £15,600 £16,286.40 +£686.40
Income Tax £820 £887.20 +£67.20
Employee NI £892.32 £943.44 +£51.12
Employee Pension £77.76 £246.10 +£168.34
Net Pay £13,809.92 £14,209.66 +£399.74
Employer NI £1,026.17 £1,084.96 +£58.79
Employer Pension £97.20 £205.08 +£107.88
Employer Cost £16,723.37 £17,576.44 +£853.07

Both examples are calculated on an annualised basis using with a relief at source pension scheme with contributions based on qualifying earnings. Under a relief at source pension scheme the HMRC puts 20 pence into the pension for every 80 pence the employee pays in.

As a reminder don’t forget to send your employees their P60’s for 2017-18 by 31st May and P11D’s by 6th July.

If you have any questions on payroll or pension changes for the new tax year, please give us a call on 01933 409488 for a no obligation conversation.

Andi Herrington is the Director of Payroll Services at Wallis Payroll based in Wellingborough

Originally published in the February edition of All Things Business

Posted by AndiH in Pensions, Tax and NIC, 0 comments

Employee Benefits and how to deal with them

Retaining good quality employees can be difficult, for years larger employers have been doing this by providing their employees with perks, or benefits. Smaller employers are starting to join in and are looking into providing benefits to employees but can be concerned about the extra red tape and have to consider not only the cost of the benefit but the cost of administering that benefit as well.

One of the benefits that is becoming more common with employers who have a smaller number of employees is private medical insurance. There are now a number of providers who cater for or specialise in the Micro and SME market, and many of these offer much more competitive rates than an employee can get independently.

But if you provide your employees with such a benefit isn’t it taxable? Doesn’t that mean that you will have to report it to the tax man on a P11D and won’t the employee get a bill when they do their return? Well Yes, and No it doesn’t have to be.

From the 2016-17 tax year something called ‘Payrolling Benefits’ was introduced. This means that the value of the benefit received can be taxed in real time removing the requirement to report the benefit on each employees P11D, thereby saving your business time and money by not needing the staff to process the P11D’s inhouse or not using your accountant/payroll provider to process these for you. There is still a need to report the total value of the payrolled benefit on the P11D(b) for Class1A NI purposes but this is by far less time consuming than generating multiple P11D’s. The other benefit of payrolling benefits is that employees pay the tax on the benefit while they are receiving it and don’t have to pay a tax bill when they complete their tax return 10 months after the end of the tax year.

If you are interested in Payrolling Benefits then you will need register with HMRC prior to the start of the tax year and speak with your payroll provider. If you miss the registration it does not mean that you are unable to payroll benefits, this just needs to be done informally and a P11D must still be completed. Once you are registered for payrolling a specific benefit with HMRC then this registration carries forward to future years for that benefit. Most payroll software and payroll providers should be able to set you up for payrolling benefits on their applications without any difficulty.

At the present time all benefits can be payrolled with the exception of employer provided living accommodation and interest free / low interest (beneficial) loans. These benefits must still be reported on a P11D.

If you do choose to payroll benefits you do not have to payroll everything that can be payrolled, for example many businesses start with private medical insurance as this impacts the majority of their employees and then move onto company cars in the following year once they are comfortable with the set up, each benefit must be registered for payrolling separately.

If you would like to find out more about payrolling benefits contact Andi Herrington, Director or Payroll Services at Wallis Payroll on andi.herrington@wallispayroll.co.uk or call on 01933 409488.

Originally published in All Things Business April 2018

Posted by AndiH in Benefits & Expenses, 0 comments

HMRC set up new forum for Small Businesses

The HMRC have launched a new online forum and dedicated webchat service for small businesses and the self employed.

The forum is designed to give users quick answers to tax questions as well as help with issues that may arise when starting a business, taking on new employees and completing tax returns.

The Financial Secretary to the Treasury and Paymaster General, Mel Stride, explained that HMRC has launched the service to help businesses “get off the ground and support them as they grow”

If you would like to visit the new forum to see how it can help you have a look here

Posted by AndiH in General, 0 comments

All Things Business

An extract of the article about Wallis Payroll in this months All Things Business magazine.

All Things Business spoke with Andi Herrington, Director of Payroll Services at Wallis Payroll about the beginnings of Wallis Payroll, what they provide and why businesses should choose Wallis Payroll for their payroll requirements…

Tell us where Wallis Payroll came from and what services you offer?

Having spent 15 years working as both an employee of a payroll provider and on the other side of the table as a customer, I felt I had experienced both the highs and lows of working with an outsourced payroll partner. With this experience, I felt that I could do a MUCH better job. I set up Wallis Payroll three years ago to provide the same level of payroll expertise to Micro and SME employers as that afforded to large organisations who have an in-house team or use one of the large payroll bureaus who cater for high volume employers.

Along with my business partner, we wanted to do something different, something more personal yet professional where it would feel that we are part of a customer’s team providing payroll processing solutions, giving customers the confidence to manage the growth and development of their business while we manage their payroll.

To read more visit All Things Business

Posted by Donna V in General, 0 comments

Advisory Fuel Rates

The HMRC review (and change) the advisory fuel rates every 3 months, these rates apply to vehicles running on Petrol, LPG and Diesel and are to be used for company cars only. Where a car is hybrid it is treated as either petrol or dieselFor ease we have placed the rates for the 2016-17 tax year to date in one place.

You will see that the rates start from March 2016 this is because the rates are not reviewed in line with the tax year or tax periods.

Petrol Advisory Fuel Rates 2016-17 onwards

Dates Covered1400cc or less1401cc to 2000ccOver 2000cc
June - August 1811 pence14 pence22 pence
March - May 1811 pence14 pence22 pence
December 17 - February 1811 pence14 pence21 pence
September - November 1711 pence13 pence21 pence
June - August 1711 pence14 pence21 pence
March - May 1711 pence14 pence22 pence
December 16 - February 1711 pence14 pence21 pence
September - November 1611 pence13 pence20 pence
June - August 1610 pence13 pence20 pence
March - May 1610 pence12 pence19 pence

LPG Advisory Fuel Rates 2016-17 onwards

Dates Covered1400cc or less1401cc to 2000ccOver 2000cc
June - August 187 pence9 pence14 pence
March - May 187 pence8 pence13 pence
December 17 - February 187 pence9 pence14 pence
September - November 177 pence8 pence13 pence
June - August 177 pence9 pence14 pence
March - May 177 pence9 pence14 pence
December 16 - February 177 pence9 pence13 pence
September - November 167 pence9 pence13 pence
June - August 167 pence9 pence13 pence
March - May 167 pence8 pence13 pence

Diesel Advisory Fuel Rates 2016-17 onwards

Dates Covered1600cc or less1601cc to 2000ccOver 2000cc
June - August 1810 pence11 pence13 pence
March - May 189 pence11 pence13 pence
December 17 - February 189 pence11 pence13 pence
September - November 179 pence11 pence12 pence
June - August 179 pence11 pence13 pence
March - May 179 pence11 pence13 pence
December 16 - February 179 pence11 pence13 pence
September - November 169 pence11 pence13 pence
June - August 169 pence10 pence12 pence
March - May 168 pence10 pence11 pence

Tables last updated 27th February 2018

Posted by AndiH in Benefits & Expenses, 0 comments

Most Optimistic Self Assessment Expense Claims

In advance of next weeks 31st January the HMRC has released a list of the latest extravagant items which have been claimed as expenses on self assessment tax returns. These examples are all from the 2014-15 returns, we will have to see if those of the 2015-16 tax year can compete.

1. Holiday flights to the Caribbean
2. Luxury watches as Christmas gifts for staff – from a company with no employees
3. International flights for dental treatment ahead of business meetings
4. Pet food for a Shih Tzu ‘guard dog’
5. Armani jeans as protective clothing for a painter and decorator
6. Cost of regular Friday night ‘bonding sessions’ – running into thousands of pounds
7. Underwear – for personal use
8. A garden shed for private use – plus the cost of the space it takes up in the garden
9. Betting slips
10. Caravan rental for the Easter weekend

Needless to say none of these ‘expenses’ were allowable.

The Self Assessment tax return deadline is in just 7 days, there are penalties for not submitting your tax return on time even if there is no tax due.

Posted by AndiH in General, 0 comments

Personal Allowance

The personal tax allowance for 2017-18 will be £11,500, for individuals with this tax allowance the code will show as 1150L. Although this is due to be the standard tax code for 2017-18 some individuals will be on a different code depending on their circumstances, have a look at our tax codes article for more information.

For the 2017-18 tax year individuals on the standard tax code will not start paying tax at 40% unless their earnings exceed £45,000, this is the greatest amount someone can earn before paying 40% tax since 2010-11, the last 7 years have seen a decrease in the higher rate threshold in both real and actual terms.

The below table shows the rate bandings from 2010-11 to those for 2017-18, the bandings for future years will be confirmed closer to the time.

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Tax Rate
Personal Allowance £6,475 £7,475 £8,105 £9,440 £10,000 £10,600 £11,000 £11,500 0%
Basic Rate Threshold £37,400 £35,000 £34,370 £32,010 £31,865 £31,785 £32,000 £33,500 20%
Higher Rate Threshold £43,875 £42,475 £42,475 £41,450 £41,865 £42,385 £43,000 £45,000 40%
Additional Rate Threshold £150,000 £150,000 £150,000 £150,000 £150,000 £150,000 £150,000 £150,000 45%
Posted by AndiH in Tax and NIC, 0 comments

It’s our Birthday – PROMOTION

We are very pleased to be able to celebrate our 2nd Birthday this September, over the last two years we have grown steadily, welcoming new clients to both our payroll processing and consultancy service.

HappyBirthday

We would like to share our birthday celebrations and are offering two FREE months processing to all new customers who sign up in September and October 2016.  To qualify for this offer please email us at info@wallispayroll.co.uk or complete your details in the contact us form, quoting WPL2.

Posted by AndiH in General, 0 comments

Tax Codes – what do all those letters and numbers mean?

Have you ever wondered what your tax code means, and why you may have a different code to your friends or colleagues, as if you have nothing else to talk about in the canteen.

Some parts of the tax code are more obvious than others but we hope that this article helps explain things so that you can understand why you are being taxed at a certain rate.  Should you believe that your tax code is incorrect then you will need to contact HMRC directly as unfortunately even if your employer believes the code to be wrong they can not change it for you.

1100L

1100L is the standard tax code for most people (born after 5 April 1938) for the current (2016-17) tax year.  If this is your tax code then it means that you do not pay any PAYE (tax) on the first £11,000 you earn during the year, unfortunately this allowance isn’t given all in one go, you get 1/12th of the annual allowance (approximately £916) per month tax free.

Your personal tax code could be higher or lower than 1100L dependent on your circumstances, i.e. whether you have unpaid tax from a prior year or you have tax relief due on charitable contributions.

Tax Code Letters

The letters in your tax code can mean a number of different things.

LetterWhat it means
LIndicates that the value preceding is your tax free personal allowance
MIndicates that you have received a transfer of 10% of your partners personal allowance (Marriage Allowance)
NIndicates that you have transferred 10% of your personal allowance to your partner (Marriage Allowance)
SThe S would precede the numeric value of your tax code and indicates that tax is paid inline with the Scottish Rate of Income Tax, for the current tax year this is the same as the rest of the UK but may change in future years
TThis typically indicates a temporary tax code or a code that has other amounts factored into it. Also used for individuals who earn over £100k at which point you start to lose your personal allowance.
KThis is used when the level of your untaxed income/benefits exceed your personal allowance
0TYou do not have any personal allowance remaining and do not have any tax free pay. This code would typically be used if your earnings were in excess of £122k or if you did not provide your new employer with a P45 or starter declaration
BRAll of your income from this employment/pension is taxed at the basic rate, currently 20%
D0All of your income from this employment/pension is taxed at the higher rate, currently 40%
D1All of your income from this employment/pension is taxed at the additional rate, currently 45%
NTYou do not have to pay any tax on this income

Tax Basis M1/W1

Many individuals do not have either a M1/W1 marker against their tax code, when this is the case your taxable pay for the current year is completely recalculated each month and the amount of tax you have paid so far for the year is deducted from the total amount now due, this is known as a cumulative tax code and you receive an additional 1/12th of all allowances and bandings each month.

If you are on a M1/W1 tax code it means that only your income for that pay period is looked at in calculating the tax due on your pay, the HMRC sometimes refer to codes that are M1/W1 as being emergency tax codes.

50% threshold

Should you have underpaid tax earlier in the tax year or be on a K code which adds a high level of additional liability to your earnings you are protected by an automatic 50% threshold to prevent employers and pension providers from taking more than half of your pre-tax wages as tax.

Changes to tax codes

Typically tax codes only change at the beginning of a new tax year (6th April) as normally the government increases the personal allowance at this time (set to become £11,500 from 6th April 2017).  However there are occasions when HMRC changes codes during the tax year, either on receipt of new information from your employer (P11D) or from yourself.  If you believe that your tax code is incorrect then you need to contact HMRC directly to arrange for them to amend this.  Once HMRC have amended your tax code they will usually send this directly to your payroll provider to allow your pay record to be updated.  At this point dependent on the tax code and tax basis you may be lucky enough to receive a tax refund.

Posted by AndiH in Tax and NIC, 0 comments

Employing staff for the first time

It is very exciting to employ your first member of staff, and in addition to the equipment needed there are a few legal requirements that need to be met when employing staff for the first time.

  • Decided how much to pay them, this must be at least the national minimum wage or the national living wage if over 25.
  • Do they have the right to work in the UK?
  • Do they need a DBS check?
  • Get employment insurance as you need to have employers’ liability insurance.
  • Provide your new employee with details of the job in writing, this is required for any individual you employ for more than 1 months.
  • Register with HMRC as a new employer, this can be done up to 4 weeks before you pay your new staff.
  • From October 2017 all new employers will need to enrol their staff into a workplace pension.

Should you need any support with becoming an employer please give us a call as we can help with all of the processes from start to finish.

Posted by AndiH in General, 1 comment