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

Changes to Employment Allowance

In the 2015 Autumn Statement it was announced that there would be changes to the Employment Allowance from the 2016-17 tax year.  On the most part these changes are good for small businesses though single director businesses will lose out.

The Good News

The Employment Allowance is rising from £2,000 to £3,000 per tax year from April 2016.  If as a small business you employed two people on an annual salary of £20,000 each you would only pay £281 in employers Class 1 National Insurance for the whole year instead of £3,281 as would be the case if the Employment Allowance did not exist.

The Bad News

The number of employers that are eligible for Employment Allowance will reduce, at least 150,000 single director companies will no longer be able to claim this allowance.  However if you are a business with multiple directors or other employees on your payroll you will still be able to claim the allowance.

Are you eligible?

The Employment Allowance is open to most business and charities who pay employers Class 1 National Insurance.  Though there are some employers who are not eligible for the scheme, including:

  • domestic employers
  • public bodies or businesses who work mainly or wholly of a public nature, except charities
  • service companies
  • those who are part of a group that has already claimed the Employment Allowance
  • single director companies

For more details on eligibility please look at the guidance note provided by HMRC.

How to claim?

Claiming your Employment Allowance should be a simple process through your payroll software or alternatively through HMRC Basic Tools.

You only need to claim Employment Allowance once, this automatically roles over to future tax years.  If you become no longer eligible then you will need to mark this as such in your payroll records.

Posted by AndiH in Tax and NIC, 0 comments

Self Assessment – Tax doesn’t have to be taxing

Or that is what the adverts say.

Unfortunately this is not always the case but as an employer you can help by ensuring you have provided your employees with all of the required information.  All employers are legal obliged to provide any individuals in their employment on the 5th April each year with a P60 by the 31st of May that year, in addition should you provide your employee with any taxable benefits you need to issue them with a P11D (Expenses and Benefits Statement) by the 6th July following the end of the tax year.  Not everyone keeps these documents in a secure (and memorable) place so you may be asked for copies.

Employees require both their P60 and P11D, in addition to information from any other income source, in order to complete their self assessment tax return.

We are swiftly approaching the online tax return deadline of 31st January, it is already too late to complete a paper return as the deadline for this was 31st October 2015.  All individuals who are required to complete a tax return for the 2014-2015 tax year must have submitted this and paid any outstanding tax by the 31st January to avoid having to pay a penalty.

You may find that after your employees have submitted their self assessment tax returns you receive an amended tax code to apply to their earnings.  You must apply this even if you or the employee believe the code to be incorrect.  Any queries regarding the accuracy of the code must be taken up directly with HMRC by the employee.

For more information and to complete a self assessment tax return visit HMRC

Posted by AndiH in Tax and NIC, 0 comments

Living Wage – What is it all about?

On 8th July George Osborne announced the following:

  • Introduction of a new National Living Wage for workers aged 25 and above, and asks the Low Pay Commission to set out how it will reach 60% of median earnings by 2020; based on Office of Budgetary Responsibility (OBR) forecasts, this means that the National Living Wage will reach the government’s target of over £9 by 2020.

But what does this mean to businesses?

  • From April 2016 employees over the age of 25 are to be paid at a rate of £7.20ph
  • The National Living Wage is perceived as being a premium on top of the National Minimum Wage
  • The National Minimum Wage is still in place for those under 25 (see table)
  • The current National Minimum Wage is still due to increase to £6.70ph from October 2015

There is some support to businesses to help pay for part of this additional cost.

  • The employment allowance, currently set at £2,000 will be increased to £3,000, this increase will pay for the cost of the employers NI when employing 4 full time individuals paid at NLW.
  • Corporation Tax is being cut to 18% from 20%

National Minimum Wage / National Living Wage rates

Hourly RateOctober 2014October 2015April 2016
Workers aged 16-17£3.79£3.87£3.87
Workers aged 18-20£5.13£5.30£5.30
Apprentices£2.73£3.30£3.30
Adult 21+£6.50£6.70-
Adult 21-24--£6.70
Adult 25+--£7.20

 

Posted by AndiH in Budget, 0 comments

Abolition of Employer National Insurance for Under 21s

In the Autumn Statement 2013 the Government announced plans to make employing younger people more affordable for businesses. From the 2015-16 tax year there secondary (employer) national insurance contributions will be abolished for employees under the age of 21 earning below the Upper Secondary Threshold, currently (2015-16) equal to the Upper Earnings Limit. Employees under 21 will continue to pay the same rate of national insurance as their colleagues over 21.

The below table details the previous and new NI letters for employees under the age of 21.

CategoryNI Letter 21yrs and overNI Letter under 21ys
Not Contracted-Out Standard RateAM
Not Contracted-Out Deferred RateJZ
Not Contracted-Out Standard Rate (Mariners)RY
Not Contracted-Out Deferred Rate (Mariners)QP
Contracted-Out Salary Related Standard Rate *DI
Contracted-Out Salary Related Deferred Rate *LK
Contracted-Out Salary Related Rate (Mariners) *NV

*these categories will end in April 2016 following the introduction of Single-Tier pension

Your payroll software should automatically update the NI letter at the start of the 2015-16 tax year. But please do check as this change will save your company money if you employee individuals under the age of 21.

You will no longer have to pay any employers national insurance on the earnings of employees under the age of 21 up to £815 per week (annual equivalent £42,385). You will save over £500 per annum if for an employee earning £12,000, if the pay was £15,000 this would save you £950 and on earnings of £18,000 you would save over £1,350 in employers national insurance contributions.

For more information see HMRC

 

Posted by AndiH in Tax and NIC, 0 comments

Win A Payroll Review

We are giving small business in Northamptonshire the opportunity to win a FREE payroll review, this is in conjunction with #Northantshour on the 5th and 12th of February.  There are 3 payroll reviews available for local small businesses to win.

It doesn’t matter whether you currently operate your payroll in-house, use a Bookkeeper/Accountant or another payroll agency, we can review your internal processes to give you the comfort that your business is compliant with HMRC rules and regulations.  This is the perfect time of year to carry out a payroll review as tax year end is just around the corner.

This offer is open to businesses in Northamptonshire who have under 20 employees, all you need to do is complete your details on the ‘contact us’ page and give a brief description of your business and how many employees you have.

The closing date for applications is midnight on Thursday 12th February and the payroll reviews will be provided during the month of March. The winning organisations will be selected at random from all who apply.

If you are unable to participate in this offer due to having more than 20 employees or being based outside of Northamptonshire but would still like a review of your payroll please ‘contact us’ for a free no obligation conversation, we provide competitive rates and for a small fee you will have the comfort of knowing that your business is doing all that it should from a Tax and National Insurance compliance point of view.

Good luck

Posted by AndiH in General, 0 comments

Have you claimed your £2000 Employment Allowance?

With only two months left of the current tax year you need to make sure you have submitted your claim for the £2000 Employment Allowance that many employers are entitled to.   This allowances reduces your employers Class 1 National Insurance liability, if your Class 1 NI bill is less than £2000 you won’t pay a penny.

Are you eligible?

If you are a business or charity paying employers Class 1 National Insurance then you will be able to claim.  There are a small number of employers who are not eligible for this scheme, these include:

  • domestic employers
  • public bodies or businesses who work mainly or wholly of a public nature, except charities
  • service companies
  • those who are part of a group that has already claimed the Employment Allowance

For more details on eligibility please look at the guidance note provided by HMRC.

How to claim?

Claiming your Employment Allowance should be a simple process through your payroll software or alternatively through HMRC Basic Tools.

You only need to claim Employment Allowance once, this automatically roles over to future tax years.  If you become no longer eligible then you will need to mark this as such in your payroll records.

Posted by AndiH in Tax and NIC, 0 comments

Welcome

Welcome to our new website, at Wallis Payroll we are on hand to help your business whatever your payroll needs.  Please let us know what you think of both our website and our payroll services and what more we could do to help your business.  We look forward to working with you in the future.

 

Posted by AndiH in General, 0 comments