In this month’s enews we report on many employer related issues including the announcement of the new National Minimum Wage rates. Please do get in touch if you have any queries.
|Real Time Information||Cheque Guarantee Card Scheme to end|
|Penalties on late payment of PAYE||National Minimum Wage rates|
|P11D deadline looming||Online VAT returns|
|Implementation date announced for the Bribery Act 2010|
Real Time Information
HMRC are planning to introduce significant changes to the way in which PAYE information is submitted to HMRC. Currently employers send details of employees pay, tax and national insurance deductions at the end of the tax year (forms P35 and P14). The deadline for the submission of this year’s forms is 19 May 2011. There are penalties, which apply to broadly all employers, for failing to submit the forms on time and electronically, so please get in touch if you require any help in this area.
HMRC are planning to introduce Real Time Information (RTI) a system of monthly/weekly PAYE returns which would replace the annual end of year forms.
As detailed in the HMRC consultation document:
‘RTI will collect information about tax and other deductions automatically each time employers run their payroll. This information will be submitted automatically to HMRC at the same time the employees are paid. Where employers pay their employees via BACS, the RTI data will form part of the BACS submission.’
HMRC hope that this change to the system should mean that employees pay the right amount of tax and are paid the correct amount of state benefits where appropriate.
Following a consultation by HMRC, it has been confirmed that a pilot scheme will run from April 2012. The introduction of the scheme will be phased in and it is expected that all employers will move to RTI by October 2013. Large employers will be expected to use the system from April 2013.
The start date is slightly later than had been originally announced following a consultation with interested parties.
If you would like further information or guidance on payroll issues please do get in touch.
Internet link: Press release
Cheque Guarantee Card Scheme to end
It has been announced that the Cheque Guarantee Card Scheme will come to an end.
The closure of the Scheme means that it will no longer be possible to guarantee a ‘domestic’ cheque using a card after 30 June 2011. The decision to close the Scheme was taken by the Payments Council as guaranteed cheque use is in decline. The end of the Cheque Guarantee Scheme does not necessarily mean the end of cheques as businesses may continue to accept them if they choose to do so. However businesses that currently accept cheques with a guarantee card may wish to look into alternative payment methods.
Internet link: UK Payments article
Penalties on late payment of PAYE
HMRC have been warning employers for some time that they may have to pay a penalty if they do not pay their PAYE deductions on time. The penalties apply to PAYE deductions due for a period starting on or after 6 April 2010 include PAYE, Student Loan deductions, Construction Industry Scheme payments, Class 1 NICs, annual payments of employers’ Class 1A NICs and annual PAYE Settlement Agreements payments.
Deductions of PAYE, NICs, Student Loan deductions and Construction Industry Scheme payments are generally due by 19 of each month (or 22 if paid by electronic means and cleared into HMRC’s bank account). Small employers are able to pay quarterly.
Although the penalties apply from April 2010 notices will not be issued until after the end of the tax year and are expected to be issued in April or May 2011. For the majority of late payments the penalties start at 1% increasing to 4% depending on the number of late payments in the year. Extra penalties will be added where liabilities are outstanding for a further six and then 12 months.
National Minimum Wage rates
The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. The rates are reviewed each year by the Low Pay Commission and from 1 October 2011:
- the main rate for workers aged 21 and over will increase to £6.08 (currently £5.93)
- the 18-20 rate will increase to £4.98 (currently £4.92)
- the 16-17 rate for workers above school leaving age but under 18 will increase to £3.68 (currently £3.64)
- the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship will increase to £2.60 (currently £2.50).
Business Secretary Vince Cable said:
‘More than 890,000 of Britain’s lowest-paid workers will gain from these changes. They are appropriate – reflecting the current economic uncertainty while at the same time protecting the UK’s lowest-paid workers. I would like to thank the LPC for doing a good job in difficult circumstances.’
Chairman of the LPC David Norgrove said:
‘We welcome the Government’s acceptance of our recommendations. The Commission was again unanimous, despite all the economic uncertainties. We believe we have struck the right balance between the needs of low-paid workers and the challenges faced by businesses.’
Penalties for non compliance
Since April 2009 HMRC have been able to charge penalties to those employers found to be in breach of the NMW rules.
Automatic penalties are levied on employers where HMRC officers find NMW arrears. The penalties range from £100 to £5,000 with 50% prompt payment discounts for employers who settle within 14 days of notification.
The penalty is payable in addition to arrears owed to the workers.
In serious cases of non compliance the employer may be tried in a Crown Court and in those cases the fines are unlimited.
If you have any queries on the NMW please do get in touch.
P11D deadline looming
The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2011, are due for submission to HMRC by 6 July 2011. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 12.8% (for 2010/11) on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.
If you would like any help with the completion of forms P11D or the calculation of the Class 1A liability please get in touch.
Internet link: HMRC P11D guidance
Online VAT returns
HMRC have confirmed that all businesses will have to complete online VAT returns and pay their VAT liabilities electronically from April 2012. Currently many businesses have to comply with these rules. However smaller businesses, registered prior to 1 April 2010 with an annual turnover of less than £100,000, can currently complete paper VAT returns and pay by non electronic means.
If you would like any help with VAT matters please do contact us.
Internet link: HMRC VAT guidance
Implementation date announced for the Bribery Act 2010
At the end of March 2011, the Justice Secretary, Kenneth Clarke announced that the Bribery Act 2010 will come into force on 1 July 2011. The new Act replaces, updates and extends the existing UK law against bribery and corruption. This important new legislation:
- introduces a corporate offence of failure to prevent bribery by persons working on behalf of a business. A business can avoid conviction if it can show that it has adequate procedures in place to prevent bribery;
- makes it a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe either at home or abroad. The measures cover bribery of a foreign public official; and
- increases the maximum penalty for bribery from seven to 10 years imprisonment, with an unlimited fine.
The introduction into law of the new corporate offence of failure of commercial organisations to prevent bribery is an important development that essentially requires all businesses to consider the requirements of the new Act. This new corporate offence is coupled with a defence where, if the business can show that it had ‘adequate procedures’ in place to prevent bribery, it can be protected from committing the new criminal offence.
All businesses should now familiarise themselves with the statutory guidance and begin to assess the risk of bribery occurring in the business. The extent of any further action will be dependent on the results of this risk assessment.
The Act also requires the government to produce guidance on what constitutes ‘adequate procedures’ and the Ministry of Justice has produced this. This can be found using the links below.