28 Apr PAYE – penalty and interest regime from April
Well hopefully we’ve managed to survive the first year of RTI (Real Time Information) the most significant change to operating a payroll since the introduction of PAYE way back in 1944. As you were probably aware after this first year, HMRC will be taking off the gloves with regard to penalties etc for late filing and late payment.
Late filing penalties will apply on a monthly basis, where payment information is not received by the due date as expected on an FPS. The size of the late filing penalty for a monthly default will range from £100 for a scheme with nine or fewer employees to £400 for schemes with more than 250 employees. In addition there will also be late payment penalties. However there is some good news in that the date for the introduction of these penalties has been put back to 5 October 2014. So you have a further six months to get your filing completely up to date before penalties begin to bite.
Late payment interest has not been deferred. From April (i.e. now) interest will be charged on any payments not made by the due date. The current rate of interest in late payment is 3%. Your monthly PAYE should be paid online by 22nd. To ensure you don’t miss the date you should consider setting up a direct debit online payment to ensure it is collected by HMRC on the due date.
This is the really good news. Provided you are eligible, most employers, whatever size, will be entitled to a £2,000 reduction in employer Class 1 National Insurance contributions for each tax year commencing 2014/15. Certain employers are not eligible, such as those employing someone for household or domestic work, or personal service companies. Please give us a call to check your eligibility, if you’re not sure.
You have to make the claim. This should be a fairly simple process, and if you use payroll software it should have instructions on how to file your claim online. Otherwise you can use the Revenue’s Basic PAYE tools to make the claim. Once you have made the claim, you can reduce your Class 1 employers National Insurance up to the limit of £2,000 per year.
Statutory Sick Pay (SSP)
Whilst the above employment allowance is good news for small employers, changes to sick pay regulations may provide a nasty cost for small employers. SSP increased to £87.55 per week from 5th April. But, whereas small firms could recover this cost once it exceeded 13% of National Insurance, this will no longer be the case from 2014/15. Whilst this won’t be particularly significant for most employers, it could be a killer cost for micro employers with someone on long term sick.
The DWP has set up a new Health and Safety Service for small firms. Any worker off sick for more than four weeks must be referred to this new service.