Employer’s Update on Real Time Information (RTI)

HMRC announced that RTI would benefit employers and HMRC in some aspects, such as reducing costs by phasing out the annual employer returns, and identifying underpayments by employers earlier thanks to the filing of RTI online regularly throughout the year. However, there are still some issues for employers on how RTI will work for them:

Smaller employers and those with staff on variable hours could find it difficult to burden themselves with the cost of software, administrative expenses and the time-consuming process of inputting electronic payroll data.

Employers need to make Full Payment Submissions (FPS) on or before the date of payment under RTI, every time they make payments to employees. For those who pay employees every day or irregularly, this would be another burden.

RTI causes problems for small employers with a lack of internet access, computer knowledge or appropriate training.

Employers now need to inform HMRC of payments to employees earning less than the Lower Earnings Limit (LEL) for National Insurance purposes.

Many contractors and small businesses are likely to face common difficulties in adopting RTI. Here is some advice on how to get your data and systems in order.

Your RTI submissions such as FPS need to be filed with HMRC on or before your staff BACS or cheque payment date.

When you file FPS, it needs to cross-reference with your BACS payment. It means that you should make sure that a sub-reference in field 7 of your BACS payment instruction (known as ‘BACS hash’) must be the same as in your RTI submission.

HMRC assumes that if someone is not paid for 3 months then they have left and will remove them from their records. This may be an issue with casual workers or with workers on maternity leave. So it is essential to tick an irregular payee box on your FPS for such employees.

Although annual P35s are no longer required, for the time being you will still need to give P45s to departing employees and get P45s or P46 information from starters.

Penalty Charges:

The penalty regulation for RTI non-compliance has been announced but will not come into force until the 2014-15 tax year. It means that no penalties will be charged in 2013-14 for late in-year RTI returns like the FPS. In order to avoid any late filing penalty for 2013-14, you should ensure that you report to HMRC all payments made to your employees in the 2013-14 tax year by 19 May 2014.

What you need to do right now:

Carry on sorting out your data
The most important task is to guarantee your data is up to date, complete and correct. Regular reviews of your data will ensure HMRC has the correct information and avoid future issues and/or penalties.
Ensure your staff and systems can cope with the RTI process
The implementation of RTI is likely to significantly increase your administrative burden. Ensuring that your payroll software is compliant and your staff are trained to input the data correctly will be essential.
Manage your cash flow
Failures to pay monthly liabilities on time under RTI will be immediately apparent to HMRC and invite penalties. So it is very important to ensure your cash flow functions properly.
BACS software compliance
You should check that your BACS payment instruction and your RTI submissions are cross-referenced or confirm this with your payroll provider.

Belsize Accountancy provide payroll services to our clients and help them to submit RTI submissions online to the HMRC as a routine process every month. We will make sure the payroll software is suitable for online submission, save you time on adjusting to the new system and avoid late submission penalties. Please feel free to contact us for further information on 0207 043 0052 or via e-mail at info@belsizeaccountancy.co.uk.

NIC Holiday For Employers

The Regional Employer National Insurance Contributions (NICs) Holiday for New Businesses Scheme is a scheme that relieves employers of the need to pay employer NICs in respect of the first ten qualifying employees employed during the first year of their business. This scheme will end on 5 September 2013.

As a sole trader, partnership or company, you must start a new business in the period from 22 June 2010 to 5 September 2013 inclusive. The new business must be set up in a certain area of the country: Northern Ireland, Scotland, or Wales; or, if in England: the East Midlands, North East, North West, South West, West Midlands, Yorkshire or Humber (Greater London, the East and South East of England are excluded).

New businesses may qualify for a reduction of employer NICs up to £5,000 for each of the first ten employees they take on. This means a potential saving up to £50,000 for the business.

If you have recently set up a new company within one of the areas specified above and plan to apply for this scheme, please provide us with the following information and we will take care of the online application form for you:

• your PAYE and Accounts Office references - you will find these in the New Employer Pack sent to you     when you registered as an employer with HMRC
• your business name
• the date your business started
• your business address including the post code
• the region or country your principal business address falls within

Please make sure that you have registered with HMRC as an employer before you apply for the scheme. In the meantime, we kindly remind you that this scheme will expire on 5 September 2013, and so requires your immediate action if you wish to apply.

Audit Exemption Thresholds Reduced For Small Businesses

The audit exemption thresholds will be reduced for UK businesses with accounting periods ending on or after 1 October 2012. This will exempt thousands of UK businesses from audit provided they meet two out of the three criteria:

-Turnover less than £6.5m

-Net assets less than £3.26m

-No more than 50 employees

Subsidiary companies will also be exempt from audit provided their parent company guarantees their liabilities.