Running payroll is one of the less glamorous aspects of being an employer.
However, it is often the mundane tasks that are the most crucial. Failing to pay your staff would quickly lead to a very unhappy workforce. While neglecting your responsibilities towards HMRC could result in penalties and investigations.
On top of all the dates and deadlines, you have to keep up with changes in your company and the law.
This year has already seen some major changes to payroll legislation including:
- the introduction of shared parental leave and pay in April 2015
- real-time information (RTI) penalties for businesses with 30 or fewer employees from March 2015
- a shared personal allowance for married couples and civil partners allowing them to share up to 10% of their personal allowance
- the abolition of employers national insurance contributions for employees aged under-21 from April 2015.
Although the legal landscape changes year on year, some questions crop up time and time again. Here are some of the issues clients frequently as us about.
Since the introduction of RTI it’s important to make sure you send your Full Payment Submission (FPS) on time to avoid receiving a fine.
The key dates are the same each month:
On or before employees’ payday: send FPS to HMRC
6th: new tax month
12th: you can view your FPS and how much tax and national insurance you owe from the previous month online
19th: deadline for sending Employment Payment Summaries (EPS) to claim any reductions of what you owe HMRC. Generally, HMRC will update your online account to show what you have claimed and what you owe within 2 days of receiving your EPS
22nd: deadline for paying HMRC (this is the 19th if you pay by post). You may be able to pay quarterly if you usually pay less than £1,500 a month
It’s not rocket science but putting these deadlines in your diary will help.
We can advise on the dates that affect your business.
Remedying any mistakes on your FPS or EPS is relatively straightforward although the exact procedure will depend on the type of error.
The simplest way to go about correcting mistakes is to send an additional FPS or EPS for the same period which should:
- show updated ‘this pay period’ figures
- show correct the year-to-date figures
- use the same payment date as the original FPS
- have ‘H – Correction to earlier submission’ in the ‘Late reporting reason’ box.
Be aware that multiple submissions for the same period could cause some confusion with HMRC so try to keep this to a minimum and only if absolutely necessary.
Dealing with mistakes on your final FPS of the year is a different process so speak to us if this affects you.
We can advise you how you can amend errors in your payroll.
You can change your pay or how often you pay employees to suit your business and workforce and these kinds of alterations are usually easy to implement.
If the new payday is a different tax month or week to the old one, you can just make your FPS as usual.
However, if the new payday falls within the same tax month or week as the previous one, you will need to treat the new payday as an additional payday for that period.
Calculating national insurance after changing paydays is a bit more complex and involves realigning when you submit your FPS with the tax month or week.
Payroll software can usually handle any changes to how often you pay your staff but talk to us if you have any concerns.
Get help with your payroll
Payroll can easily be separated from other accounting functions. Even if you chose to outsource your payroll, overall responsibility for getting it right lies with the employer.
Talk to us about managing your payroll.