There are various payroll processing data-item and rule changes for the new tax year on 6 April, 2014. These changes include:
- Employment Allowance of up to £2,000
- Tax code increase to 1000L (uplift of L codes)
- Abolition of SSP Recovery Scheme
- Increase in student loan recovery threshold
- Changes to rates, bandwidths and thresholds for PAYE, NI and statutory payments
- Employer Bank Account details declared on EPS payroll filing (RTI filing)
- Hours worked banding changes
- RTI late filing reason indicator
- Scheme Contracted Out Number (SCON)
Brief details are provided below, however, you should consult your accountant or payroll bureau regarding these changes before taking action.
Employment Allowance – reduction of Employers Class 1 NIC by up to £2,000
From 6 April, 2014 most employers will be able to claim the Employment Allowance to reduce their employer Class 1 National Insurance Contributions (Employers NIC’s) by up to £2,000 each tax year.
You claim the allowance by basically underpaying your employers NIC to HMRC until the £2,000 allowance is used up. Your payroll software will have a dialogue box to claim the allowance.
Automatic Tax Code increases for 2014/15
HMRC have announced a general ‘uplift’ of all tax codes with an ‘L’ suffix by 56. For example, if an employee had a tax code of 944L in 2013/14 (full personal allowance) their tax code would be uplifted by 56 to 1000L from 6 April. If you receive separate coding notifications from HMRC to change an employees tax code then you must apply HMRC’s coding notice figure.
Abolition of Statutory Sick Pay (SSP) Recovery
From 6 April, 2014 employers will no longer be able to reclaim Statutory Sick Pay paid to employees.
Increase in student loan recovery threshold
From 6 April, 2014 the student loan recovery threshold will increase to £16,910.
Changes to rates, bandwidths and thresholds for PAYE, NI and statutory payments
From 6 April, 2014 the rates, bandwidths and thresholds for PAYE, National Insurance and statutory payments (such as Statutory Sick Pay and Statutory Maternity Pay) will change.
Employer Bank Account details declared on EPS payroll filing
From 6 April, 2014 the employers bank details can optionally be included in the Employer Payment Summary (EPS).
Hours worked banding changes
From 6 April, 2014 the number of bands used by HMRC for normal hours worked will be increased from four to five.
RTI late filing reason indicator
From 6 April, 2014 a late PAYE reporting reason for each employee must be included where relevant in the full payment submission (FPS)
Scheme Contracted Out Number (SCON)
From 6 April, 2014 SCON numbers for employers in COSR (contracted out salary related) schemes must be included in their Full Payment Submissions (FPS).
These employees use NI category letters D, E or L. The SCON number must be reported in addition to the employers’ contracted-out number (ECON).
This does not affect a lot of smaller businesses.
This blog should not be regarded as offering a complete explanation of the subject matter and therefore you should seek professional advice before taking any action or non-action based on it.