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Contributed by ACCA, in their own words

Employers who have not yet taken up real time information (RTI) reporting must take action now.

The first year of reporting under real time is coming to an end and employers will soon be making their final 2013-14 PAYE submission. This year, employers should not complete a P35 or P14.

HMRC is emailing employers who should have started reporting PAYE in real time, but haven’t, to warn them that they may face penalties at the end of the 2013-14 tax year if they do not act now.

Employers not already reporting PAYE in real time should act now to avoid penalties. They should either:

  • tell HMRC if they no longer employ anyone; or
  • start reporting in real time.

Employers who:

  • no longer need their PAYE scheme, but have not told HMRC, should follow the instructions at PAYE if your business closes or changes
  • still need their scheme but have yet to make a report in real time should follow the instructions at HMRC’s Act Now page – even if they haven’t paid anyone at all. This is because they still need to need to let HMRC know that they don’t owe any tax.

Employers who are an annual filer and are due to file before the year end should ensure that they are ready to submit their return on time. For most employers, the final submission will be their final Full Payment Submission (FPS). This is the one telling HMRC about the very last employee payment for 2013-14.

  • for most employers, the final FPS should be sent on or before their last pay day of the tax year – which ends on 5 April
  • the final FPS (or Employer Payment Summary (EPS)) should indicate that it is the ‘final submission for the tax year’ – and that means for the whole PAYE scheme. If the scheme covers more than one payroll – for example, a weekly payroll and a monthly one – only indicate the final submission when the last FPSs for the tax year for all other payrolls have been successfully submitted
  • on the final submission, complete the end-of-year questions and declaration. Before RTI, these appeared on form P35 and you had until 19 May to submit the form. Now, final FPS or EPS should be submitted much earlier, so you may wish to make sure you have the answers to the questions in plenty of time for you to make that submission. Some employers and agents might want to start gathering that information now
  • if you need to correct any of the information on your final submission, send a revised FPS as soon as possible – but definitely before 20 April 2014. This is because, from that date, HMRC will start using it to work out people’s tax, national insurance, student loans and tax credits. If you discover any errors in your final FPS on or after 20 April 2014, you must correct these by sending an Earlier Year Update (EYU)
  • if you want to avoid a late-filing penalty for 2013-14, you must submit your final FPS by 19 April 2014 or send an EYU to HMRC by 19 May 2014. You can send an EYU after this but you may run the risk of a penalty, unless the EYU is submitted to amend your previously submitted final FPS figures
  • remember that if you do need to send an EYU, it should report only the differences to the latest amounts already reported for the tax year. For example, if a figure previously reported as £1,900 should have been £2,300, the EYU should show ‘£400’ – not £2,300. Similarly, if you want to reduce a figure previously reported as, say, £1,000 to £700, the EYU should report ‘-£300’ – with a minus sign in front – not £700
  • you have until 31 May 2014 to give a P60 End of Year Certificate to any employees employed by you at 5 April.

The form P60 must be given (either paper or electronic) to each employee on the payroll who was working for you on the last day of the tax year (5 April) no later than 31 May. 

Hours worked declaration

There is a change to the banding of the number of hours for an employee that is required to be included as part of the FPS submission. An additional banding is in place and the revised bandings for hours worked by an employee are:

A) up to 15.99 hours

B) 16 to 23.99 hours

C) 24 to 29.99 hours

D) 30 hours or more

E) other. 

Scheme Contracted-Out Number (SCON)

Employers are legally required to show the SCON, in addition to the Employer’s Contracting-out Number (ECON), on their FPS for employees who have been in a contracted-out scheme during the tax year. As previously highlighted, a temporary dummy SCON can be used. HMRC has stated that ‘you must not, however, use the temporary dummy SCON as an automatic default’. 

Interest charges on late PAYE/NICs payments

For tax years 2014-15 onwards, HMRC will charge daily interest on all unpaid amounts from the due and payable date to the date of payment, and raise the charge when payment in full has been made. Check current and historic HMRC interest rates on late payments. 

Preparing for April 2014 rates and thresholds

After 6 April 2014, employers must ensure that payroll calculations for income tax and national insurance contributions (NICs) are done using the 2014-15 rates and thresholds. These can be found by following this link: Rates and thresholds for employers