News from
PAYtEc Online
Changes
to the Construction Industry Scheme (October 2007)
HMRC has
warned of heavy automatic penalties of £100 for every
monthly return that has not been submitted either by paper
or online by the due date of the 19th of each month.
This includes any returns due for earlier periods that remain
unsubmitted. It is also vital to ensure that zero returns
are submitted when no payments have been made because penalties
still apply. There is more detailed information available
on the HMRC
website
HMRC is
also looking each year at subcontractors who are entitled
to receive gross payments from contractors. If a subcontractor
is also a contractor and their PAYE and CIS taxes are not
up to date then they will lose the right to receive gross
payment.
P46 and P45 forms are about to be quality checked (October
2007)
There are changes
coming into effect from April 2008 that mean it will no longer
be possible to set employees up on PAYE with missing details.
For many years
we have attempted to ensure the quality of all documentation
submitted to HMRC but have often failed because a client has
not insisted that new employees complete P45 and P46 forms.
HMRC will apply these checks strictly and will return all
failed documents for correction.
Our advice
continues to be compatible with the new requirements.
We strongly recommend that all employees are encouraged to
complete form P46 as part of their induction programme.
In this way all of their important data can be collected and
we will be able to ensure that your staff are being dealt
with and paid correctly within the regulations.
We will
continue to use a Basic Rate tax code at 22% tax for all employees
without a properly completed P46 and/or P45.
Find all
of these important forms here
in PDF format. Simply print off as many as you need
and send them to us, via post, fax, or email, for the
first payroll run.
Statutory Holiday Entitlement increased to 24 days (October
2007)
From the start
of October 2007 the minimum holiday entitlement will increase
from 20 days a year to 24 days (pro-rata for part-time staff).
This will increase to 28 days from October 2008.
There
has been some confusion as to whether bank holidays are additional
to or included in the total. For the record there is
no statutory right for employees to be paid for bank holidays,
although it is usual for companies to pay them either as part
of the old 20 day entitlement or as an addition over and above
the statutory entitlement. It follows that all employers
paying 20 days plus bank holidays will already be complying
with the legislation. Those that pay 20 days including
bank holidays will need to increase entitlements by 4 days
this year and another 4 days in October 2008.
For more
detailed information visit the DTI
website here.
National
Minimum Wage NMW (October 2007)
Starting on 1st
October 2007 the National Minimum Wage rates have increased.
It is vital that you ensure your employees are paid at least
these minimum rates as it is a criminal offence to pay less.
We will try to spot when you are underpaying your staff but
the onus is on you to be certain that you are operating within
the rules.
(1) NATIONAL MINIMUM
WAGE RATES:
MAIN RATE
- WORKERS AGED 22 AND OVER
£5.52
DEVELOPMENT
RATE - WORKERS AGED 18 - 21
£4.60
DEVELOPMENT
RATE - WORKERS AGED 16 - 17
£3.40
2) ACCOMMODATION
OFFSET RATE:
DAILY
RATE
£4.30
WEEKLY
MAXIMUM
£30.10
There
is more information available on this
link
National
Minimum Wage (NMW)
The NMW
is set to increase to the following rates from 1st
October 2006:
Main
Rate:
For workers 22 years of age and over the NMW is £5.35
per hour.
Development
Rate:
For workers between the ages of 18 and 21 the NMW is £4.45
per hour.
This rate
can also be paid to workers of 22 years of age and over who
start a new job and commence UK Government approved accredited
training in order to obtain a vocational qualification. You
may pay the developmental rate for six months under these
circumstances but must then switch to the main rate of £5.35
per hour.
Young
Workers Rate:
For workers above compulsory school leaving age and under
18 years of age the NMW is £3.30 per hour.
For further
information you can visit the interactive website of the Department
of Trade and industry at www.dti.gov.uk
Paytec-Online
will highlight any workers who are being paid below these
statutory rates.
Statutory
Sick Pay (SSP)
With effect
from 1st October 2006 the UK Government has
lifted the long-standing age restrictions on SSP meaning that
employees above 65 and below 16 years of age can now qualify
for SSP as long as all other qualifying conditions are met.
This move helps to protect the statutory rights of employees
who have traditionally been at a disadvantage and discriminated
against simply because of their age.
Paytec-Online
will be operating SSP under these new rules automatically.
HMRC
underpayment letters cause concern
Many Paytec-online
customers would have been thrown into a panic earlier this
month thanks to a letter from HMRC claiming that they have
underpaid their tax and National insurance.
Companies
with fewer that 50 employees that filed their 2004-2005 end
of year returns online qualified for an incentive payment
of £250. This was correctly deducted by Paytec-online
from payments to HMRC during the 2005-2006 tax year. Unfortunately,
a computer error at the Revenue put the incentive into the
wrong tax year and resulted in underpayment notices being
sent to business owners. To add insult to injury, interest
was charged on top.
Understandably,
this has caused major concern but thankfully we have now requested,
on behalf of all of our customers, that the incentive be offset
against the correct tax year.
Should
you have any further problems regarding underpayment notices
then please contact us here: www.payroll-services-uk.com/payroll-contact.html
New
Construction Industry Scheme CIS
We are
ready for the new CIS when it is launched in April 2007. You
will be pleased to hear that HMRC has dropped the cards and
vouchers in favour of a verification based scheme.
Thankfully not all subcontractors need to
go through the verification process. HMRC will be sending
you two lists of all your existing subcontractors. Any subcontractor
appearing on your lists does not need to be verified again.
It is crucial that the lists are kept safely filed for future
reference
Contacting
HMRC:
CIS verification
for new subcontractors can be requested by phoning HMRC on
0845 366 7899 or online at www.hmrc.gov.uk/new-cis.
When contacting HMRC you must provide: your name; your ten
digit unique tax reference (UTR); and your accounts office
reference (look for it on your yellow payslip booklet). Then
you need to give the details of your new subcontractor. The
details vary according to the subcontractors trading style.
For sole traders you must provide: name; UTR; and NI number.
For partnerships you must provide as for a sole trader plus
partner's: name; UTR; and NI number. For a subcontractor that
is a limited company you must provide: company name; company
UTR; and company registration number.
There
are three possible outcomes from the verification process:
Gross - you pay the subcontractor without deduction; Net -
you pay the subcontractor after deduction of tax at 20% (2007/8);
or Unmatched - you pay the subcontractor after deduction of
tax at a higher rate of 30%.
Statutory
requirements:
From April 2007 each subcontractor must be
given a statement each tax month declaring how much tax has
been deducted from their pay. It is also a statutory requirement
to submit a monthly return to HMRC using form CIS300
Our
Services:
Paytec
Online can help you and save you time and worry by producing
monthly statements for subcontractors and completing and submitting
monthly returns to HMRC. We can also help you decide about
a workers status and tell you whether the worker is employed
or self-employed. You can read about this online at
www.hmrc.gov.uk/employment-status. We will be providing
these services at very reasonable prices.
If you would like to find out more about the
new CIS or our services then please contact Kelly Pethick
on 0845 052 9456 for further details
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