2016 - 17 Best Year Ever for HMRC Customer Service

HMRC’s Annual Report and Accounts for the tax year 2016-17 revealed the best results for customer service performance. The report sets out HMRC’s latest performance results which includes the collection of £28.9 billion from compliance activities, which exceeded their government target. With total tax revenues of £574.9 billion, this report shows record tax revenues for the seventh year in a row. The Annual Report is available here.

HMRC online services and new improvements have made it easier for customers to obtain information, advice and support.  The improvements have also made it easier to process returns which has lead to an increased number of HMRC customers going digital. For example, over 9.4 million HMRC customers accessed their Personal Tax account online and HMRC conducted over 1.6 million web chats.

Customers can still contact HMRC by telephone or post seven days a week.  The average call waiting time for customers to get through to HMRC during 2016-17 was approximately 4 minutes. Postal levels are the lowest in recent years.

Regarding renewing tax credits, nearly 2.5 million did so ahead of the deadline of 31st July 2016 and around one million people renewed their tax credits online, an increase of 30% on the previous year.

HMRC’s Charter Annual Report sets out the relationship between HMRC and their customers, what customers can expect from HMRC, and the behaviours HMRC expect from their customers. This helps HMRC strive for their commitment to provide excellent customer service. The Charter Annual Report can be viewed here.

Posted byDebbie ClarkeinHMRC

HMRC issue with Real Time Information responses

HMRC are currently experiencing issues with a delay in submission responses from RTI submissions. If you are unsure if your submission has been successfully sent, you should receive your confirmation email from HMRC to acknowledge receipt of the RTI submission.

The following message has been added to the PAYE service availability and issues page: 

PAYE Real Time Information slow submission responses

HMRC are aware of a technical issue which is causing a delay in submission responses being issued for Real Time Information (RTI) submissions. We are currently investigating the underlying problem and are working hard to resolve this as soon as possible.

If you have received your confirmation email from HMRC to acknowledge receipt of the RTI submission and it still shows as outstanding in BrightPay you can mark the submission as sent and accepted by HMRC.

To mark an FPS as sent in BrightPay:

1) Click the RTI tab heading and select the FPS from the left hand listing.

2) Click the 'Send' button on the menu toolbar and select 'Mark as Sent and Accepted by HMRC'. 

This will flag the FPS as sent on BrightPay but the FPS file will not be submitted again to HMRC.

Posted byDebbie ClarkeinHMRCPayroll SoftwareReal time information

Hiring An Apprentice:

If you are considering employing an apprentice there are some things you should know:

• An apprentice will be aged 16 or over
• An apprentice must be paid at least the minimum wage for their age  
• An apprentice must work with experienced staff, learn job specific skills and study for a work based qualification during the working week
• An apprentice must work for at least 16 hours per week and will usually work for 30 hours
• An apprentice must be paid for time spent training or studying
• An apprentice must be provided with the same conditions as other employees i.e. paid holiday, sick pay and any benefits such as childcare voucher schemes.

If you employ an apprentice you may be eligible for an apprenticeship grant of £1,500 if you have less than 50 employees and your apprentice is aged between 16 and 24.  

If you are providing the training you can apply for training funding to cover some or all of the training costs.  Further information is available on the HMRC website.

Employers who have an apprentice will not be required to pay employers National Insurance Contributions (NICs) on their earnings if they are under 25, earning below £45,000 and on an approved UK government apprenticeship.  National Insurance category ‘H’ is to be used for apprentices under 25 in qualifying circumstances.

Posted byCaoimhe ByrneinHMRCNICPay/WageWages

HMRC to update Tax Codes for Adjustments for PAYE throughout the tax year

Currently with HMRC if there is an underpayment of tax that is owed at the end of the tax year the process is that it can be coded out, by means of adjusting the tax code for the employee in the next tax year, or the tax is to be paid by the employee in full. From May 2017 onwards HMRC will make automatic adjustment to Pay As You Earn tax codes using real time information as they occur.

HMRC will be watching the data being submitted from Full Payment Submissions by employers and pension companies from April 2017 onwards. HMRC will then be assessing individuals and projecting whether an employee will be due to have an underpayment of tax by the end of the tax year. Where this occurs HMRC will amend the employee’s tax code in order for the collection of the tax be in the current tax year and not be left owed at the end of the tax year. This proactive approach from HMRC ensures that the majority of tax owed will be collected in the same tax year.

Posted byDebbie ClarkeinHMRCPayroll Software

Spring Budget 2017 - Employer Focus

The main points to be noted by employers from Spring Budget 2017 announced by Chancellor of the Exchequer, Philip Hammond are:

• The personal tax allowance will increase by £500 from £11,000 to £11,500 from 6th April 2017 as previously announced, this is in line with the government's goal to have the personal tax allowance at £12,500 by 2020.

• The Dividend Allowance will decrease by £3,000 from £5,000 to £2,000 from 6th April 2018. This means that there is no tax payable on dividend payments up to £2,000 from April 2018 onwards. Any dividends above this allowance will be taxed at 7.5% for basic-rate taxpayers, 32.5% for higher-rate taxpayers and 38.1% for additional-rate taxpayers.

• There were no changes regarding company car and van charges or fuel charges.

• In the Finance Bill 2017, legislation will be introduced by the government about dates where an employee can make a payment in return for a Benefit in Kind they receive, this can reduce the taxable value of the Benefit in Kind. The 6th of July after the end of that tax year has been decided by the government, so if employees make a payment for the BIK before that date, they can reduce the taxable value of the BIK or remove if payment in full is made. This will be for the 2017-18 tax year and following tax years.

• Termination payments over £30,000 which are subject to income tax currently from April 2018 will be subject to Employer National Insurance Contributions (NICs) The first £30,000 of a termination payment will remain exempt from Income Tax and NICs. In the Finance Bill 2017, the tax treatment of termination payments will be clarified and this will include all contractual and non-contractual payments in lieu of notice taxable as earnings and requiring employers to tax the equivalent of an employee’s basic pay if notice is not worked. The changes, including to Foreign Service Relief, will take effect from 6 April 2018.

• The Money Purchase Annual Allowance to £4,000 will be reduced from April 2017, down from £10,000. This restricts the amount of tax relieved contributions an individual can make in a year into a money purchase pension, if they have flexibly accessed their pension savings.

• The Government is carrying out the first statutory review of State Pension Age and the details will be published in their review by 7th May 2017.

• HMRC's compliance team are monitoring employers that are claiming the Employment Allowance, as it has been reported that some employers are using avoidance schemes to avoid paying National Insurance amounts due.

Posted byDebbie ClarkeinHMRCPayrollPayroll Software

2017-18 Notice of Coding - P9

Electronic Notification - HMRC will be sending out email notifications from 18th February up until the 5th March to notify employers that P9 coding notices for the tax year 2017-18 are available to view online. HMRC have advised employers to ensure when logging into their online account to ensure they have the correct tax year selected, 2017-18. And also if the notices are not available that day, to leave it 24 hours and log in the next day and the P9s should be available to be viewed.

HMRC have commenced to send out the P9 paper coding notices and employers should expect to receive them up until the 17th March, although some employers may receive this notifications up until 20th March. If for some reason the employer does not receive the paper coding notice before the 6th April 2017, the employer may contact HMRC Employer Helpline on 0300 200 3200 and request a duplicate. Just to note the duplicate will only be made for the full employer PAYE scheme and no individual tax codes will be sent for individual employees. HMRC have advised that the duplicate requests may take up to 14 working days.

Posted byDebbie ClarkeinHMRCPayroll Software

Higher rate Scottish Taxpayers to pay more

The new tax year will see thousands of Scots having to pay more in income tax compared to their British counterparts earning the same salary.

This follows the announcement that the wage at which Scots will start to pay the 40p income tax rate will remain frozen at £43,000 in tax year 2017-18. For the rest of the UK, this threshold will increase to £45,000 when the new tax year commences in April.

As a result, it is estimated that approximately 370,000 higher rate taxpayers in Scotland will pay up to £400 more than people earning the same in the rest of the UK.

Under devolved powers, Scotland is able to vary the rates of Scottish income tax (SRIT) by up to 10% from those set by the government in Whitehall.

Posted byVictoria ClarkeinHMRCPAYEPayroll

Wales handed powers to set income tax

Income tax rates in Wales could vary from April 2019 following a deal between the Welsh government and UK treasury.

In a milestone agreement between the UK and Welsh governments, Wales will take control of 10p in each band of the income tax collected within its borders.

The new fiscal framework was negotiated by chief secretary to the Treasury David Gauke and Welsh finance Minister Mark Drakeford.

The block grant that Wales gets from the Treasury annually will be reduced in a fair way, the governments claimed.

Posted byCaoimhe ByrneinHMRC

NINOs with prefix 'KC' will be accepted by HMRC from 15th November

National Insurance Numbers had been issued with the prefix of KC by Jobcentre Plus (on behalf of the Department for Work and Pensions). These National Insurance numbers are valid. HMRC had issues with these NINOs with the KC prefix as HMRC has not included the KC prefix as a valid prefix on their list of valid prefixes to software developers. So HMRC's systems did not recognise the prefix KC and most payroll software did not recognise it either. But from 15 November 2016, as advised by HMRC, employers will be able to submit RTI data to HMRC for employees using this NINO prefix.

Some software products, including HMRC’s Basic PAYE Tools, may not be updated before April 2017. If this applies to you then you should continue to follow this guidance when submitting your returns:

• Do not enter the NINO for the employee - this field should be left empty

• The employee's address has to be entered, the first two lines are the minimum requirement

• You do not need to request a new NINO as the NINO with the KC prefix is valid.

Posted byDebbie ClarkeinHMRCPayroll Software

Payrolling Benefits in Kind 2017-18

HMRC requires an employer to register in order for them to process benefit in kind through the payroll. If you are planning on processing the benefit in kind through the payroll for 2017-18 you can register now and up to 5th April 2017. But HMRC are advising employers that it would be best to register before the 21st December, when the annual tax coding process normally starts, in order to avoid being sent several tax codes for employees with payrolled benefit in kinds.

Employers who wish to process benefits in kind through the payroll must ensure they are registered with HMRC for real time information. Employers can register for payrolling of benefits using their government gateway ID to login. Currently agents cannot use this registration service for payrolling of benefits but HMRC will develop this option at a later stage.

Employers must select the benefits that will be processed in the payroll for their employees for the whole tax year. If a benefit is not selected by the employer but is processed through the payroll the employer must report these benefits on a P11D. Benefits may be added or the original application can be changed by the employer if an error was made. Normally the selection of benefits, if no changes were made, would automatically be carried forward to the next tax year.

Posted byDebbie ClarkeinHMRCPayroll Software