In Year Filing & the Budget – What you need to know

Last time, end of year fining, ahem, filing was the topic of conversation http://bit.ly/9PwX4e. For our adventures in payroll this time, I’ll walk you through in-year filing. Before we start, here’s a little recap of the impact of today’s Budget on your payroll:

For April 2010 to March 2011

• Personal Allowances remain fixed at the 2009-10 values.
• Introduction of 50% tax rate for income above £150,000.
• Sliding scale reduction of personal allowances for incomes over £100,000.

NIC Changes

• Lower Earnings Limit raised to £97 per week (from £95 per week).
• No changes to NIC rates for employers or employees for 2010-11.

There are increases in National Insurance Contributions on the horizon, but these won’t kick in until April 2011.

So, with that out of the way, back to in-year online filing. HMRC introduced this new measure in April 2009, for companies with more than 50 employees. Four forms are covered, the employee starting and leaving forms (P46 and P45) and two new forms: P46(Pen) and P46(Expat). If you have fewer than 50 employees, it doesn’t become compulsory to file these forms online until April 2011; but with most modern payroll software, it is easy enough to get started early.

Which form should I use?

Form & when to use
P45 Part 1
When an employee leaves your business

P45 Part 3

When a new employee starts

P46

When a new employee starts without a P45 from their previous employer

P46(Pen)

For sending details of a new pension or annuity that you start to pay

P46(Expat)

For certain employees seconded to work in the UK (see here for details)

All of these forms can (and should) be filed online.

If you have registered online for PAYE online filing (using the handy link in my last article), you are now ready to go. ( If you haven’t, you can find instructions on registering at the following link: www.hmrc.gov.uk/paye/file-or-pay/fileonline/register.htm.)

There are four main ways to file the forms:

1. Use commercial payroll software – usually the information on the forms can be completed for you, using the employee information.
2. Use the HMRC ‘Online Return and Forms – PAYE’ service – this won’t help you actually pay your staff, only complete the forms.
3. Pay an agent or payroll bureau to file on your behalf, as part of running your payroll.
4. Sign up to Electronic Data Interchange (EDI) – this is typically only suited to large employers.

Finally, HMRC have published a helpful list of common filing errors and pitfalls to avoid, which you may want to bookmark: www.hmrc.gov.uk/paye/employees/start-leave/common-online-errors.htm

What would you like to see covered next time? Let me know in the comments!