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No more P35 Questions

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HMRC has said that from 6th March 2015, the end of tax year P35 checklist will no longer be required. Employers will still however be required to report the Final Submission for the Year indicator with either their RTI Full Payment Submission (FPS) or EPS. The end of year checklist consists of seven declaration questions but HMRC states this is now part of the ‘defunct’ P35 process.

This notification has been made rather late though for many employers as not all software developers may have made the appropriate adjustments in time for the 2014/15 year end, so some employers may still have to complete the P35 checklist as usual. The removal of the checklist does not affect any other part of the year end process or it’s deadlines. The deadline date for the final FPS submission is 19th April. Once passed, any further change can only be made through the submission of an Earlier Year Update (EYU). p35

Shared Parental Leave

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On 1st December 2014, new regulations giving Shared Parental Leave and Pay came into force in Great Britain. This applies to eligible couples whose baby is due to be born or the child is placed with the adopting couple on or after 5th April 2015. This will replace Additional Statutory Paternity Pay and leave.

If eligible, employees can start their Shared Parental Leave (SPL) if they or their partner ends their maternity or adoption leave or pay early. The remaining leave will be available as SPL and the remaining pay may be available as Statutory Shared Parental Pay (ShPP). The mother must take a minimum of 2 weeks maternity leave meaning this will allow parents to share 50 weeks’ maternity leave and up to 37 weeks’ pay.

Employees can take this leave in up to 3 separate blocks instead of taking it all in one go and can also share the leave with their partner if they are also eligible. Parents can choose how much of the SPL each of them will take. If both parents are taking Shared Parental Leave, they can take it at the same time as each other or at different times. The employee must give at least 8 weeks notice before a block of leave begins. This leave and pay must be taken between the baby’s birth and first birthday, or within one year of adoption.

For more details and a new calculator for maternity, paternity and shared parental pay click here

New Holiday Pay Ruling

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Hitting the headlines this month is the result of 3 Employment Appeals Tribunals (EAT) regarding the calculation of holiday pay. The workers won and the employers lost and the ruling means that where you require staff to work overtime, you must now include the overtime pay in the holiday pay calculation for the first 4 weeks of annual holiday pay. Where the overtime pay varies, the holiday pay calculation must be based on the average of their last 12 weeks pay.

A major concern for employers is that the EAT also rules that employees can claim that the employer has made an unlawful deduction of wages under The Employment Rights Act if their holiday pay does not include overtime and other payments considered part of ‘normal remuneration’ such as commission and travel allowance, which in theory could go back as far as 1998, when the original Working Time Regulations were implemented in the UK. However, the EAT ruled that a claim for an unlawful deduction can only made if the claim is made within three months of the incorrect holiday pay amount being paid. So really, an employee has to bring a claim before an Employment Tribunal within 3 months of the unlawful deduction being made from wages.

If you have staff who you know will now be entitled to increased holiday pay, please be aware of possible backdated claims and ensure that your payroll provider or internal staff are aware of this issue to avoid underpayments being made going forward.

HMRC error affects 5 Million UK taxpayers

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The Daily Telegraph has reported that HMRC have made miscalculations in millions of taxpayers’ pay and tax calculations for the 2013-14 tax year. We have already been contacted by many of our clients whose employees have received form P800 which they believe to be incorrect as the forms show they have earned more than they actually have and therefore owe more tax than they actually do. There is a commitment to resolve the issue fully within the next 6-8 weeks, but in the meantime, if they believe the HMRC calculation is wrong, employees should not pay any monies that are shown as an underpayment and not cash any cheques that have been sent where a repayment has been calculated. HMRC also advise that any employees’ tax codes that have been altered in error will be corrected at a later date, however, they have as yet not made a statement confirming or denying any errors. Read The Telegraph’s article for more details.

HMRC delays RTI late filing penalties

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From 6th October 2014, HMRC introduce automated penalties for late in-year filing of RTI submissions. However, there is now a respite for small employers as HMRC have delayed these new penalties for employers with fewer than 50 employees until 6th March 2015. HMRC have sent electronic messages to all employers telling them when the penalties will apply to them, based on the number of employees shown on the Revenue’s records.

In the run up to March 2015, in addition to financial penalties, HMRC have said it will examine other ways to encourage employers to comply, although it has given no indication as to what these could be. The size of the penalties depend on the number of employees in the PAYE scheme: 1 to 9 will attract £100, 10 to 49 £200, 50 to 249 £300 and 250 or nore £400. HMRC has issued a downloadable helpsheet on penalties for late filing of PAYE in RTI.

If you do submit a late RTI submission, you must now include a late reason, which your payroll software should offer you.