Employers Bulletin Issue 23 - April 2006

Contents

Hello again

Doesn’t time fly? It seems like only yesterday since I penned my last editorial for February’s Employer Bulletin. A lot has happened since then, including the Chancellor’s Budget, of course! You’ll notice that this issue has lots of information to help you to make sense of changes introduced in the recent Budget announcement.

Not least of these are changed tax bandwidths, expansions to HMRC online services, changes to the company car threshold from 2008 and the withdrawal of tax exemption for employer provided
computers. You can read all about how the Budget might affect you on our centre spread, pages 10-11.

Most employers will know that your end of year returns must reach us by the 19 May to avoid incurring penalties. But we’re not just interested in getting them on time – we’d also like you to
think about helping us to get this allimportant detail through our systems and onto your employees’ records. Of course, I’m talking here about reducing errors on end of year returns. And we’d especially like to help you to avoid the most common mistakes, so have a good read of our special feature on pages 12-14, Time is running out telling you all about the pitfalls to avoid.

Payroll managers will also be interested in hearing about changes to Statutory Payments where the age restriction on SSP, SMP and SPP has been abolished as long as average earnings are at least at the Lower Earnings Limit.

Finally, I’d like to thank all those employers who have sent letters for our newly launched Letters Page, Ask us. We’ve had a great response, so please keep ‘em coming!

Don Macarthur
Employer Programme Director

Tips, Gratuities, Service Charges & Troncs Changes to our guidance on NICs

Changes to our guidance on NICs

The Tax Bulletin issued in June 2005 provided guidance for employers regarding tips, gratuities and service charges. That bulletin included guidance on the National Insurance contributions (NICs) treatment of tips, gratuities and service charges.

Leaflet E24 ‘Tips, Gratuities, Service Charges and Troncs: A guide to Income Tax, National Insurance contributions, National Minimum Wage issues and VAT’ has been included in the Employer pages on our website since February 2005.

Following further legal advice, the leaflet has been amended to remove guidance about NICs.

A comprehensive article is in the April 2006 edition of the Tax Bulletin and provides detailed guidance about the changes.

Leaflet E24 will be updated to reflect the changes. There are no changes to the Income Tax and VAT guidance contained within the leaflet. The article provides interim guidance about NICs liability.

Changes are also required to

  • Chapter 2 of booklet CWG2 Employer Further Guide to PAYE and NICs (Tips, gratuities, service charges and troncs). It has not been possible to make changes to the CWG2 (2006) before it was distributed to employers and made available on our website.
  • Expenses and benefits in kind: A guide to tax and NICs, which is available on the enclosed CD-ROM and at Expenses and benefits in kind: a guide to tax and NICs.

You should not rely on the guidance contained about tips in either of these publications until the changes are made.

Class 1 NICs paid in error

We will write to employers who have had a compliance visit and paid Class 1 NICs on tips as part of a settlement, telling them about the changes and refund arrangements. NICs liability on tips may depend on more than one feature of the arrangements in place. So NICs may still be due even where tips are used to meet NMW and/or contractual obligations, if the tips are being indirectly or directly allocated by the employer.

After reading this note, if you have not had a compliance visit but consider that you may have incorrectly paid NICs on tips, you can contact National Insurance Contributions Office, Refunds Group (Employers Team), Room BP 1001, Benton Park View, Newcastle upon Tyne, NE98 1ZZ so that the matter can be investigated further.

Reducing the burden – literally!

You may have noticed that your Employer and Budget Packs are looking smaller compared to previous years! But most readers will know that if you use all the facilities on the Employer
CD-ROM your pack is actually getting bigger and more comprehensive with each edition.

This noticeable “slimming down” of your Pack’s size (and weight!) builds on that, and reflects a new phase in our work programme and determination to support you better.

In 2006 nearly 90% of employers have received a “mini” pack containing only a few important paper notices apart from this Bulletin and the CD-ROM. And from 2007 we will no longer issue the
traditional bulky paper pack. Instead all employers will be encouraged to follow the majority example and learn how best to take full advantage of their ‘mini’ pack. As always, your bureau or agent or our Business Support Teams can give you any help you need to get you started.

So, if you are among the 10% of employers who in 2006 still received the larger packs including paper Helpbooks, you needn’t worry. The enclosed CD-ROM contains an extensive range of tools and information to help you, as does Employers And paper copies of forms, tables and guides will continue to be available from the Employer Orderline. We hope you agree that in this case, less is definitely more!

You might be interested in what a number of employers across the country have told us. For example:

“ Before they sent you everything, and half the stuff you didn’t need. For me, personally the smaller pack covers everything”

(Employer who already receives a “mini” pack)

“ I suppose it is inevitable. As long as it’s done on a user-friendly basis I have no objection. In
fact, I think it will help everybody. It should save time for the employer and the Revenue”

(Employer considering the switch from the traditional pack to the “mini” pack)

Factors that have influenced this change of policy

  • Our commitment to reducing volumes of paper
  • The progressive development of the CD-ROM to include various calculators, the A to Z of employer literature and new from 2006, an interactive Form 42 and a P11 Calculator
  • The increasing use of commercial payroll packages
  • Increasing use of payroll agents, bureaux and other intermediaries
  • Continued availability of employer forms, guides and tables from the Orderline on request, within five working days, for any customer requiring paper
  • Continued availability of the Employer Helpline and our Business Support Teams.

 

New Form P46

New Form P46 starts from April

  • Do you have new employees?
  • Do they always give you a P45?
  • If not you must make sure they fill in a form P46.
  • Form P46 changed on 6 April 2006. You must use the new form.
  • Please dispose of any old forms and order the new form P46.
  • The form is on the CD-ROM, you can order direct on our Employer Orderline or phone the Orderline on 0845 7646 646
  • There have been changes to the statements A, B and C. Your employee must tick only one of the statements.
  • There is a new statement D regarding student loans that your employee must tick if it applies to them.
  • If you use an electronic form P46 make sure that it has been updated, and if not contact your software supplier for advice.

 

Statutory Payments

Work and Families – Choice and Flexibility

The government has published a consultation paper covering the draft regulations on:

  • maternity and adoption leave and pay;
  • extending the right to request flexible working to carers of adults.

Further information about the consultation exercise can be found at Work and Families: Choice and Flexibility.

A consultation paper was also issued on the proposals for Additional Paternity Leave and Pay. A copy of the consultation document can be found at Work and Families: Choice and Flexibility.

The closing date for comments will be 31 May 2006.

Statutory Sick Pay

The Government’s recent Green Paper “A new deal for welfare: Empowering people to work” included suggested reforms to make Statutory Sick Pay (SSP) easier for employers to administer.
The consultation period has now ended but for information purposes you can access this at Welfare Reform.

Help and Support

And don’t forget - you don’t need to calculate Statutory Payments manually. We now provide:

  • Electronic Calculators - we have the full range of Statutory Payments calculators on the Internet and on our CD-ROM. These are quick and easy to use - and you can print out
    the figures there and then.
  • Telephone calculation - if you are not comfortable with electronic calculators the Employer Helpline will make the calculations for you, and confirm the calculation by letter if you wish.

Changes to Incapacity Benefit Legislation

Subject to Parliamentary approval, changes to the Incapacity Benefit legislation will mean that from the 9 October 2006, you will not need to pay SSP to some employees who are within 2 years (104 weeks) of their last payment of Incapacity Benefit. This is an extension of the current 52 week welfare to work beneficiaries linking provision.

These employees will be given a linking letter in the BF220 series showing the dates when they would re-qualify for benefit and are asked to show these forms to their employers. You should
check whether new or returning employees have one of these forms and keep a copy of it with your pay records.

More detailed information will be available in the next edition of the Employer Bulletin and in the “What’s New”.

Age restrictions – all Statutory Payments

  • Subject to Parliamentary approval the current age limits of 16 and 65 on entitlement to Statutory Payments will be removed from 1 October 2006.

From this date all employees with average earnings at or above the Lower Earnings Limit (LEL), (currently £84 per week), who are

  • aged under 16 or 65 and older, will be eligible for SSP
  • aged under 16 will be eligible for SMP and SPP.

These changes do not alter the position for National Insurance Contributions. These remain payable between the ages of 16 and State Pension age, which is currently 60 for a woman and 65 for a man. The state pension age will be aligned at 65 for both men and women over a ten-year period ending in 2020.

For SMP and SPP the new rule applies to babies expected on or after 14 January 2007 and whose entitlement depends on employment in the “qualifying week” of 1 October 2006.

For SSP the new rule will apply to younger and older employees who are sick on or after 1 October 2006.

If you are likely to be affected you should check this periodically for updates on all of the above topics.

More detailed information can be found in the “What’s New”.

Making Payments by Bank Giro

One of the ways you can pay us is by taking your payment with a payslip and paying it at your own bank.

We have become aware however, that banks and building societies that offer this bank giro service are tightening up their procedures and refusing to accept:

  • payments from payees who are not their customers and/or
  • cheques drawn on third party bank or building societies (for example, where an employer tries to pay a cheque drawn on a building society account over their bank counter).

If you use this payment method you will need to ensure that your cheque

  • is drawn on your bank/ building society
  • is made payable to HM Revenue & Customs and
  • is paid over at your own bank/building society (preferably your own branch).

HMRC offers a number of other electronic payment methods that do not require the use of a payslip booklet. These are:

  • BACS Direct Credit
  • Internet and Telephone banking
  • CHAPS
  • Debit Card over the Internet (BillPay) and
  • Paymaster (if you are a Government Department or Local Health Authority).

If you make all your payments using one of these methods you can stop us sending you payslip booklets. Just send us an email from our website.

For more information please visit Payment of PAYE.

Alliance and Leicester Commercial Bank (A&LCB) Transfers

A&LCB have advised us they are withdrawing the option to pay by direct transfer between A&LCB accounts from 1 July 2006. As a consequence we have removed the ‘By transfer’ box from all our employer payslips.

You can find out more information about paying electronically at Payment of PAYE.

National Minimum Wage

National Minimum Wage (NMW) was 7 years old on 1 April 2006 and since its introduction in 1999 rates have continued to increase each year. When first introduced the minimum wage stood at £3.60 per hour whilst currently, for workers aged 22 and above, this has now risen to £5.05 per hour, (£5.35 from 1 October 2006). The rate for workers aged 18-21 and those on a Government
approved training scheme has also increased from £3.00 per hour in 1999 to £4.25, (£4.45 from 1 October 2006). And in addition a rate of £3.00 per hour was introduced on 1 October 2004, (£3.30 from 1 October 2006) for workers under 18 who are above compulsory school leaving age.

In the 7 years since its introduction HM Revenue & Customs, by means of its 16 compliance teams located across the UK, have identified over £22 million of wage arrears; benefiting thousands of workers and ensuring employers comply with the regulations.

New programme of targeted enforcement

In July 2005, Department of Trade and Industry Minister Gerry Sutcliffe announced a programme of ‘targeted enforcement’, under which we will target publicity and enforcement at each of the key low-paying sectors in turn. We will initially address issues arising in each sector through closer working and education, prior to any enforcement activity. The first sector chosen under this new programme was hairdressing, as this can be a low paying profession with a high rate of NMW noncompliance. With the Department of Trade and Industry having responsibility for NMW policy and HM Revenue & Customs for NMW enforcement, both departments worked closely with key trade bodies to produce essential guidance for employers and workers alike. Feedback
and results show that this has been well received and understood.

HM Revenue & Customs have now started to plan activity for the next trade sector and we will bring you further details in future issues.

For further information about the National Minimum Wage you can

The NMW Helpline for Northern Ireland is run in conjunction with the Citizens Advice Bureau. The number 0845 6 500 207.

Working Tax Credit – a reminder

From 1 April 2006, HMRC have been paying all tax credit claimants direct meaning no employer should have been paying tax credit through their payroll after 31 March 2006.

If you have not received a stop notice for all your employees and/or you are due to pay, or have paid tax credit since 31 March 2006, please contact the Employer Helpline on 0845 7 143 143
(textphone 0845 6 021 380). The Employer Helpline will pass on details of your call to the Tax Credit Office who will contact you to:

  • agree a date to stop making tax credit payments
  • record the date up to which you have made, or will make, tax credit payments
  • issue stop notices if necessary
  • arrange a reimbursement of valid tax credit paid.

In 2006-07 you must not deduct any tax credit paid from the PAYE tax, NICs and student loan deductions you are due to pay to HMRC each month or quarter.

The 2006-07 version of forms P11, P14, P60 and P35 have been amended and no longer contain boxes for tax credit paid.

Tax Credit Funding

For Further information you can:

  • See FAQ's
  • Call the Employer Helpline on 0845 7 143 143 (textphone 0845 6 021 380)

Or if your employees have any question about tax credits, ask them to call the Tax Credits Helpline on 0845 3 003 900.

VAT and Road Fuel

We have received a number of queries following the announcement of the changes to the way in which businesses recover VAT on road fuel purchased by their employees.

The only practical change that was announced is that an invoice must be retained by employers in support of a claim for VAT recovery.

We understand that some employers have asked for an invoice to support every claim made by every employee. While this would ensure that every VAT claim for business fuel is supported by
an invoice, it has also lead to a number of claims going unpaid, as employees could not provide an invoice with each claim.

We would like to clarify that the new legislation does not mean that each claim from each employee must be supported by an invoice. It simply means that, at the end of a given period, there should be sufficient invoices to support the total cost of business fuel against which VAT will be recovered by the employer. Employers are free to develop their own policies to ensure that they have sufficient invoices available in case of an enquiry during a VAT audit.

The calculation to arrive at the VAT amount to be reclaimed should still be based on business mileage and a set fuel rate. So, while invoices are required to provide evidence of the right to deduct, they do not determine the actual amount of VAT that is recoverable.

Budget updates – 22nd March 2006

Income Tax Bands

The rates are unchanged by the Budget, but the bandwidths will be as follows

Rate % Bandwidth
Starting Rate 10% up to £2150
Basic Rate 22% £2151 - £33300
Higher Rate 40% £33301and over

Personal allowances remain as announced in the 2005 Pre Budget Report.

The National Insurance limits and thresholds changed (from 6 April 2006) as announced in the Pre Budget Report too.

The taxable pay Tables have been revised to show the new bandwidths. The tax calculator on the enclosed Employer CD ROM has been revised too. You should begin using the new Tax Tables or
the new CD ROM calculator on the first pay day after 17 May 2006.

You should already be using the revised NICs tables as it’s after 6 April.

If any of your employees’ tax codes need to be amended as a result of the Budget changes, we will send you a P6(T) form (either manually or online) for each employee. Make sure you use the P7X – Tax Codes to be operated from 18 May 2006 to amend the tax code changes that you should have made at 6 April 2006 in accordance with the P9X – Tax codes from 6 April 2006.

All of these forms and tables are available:

  • On the HMRC Web site
  • On the enclosed Employer CD-ROM
  • From the Employer Orderline

Report recommends investment and expansion in online services

The Government has announced that it is accepting the recommendations of Lord Carter’s Review of HM Revenue & Customs’ Online Services, published on 22 March 2006.

Lord Carter recommended that the Government respond to the needs of business with a package of robust, highcapacity online filing services. He also recommended an expansion in online filing of Returns, which will benefit businesses and taxpayers.

Lord Carter also recommended:

  • that large and medium-sized employers (50 or more employees) should be required to file their PAYE in-year forms online from April 2008
  • that small employers (fewer than 50 employees) should be required to file their PAYE in-year forms online from 2010.

These recommendations build on the measures from his previous Review of Payroll Services which will require all employers to file their Employer’s Annual Returns online by 2010.

HM Revenue & Customs will work closely with others - including employers, agents and software developers - on the implementation of the new measures. And, in line with Lord Carter’s
recommendations, will only implement the new measures when the IT systems that will allow efficient online filing are in place and are fully tested.

Mobile Phones

From 6 April the number of mobile phones that an employer can loan to their employees, tax free, for private use will be restricted to one per employee, and cannot be extended to the employees’ family or household.

Any employers who use a voucher scheme to make a mobile phone available to their employees, will no longer have to pay tax on these vouchers from 6 April 2006.

Reducing the Burden on Businesses

The Government has received representations to build on previous work aligning the income tax and NICs systems with the objective of reducing burdens on employers, especially smaller employers. While recognising that aligning two very different systems with very different purposes presents difficult challenges, the Government will examine the scope for further progress. Any proposals would be subject to consultation with employers and their representatives.

Company Cars

Lower threshold from 2008/09 The lower threshold, the CO2 emissions figure qualifying for the standard 15% appropriate percentage, will be reduced from 140 g/km to 135 g/km from 2008/09. This maintains the government’s practice of announcing the figure for three years in advance, helping employers make informed decisions.

New “10% band” from 2008/09 There will be a new lower 10% appropriate percentage band for cars with CO2 emissions up to and including exactly 120 g/km from 2008/09. Full details will be included in a future issue of Employer Bulletin.

Employee Car Ownership Schemes The Budget documents also included the following announcement. “In light of the findings from the company car tax evaluation that show a rise in the
number of employee car ownership schemes (ECOS), HM Revenue and Customs will review the taxation of ECOS and benefits employees derive from them, with a view to possible changes.

Employer Supported Childcare

From 6 April 2006 the tax and National Insurance Contributions exemption for employer-supported childcare will be increased by10% from £50 to £55 per week.

Tax Exemption for Employer Provided Computers

There has been a great deal of interest in the announcement in the Budget that the tax exemption
which allowed employers to make available computer equipment for private use tax free would cease to apply on 6 April 2006. The cost of computers has fallen significantly since the exemption was introduced. A computer which cost £2,500 in 1999 will now cost less than £700, making computers more accessible to many more people than had been the case in 1999.

The Home Computer Initiative has been successful at reaching those in employment but this decision enables the Government to focus resource towards those who had not been able to benefit so far, for example the unemployed and the elderly. However nobody that has had a computer made available for private use before 6 April 2006 will be affected. Equally computers provided for business purposes are not affected by the change. Where an employer provides employees with a computer with the sole purpose of enabling the employee to perform the
duties of his or her employment no tax will be due as long as any private use made of the computer is insignificant.

Some employees will have entered into a Home Computer Initiative arrangement with their employer before 6 April 2006, under which the employer is committed to providing a computer for private use by the employee. In these circumstances where for reasons beyond their control the employee cannot take physical possession of the computer until 6 April 2006 or later, we accept
that the computer exemption will apply to the provision of that computer.

Employer’s Annual Returns – time is running out…

The deadline for getting your 2005-06 Employer’s Annual Return (P35 and P14s) to us is 19 May 2006. So if you have not already sent your Return, time is running out.

If you had 50 or more employees in November 2004 you must file your 2005-06 Return online or you will get an online filing penalty.

Register now!

You must register and activate our PAYE Online for Employers – Internet service before you can file online using the Internet. If you have not already registered, do so now.

To get the ball rolling, go to www.hmrc. gov.uk and click on ‘PAYE for Employers’ under ‘do it online’. When you have registered you will get a User ID and Activation PIN in the post within seven days. You then have 28 days to activate your account.

Make sure you register in enough time to get your ID and PIN, and send your Return to us by 19 May.

Quality matters

We will be applying the full range of quality checks to your Return, and it will be rejected if it does not meet them. February’s Employer Bulletin gave you some helpful tips about getting your
Return right. You can find out more at Online filing errors and how to solve them.

This article went to press before the start of the online filing period. For the very latest information
about filing your 2005-06 Employer’s Annual Return, go 2006 Online.

New tax-free payment box on the 2005-06 P35

If you had a 2004-05 tax-free payment for online filing you need to show this in a new box on the 2005-06 P35. The following “questions and answers” should help you complete this box.

Q. I ‘self-served’ the 2004-05 tax-free payment by taking it from what I sent you. What should I put on the P35?

A. In the field marked ‘Tax-free incentive payment received during the year’ you should enter £250. The payment should not be included in any other field on the P35.

Q. I received the 2004-05 tax-free payment as a cheque payment. What should I put on the P35?

A. Where the cheque payment is for the whole £250, the ‘Tax-free incentive payment received during the year’ field must be ‘zero’ filled. It is a mandatory field and if it is left blank the Return will fail our quality checks.

Q. What if the cheque payment of the tax-free payment was for less than £250?

A. If, for example, you asked for £150 to be set against your 2005-06 liability and to receive the balance of £100 as a cheque, you must enter £150 in the 2005-06 P35 field ‘Tax-free incentive payment received during the year’.

If you had part of the tax-free payment as a cheque, and the balance set against earlier years’ arrears (years other than 2005-06), the field must be zero filled. It is a mandatory field and if it is left blank the Return will fail our quality checks.

Q. What if the employer ‘self-served’ the 2004-2005 tax-free payment but they have not yet received a tax-free payment award letter.

A. If the award letter has not yet been received, the ‘Tax-free incentive payment received during the year’ field on the P35 must be ‘zero’ filled. It is a mandatory field and if it is left blank the Return will fail our quality checks.

The following queries may also arise as a result of the award, or non-award, of the 2004-2005 tax-free payment.

Q. What will happen if the 2004-05 tax-free payment is not awarded by the time their 2005-06 Return is submitted?

A. This will only be a problem where you have self-served the tax-free payment, as there will be an underpayment for 2005-06 of £250. When awarded, the 2004-05 payment will be allocated to 2006-07 and you should ask the Accounts Office to re-allocate the payment to 2005-06.

Q. What if there is a balance of the tax-free incentive payment at the end of the year?

A. If your 2004-05 Return was filed online and HMRC credited the tax-free payment of £250 to your payment record, but for 2005-06 the ‘Total amount payable for the year’ on the P35 is only £50, there will be an overpayment of £200. The £200 will be automatically allocated against the
2006-07 payment record.

Avoid the peaks

You might have a smoother filing experience if you avoid the peak days (18 and 19 May), or file outside of office hours or at weekends if you prefer.

Some third party software allows you to set your computer to send the Return automatically outside the peak times.

Do not double up!

Do not send a paper P35 as well as your online Return. We might process the paper Return first and you will get a penalty notice for not sending your Return online if you have to, or not get
your online filing tax-free payment.

If your agent is sending an online Return for you, you do not also need to send us a signed paper P35 confirming your agreement to the details. But keep a record of your agreement of the details
your agent has sent for your own audit purposes.

Make sure your software meets your needs

In 2004-05 we received a number of Returns where ‘CIS deductions suffered’ were not claimed on the online P35 because there was no box in which to enter it. If you are a limited company
that has had CIS deductions made from payments received for work in the construction industry and need to report this information on your 2005-06 P35, you need to make sure that the software you use meets your CIS needs.

What happens when we get your Return?

You will get an e-mail message from the UK Government Gateway or HMRC portal, if you have registered to use this service, saying we have received your submission. The message will say ‘The
submission for reference < Employer’s PAYE Reference > was successfully received on <date> and is being processed’. This is NOT confirmation your Return is correct, it only confirms we have received your submission.

If your Return is rejected by the Gateway, you will get the following message ‘The submission for reference < Employer’s PAYE Reference > was received on <date>. Unfortunately it could not be accepted as it failed data checks. To correct this please use the help provided within the software you used to complete your form and send it again’. You must wait for the next message, see
below, for confirmation that your Return has been accepted or rejected.

After we have received your Return, we will check whole Returns against our Quality Standard, and will send you an onscreen message to say if we have accepted or rejected it. In most cases we
will send that message within a minute, although it will be up to five minutes for larger Returns. Please do not attempt to re-send a Return while you are waiting for an acceptance message.

If your Return does not meet the Quality Standard, we will send you a message to tell you your Return has been rejected, and why. You must put right any errors and re-send the Return by 19 May to avoid a late filing penalty.

£250 tax-free!

You will get £250 tax-free if you had fewer than 50 employees in November 2004 and you send your 2005-06 Return online. When it passes our quality checks and we process it to your PAYE payment record, we will send you an ‘online’ letter telling you that £250 has been credited
to your account. We expect to start sending the ‘letters’ out after the end of May.

How to get your £250

The quickest and easiest way to get your tax-free payment is to ‘self-serve’ by deducting £250 from your next PAYE payment(s) to us for 2006-07. You must wait for your online ‘letter’ before ‘selfserving’.

We recommend that you send a ‘nil’ PAYE payslip for any complete month(s) or quarter(s) covered by the tax-free payment. We will not then send you a reminder for that period.

Your online ‘letter’ will tell you how to get a cheque payment from the Accounts Office if you cannot ‘self-serve’ the tax-free payment. Please do not contact the Accounts Office until you receive your letter.

Is your Employer’s Annual Return – P35 – really necessary?

You must only send us an Employer’s Annual Return when you are required under the PAYE Regulations to fill in at least one Deductions Working Sheet (P11 or equivalent). If you have not filled in at least one P11 you should not send us a return.

You must tell us by 19 May 2006 if you do not need to send a return. You can telephone us, or write to us, or send us the blank P35 saying no return is due. This will help us make sure that we do not send you a penalty notice for not filing your return. You cannot tell us online that you do not need to make a return.

You may have to send us a P35 where you have nothing to report in the ‘accounting’ boxes, but you still have to send us P14s. For example, where all your employees are paid at or above the Lower Earnings Limit for National Insurance (£82 per week or £356 per month in 2005-2006), but below the National Insurance Earnings Threshold.

If you are a limited company and you need to report an amount in the ‘CIS deductions suffered’ box we will need a P35 from you, even though all the other accounting boxes on the form are ‘nil’.

You need to send us your 2005-2006 Employer’s Annual Return, or tell us that you have no return to send, by 19 May 2006 to prevent any penalty action.

Age Discrimination

The Government has now released final legislation that will outlaw age discrimination in employment and vocational training in 2006.

It will cover private and public sectors and it will include every member of your workforce, young and old. This means you will no longer be able to recruit, train, promote or retire people on the
basis of age, unless it can be objectively justified.

Rather than wait until the legislation becomes law in October, businesses of all shapes and sizes are already changing the way they work and reaping the benefits of a mixed age work force.

Organisations such as the Confederation of British Industry and the British Chamber of Commerce are backing a campaign called “Be Ready” – providing good practice information on improving
age diversity practises.

Employers across Great Britain, who have already implemented age diversity good practices, have reported significant business benefits from creating an age diverse workforce.

For examples of good practice, advice and information about age legislation, please visit Age Positive.

10 key points about age legislation and retirement:

1 Age Regulations are due to come into force 1 October 2006.

2 Regulations cover employment and vocational training. This includes access to help and guidance, recruitment, promotion, development, termination, perks and pay.

3 The regulations cover people of all ages, both young and old.

4 All employers, providers of vocational training, trade unions, professional associations, employer
organisations and trustees, and managers of occupational pension schemes will have new
obligations to consider.

5 Goods, facilities and services are not included in these regulations.

6 Upper age limits for unfair dismissal and redundancy will be removed.

7 A national default retirement age of 65 will be introduced making compulsory retirement below age 65 unlawful (unless objectively justified). This will be reviewed in 2011.

8 All employees will have the ‘right to request’ to work beyond the default retirement age of 65 or any other retirement age set by the company and all employers will have a ‘duty to consider’ requests from employees to work beyond 65.

9 Occupational pensions are covered by the regulations, as are employer contributions to personal pensions. However, the regulations generally allow pension schemes to work as they do now. See regulations for more details.

10 The regulations do not affect state pensions.

Payroll Donations Surge Ahead of New Quality Mark Launch

Payroll Giving is a way of allowing employees to make donations to charity straight from their Gross Pay. It also gives them tax relief of up to 40% on their donations.

The latest statistics have shown that during the first half of the financial year 2005-06, there was 137% increase in the number of employers signed up to Payroll Giving compared to the same
period in the previous year. The amount donated through Payroll Giving has also risen significantly.

The number of smaller organisations signed up to Payroll Giving increased from 901 (at the end of April 2004) to 2167 at the end of December 2005.

Ivan Lewis MP, Economic Secretary to HM Treasury, set a challenge to UK businesses and their employees, saying “I hope that the coming financial year will be a record year of (Payroll) donations raising in excess of £100 million for good causes.”

His comments followed the launch of the new Payroll Giving Quality Mark, on 30 January 2006. This new scheme recognises and rewards organisations that actively encourage giving in the workplace through Payroll Giving.

The Payroll Giving Quality Mark aims to provide sustainable income sources for UK charities by increasing participation in Payroll Giving. The scheme recognises and rewards employers for making
Payroll Giving available to staff by providing them with a certificate and use of a logo which allows them to publicly demonstrate their commitment to good causes.

Bronze, Silver and Gold Awards are given to organisations who can demonstrate they actively encourage and support giving in the workplace through Payroll Giving.

Gold Award winners include The Royal Bank of Scotland Group plc and Royal Mail Group plc, amongst hundreds of other companies.

Payroll Giving Grants programme

Until December 2006, the Payroll Giving Grants programme is rewarding small and medium enterprises with a grant of up to £500 simply for setting up Payroll Giving. What’s more, the first £10 of each employee’s monthly donation is matched, £ for £, for a period of six months (up until March 2007.)

Employer Diary

May 2006

3 Deadline for forms P46 (CAR) (NEW) for quarter ended 5 April to reach us

9 Last date to register to use PAYE Online for Employers if you are required or intend to file your
2005-06 Employer’s Annual Return online

17 Look at form P7X on your budget edition of the CD-ROM to make sure you are aware of any
changes to your employees’ tax codes and ensure that you use the correct taxable pay tables for
all pay days after this date

19 Cheque payments for month ended 5 May should reach our Accounts Office Last date for Employer’s Annual Returns (P35 and P14s) to reach our office. We may charge penalties on Returns received after this date

22 Electronic payments for month ended 5 May should reach our bank account

31 Last day for giving form P60 to each employee working for you at 5 April 2006

June 2006

19 Cheque payments for month ended 5 June should reach our Accounts Office

22 Electronic payments for month ended 5 June should have cleared in our bank account

July 2006

5 Last date for agreeing your PAYE Settlement Agreement for 2005-06 (if any)

6 Last date for forms P11D(b) and P11D to reach us Last date for you to give forms P9D and P11D to relevant employees 19 Cheque payments for month/quarter ended 5 July should reach our Accounts Office Cheque payments for Class 1A for 2005-06 to reach our Accounts Office

21 Electronic payments for month/quarter ended 5 July should have cleared in our bank account
Electronic payment for Class 1A NICs for 2005-06 should have cleared in our bank account

Aug 2006

2 Deadline for forms P46 (CAR) (NEW) for quarter ended 5 July to reach us

19 Cheque payments for month ended 5 August should reach our Accounts Office

22 Electronic payments for month ended 5 August should have cleared in our bank account

Sep 2006

19 Cheque payments for month ended 5 September should reach our Accounts Office

22 Electronic payments for month ended 5 September should have cleared in our bank account

EmployerTalk 2006

EmployerTalk events are held at venues around the country. You get the chance to speak to HMRC experts face to face and listen to key speakers give out the latest news on payroll. You can do this in just one morning or afternoon.

The feedback we receive from you tells us the events are a major success:

”I come to these events every year and every year I learn something”

“A very worthwhile morning”

“I’m glad I came, I now feel much more confident about doing my payroll”

“The staff were very patient and helpful”

“The human face of Revenue and Customs”

“The presentations gave me some really useful pointers”

These events are free of charge, but by invitation only as capacity at each venue is limited.

Confirmed dates and venues

3 May
Cardiff
City Hall

17 May (am)
Edinburgh
Heriot Watt
University

7 June
Belfast
Ramada Hotel

27 June
Crawley
Hawth Theatre

29 June
Newbury
Newbury Racecourse

5 September
Exeter
Exeter University

20 September
Glasgow
Royal Concert Hall

4 October
Nottingham
East Midlands
Conference Centre

21 November
Manchester
Manchester International
Convention Centre

You can find out contact details or book a place at Employers or ring Sam French on 0845 366 7878

Ask us

Views in brief

At EmployerTalk on 02/03/06 at the Barbican in London, the emphasis was “online services”. Quoting user friendly, ease of use, and accuracy etc. Why then is there no direct link between the HM Revenue & Customs CD-ROM & the online services it provides. I refer especially to P11Ds.

Perhaps you might point out to the software companies who are against this merger, that small companies will continue to use the free CD-ROM, sending in P11Ds by post. I Williams

Our policy is to encourage employers to use commercial software to help run their weekly or monthly payrolls. This helps in compiling the necessary forms and returns to meet their annual obligations, but also to tell us about in-year employee changes. This picks up on one of the key recommendations from Patrick Carter’s independent “Review of Payroll Services” published in 2001. Part of our response to that Review was to introduce tax-free incentive payments as a way to encourage smaller employers to invest in software, coupled with the development of the Quality
Standard and Payroll Standard to help ensure that the data our customers send to us
is as accurate as possible - in many instances saving the inconvenience of later checks
and enquiries.

The introduction of the P11 and other calculators on the Employer CD-ROM are designed to be part of the same strategy, along with other features like the P11D to “fill in on screen” which you mention. They are bringing big advantages to both employers and HMRC by guiding users through these tasks, reducing and avoiding errors. But small employers also tell us that these tools whet their appetite for commercial software with its much more comprehensive functionality, and that is
the strategy which we are keen to promote. We continue to work with employers, their representatives and the software industry, to remove unnecessarily complex procedures and make things as straightforward as possible for employers to meet their obligations to HMRC.

P46 re-design

I’m so glad to read in the Employer Bulletin (Feb.06) that the P46 is to be redesigned. For years this form has been most frustrating for employers to handle due to the woeful lack of thought in its design.

A new employee is instructed to tick a box and sign a statement but to leave the rest of the form for the employer to complete. With most medium or large employers this means that the form is sent to its head office or payroll section to be completed with only an Views in brief indecipherable signature as a clue to who it relates to.

In my own company with less than ten branches, we do attempt to match forms with new starters if possible so that they can be completed properly although this is not always feasible. However I suspect that this is the exception rather than the rule.

When my daughter started casual work in a shoe shop - part of a major national chain - she completed several form P46’s only to later discover that their payroll department simply put them all in the bin rather than attempt to work out who they might relate to.

It is ludicrous that this form does not allow the employee to complete their name, address and NI number. Such a simple change would resolve all of these problems.

I look forward with interest to the new form to see if it is at last user friendly. K Tabner

We decided to review and update form P46 for precisely the reasons you have identified. We consulted widely with employers and their representatives in planning the new P46. We believe that it will make life easier for employers, employees and HMRC. You can find a copy of the new form on the Employer CD-ROM or you can view it at www. hmrc.gov.uk/comp/notes-10-25.pdf

Quality Standard

I attended EmployerTalk at the Barbican in March and was interested to hear about the Quality Standard. Where can I find out more, so that I can use your online services more effectively?
J Metclafe

Full details of our Quality Standard for PAYE can be found on our website at www.hmrc.gov.uk/ebu/qual_stand. htm#2 and you can find out more about our PAYE Online services at www.hmrc. gov.uk/ebu/paye_online.htm

We cannot enter into correspondence on matters relating to individual tax or NI issues and you
should continue to deal with HMRC through normal channels for these queries. We may shorten or modify letters and there is no automatic right of reply. Publication of any letter does not imply support for the author’s views.

Helpline and Orderline numbers

Helpline (telephone advice) Orderline (order your forms and guidance)

Calls may be monitored for quality control and training purposes

General payroll matters:

Been an employer less than 3 years?
Been an employer more than 3 years?
  • Helpline 0845 60 70 143
    Mon-Fri 8am-8pm
    Sat-Sun 8am-5pm
  • Helpline 0845 7 143 143
    Mon-Fri 8am-8pm
    Sat-Sun 8am-5pm
Textphone 0845 602 1380
(for employers who are deaf or hard of hearing)
(only people with specialised equipment such as Minicom are able to use this number)
  • Orderline 0845 7 646 646 Mon-Fri 8am-8pm, Saturday 10am-1pm
  • Fax 0870 2 406 406 (Please use your Fax Order Form)
  • most of the forms you'll need can be downloaded from the Employer's CD ROM

Other helplines:

HMRC Online Services Helpdesk (including technical support for Employer's CD-ROM )
Helpline 0845 60 55 999
e-mail helpdesk@ir-efile.gov.uk

Mon-Fri 8am-10pm

Sat-Sun 10am-6pm
0845 915 9146 Mon-Fri 9am-4pm  
If we are sending you too many packs, CD-ROMs or Bulletins, or you have changed address, please contact the Inland Revenue office that you normally deal with and let them know. Thank you.

Accounts Offices:

Shipley 01274 530750
Cumbernauld 01236 736121

To find the number of your local Inland Revenue office, look in the phone book under 'Inland Revenue'.

Construction Industry Scheme (CIS)

Contractors

Helpline 0845 7 33 55 88

  • Mon-Fri 8am-8pm
  • Sat-Sun 8am-5pm

Orderline 0845 3000 551

  • 7 days a week 8am-10pm

Sub contractors

Helpline 0845 3000 581

  • 7 days a week 8am-8pm

Orderline 0845 3000 551

  • 7 days a week 8am-10pm

National minimum wage (NMW)

Helpline 0845 6000 678

  • Mon-Fri 8am-6pm

Orderline 0845 845 0360

  • 7 days a week, 24 hours

NICs: special topics

Contracted out Pensions

Helpline & Orderline 0845 9 150 150

  • Mon-Fri 8am-5pm

Non-residents

Helpline & Orderline 0845 9 154 811

  • Mon-Fri 8am-5pm

Employer Services

Visit the Employer's Website, here you will be able to access a wide variety of information for employers, and have access to the Internet version of the Employer's Orderline.

 

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