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£624 per month and RTI

What are people out there who pay themselves £624 per month planning to do about RTI? HMRC's Basic Tools is an option but is there an easier / quicker way?

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There appears to be a hole in HMRC's basic design of RTI

The idea was originally that all "earnings / income" would be available to DWP so that the correct amount of Benefit could be paid to an individual. However there are those who say that the involvement of HMRC with the use of the Bacs system has stopped some basic thinking as to how to efficiently operate the system.

The fact that an Individual "earns" an amount of money, be it above or below the limits which HMRC previously and currently consider to be relevant to the PAYE system, is relevant to the payment of State Benefit.

The fact that HMRC do not appear to have covered all the potential situations in which RTI is mandated, is of consern?

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Process

My understanding is:

If anyone in the PAYE scheme needs reporting under RTI, then everyone has to be included in the FPS even those who wouldn't be reportable (on e.g. the P14) at present.

If no-one in the PAYE scheme pays tax or earns above the NI threshold, then there's no reporting requirement under RTI.

When a claim for Universal Credit is made, DWP will check to see if they have earnings data for the person from RTI. If not, they'll be asked to provide evidence of their earnings, as happens at present when claiming benefits.

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RTI

Hold that thought, it may provide some interest in any Penalty discussions in the future?

Worth haveing a look at these two links?

http://www.telegraph.co.uk/finance/budget/9725576/Autumn-Statement-HMRC-seeks-wider-data-gathering-powers.html

http://www.computerweekly.com/news/2240173896/HMRC-admits-RTI-budget-overrun

 and noting that the Cabinet Office Major Projects Authority has given the RTI an Amber Warning, according to the lastest report by the Public Accounts Committee.

I suspect that the bottom line will be - "Sorry but You Done It Rong and there is no Appeal, so just Pay Up !! "

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RTI Reporting

The logic that

"If no-one in the PAYE scheme pays tax or earns above the NI threshold, then there's no reporting requirement under RTI."

would seem to defeat the base logic of the ability of DWP to ensure, via the HMRC PAYE system, that State Benefits are paid correctly.

It is perfectly acceptable to have one PAYE scheme where some employees are above a threshold and some below, and then proceed to set up another new PAYE scheme, transferring all those below the threshold into the new PAYE scheme, thereby avoiding RTI Reporting. Not what was intended?

The idea that a very costly national system is introduced, but there are siuations where DWP operate as they have done in the past, would seem to indicate a failure in analysis and understanding of Business Process?

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Multiple schemes

You possibly could set up a separate scheme to hold those below the threshold, but what would be the point? Just to make it harder for some of your employees to claim Universal Credit? The strategy would be risky anyway, because as soon as HMRC issued a K, 0T or BR tax code to anyone in the "below threshold" scheme, you'd have to start sending RTI details for everyone in the scheme (or find an excuse to transfer the individual to the other scheme). It all looks like extra work for no benefit.

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Isn't a FPS required for any payment?

My understanding is that when any employee/officer is paid any form of earnings, then details of that payment must be submitted to HMRC.

So, if a business had one employee who was paid below all tax/NI thresholds for a year, a FPS is still required to be submitted to HMRC 'on or before' each payment is made.

It is the payment to an emploee that is reportable, not payment of NI/tax.

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RTI

Chris Floyd wrote:

My understanding is that when any employee/officer is paid any form of earnings, then details of that payment must be submitted to HMRC.

So, if a business had one employee who was paid below all tax/NI thresholds for a year, a FPS is still required to be submitted to HMRC 'on or before' each payment is made.

It is the payment to an emploee that is reportable, not payment of NI/tax.

The rule is as stated above all employees below the threshold no payroll scheme is requied and no RTI submission required

1 employee above the threshold payroll a scheme is required and so is RTI

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Multiple schemes

If you are a Limited Company you cant have more that one PAYE scheme. Iassume that this will also apply to Sole Traders and Partnerships

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Horse's mouth

I attended a seminar at HMRC's office in Aberdeen last week.  It was confirmed that employers of the "1-man-band" variety were obliged to report each and every payment of £624.  (Remember, in any case such employers must have an employer's reference and must rerport the £624 payments in order to ensure the director(s) have a full history for state pension puropses.) 

I asked about the "contracted hours" box and the fact that we'd have to return nil.  The HMRC advisor (a very experienced officer) agreed that the salary would be £624 and that the hours would be nil - so as to avoid a problem under NMW - but she did say that she did not know what, if anything, would be done about the apparent discrepancy (ie someone appearing to be paid for no hours' work in the month). 

Does anyone have any feed back from being in the pilot?

   

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Maidstone HMRC Seminar

I was advised at this seminar to put Director's who earn salary as an office holder in the Other category - there isn't a Nil category.

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Maidstone HMRC Seminar - part 2

One participant asked about two schemes - one where everyone was below the Lower Earnings Limit and one where everyone bar one was below.  I suspect he has a lot of fruit pickers being in Kent!  The first scheme didn't require RTI and the second did for all employees.  This surely makes a nonsense of RTI.

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separate PAYE schemes

A separate PAYE scheme might be suitable for genuine casual workers, and perhaps for those under age 16 (e.g. newspaper delivery boys/girls; those who work just saturdays in hairdressing/ etc)?

Personally I can't see this 'loophole' surviving for long.

 

 

 

 

 

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RTI has no connection with NMW

I keep seeing concern about reporting RTI hours and pay which won't tie up for NMW analysis and I'm not sure where that concern is coming from.

So far as I am aware there are no plans to monitor submissions for NMW compliance, and it wouldn't make any sense for HMRC or DWP to try. The data collected isn't useful for that purpose anyway because the hours worked bandings are far too vague to simply allow the pay to be divided by hours worked. The purpose of collecting the hours worked is for the 16hr benefit entitlements cap. Hence the 16 hr banding.

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RTI - Hours worked relevance - UC, WTC, CTC

It is my understanding that Universal Credit (UC) replaces Working Tax Credits (WTC) and Child Tax Credits (CTC).

There are thresholds for levels of award for WTC and CTC, ie. 16 hours and 30 hours.

RTI appears to use bands based on these hours worked thresholds.

So, are we expecting to see directors to cease to qualify for the UC because "nil hours" worked are declared by their payroll advisors?

 

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What software to use?

I think the original question was in part about what software to use and perhaps the frequency for the £624 per month Director.

Personally I don't particularly want to press the payroll button every month X number of one man band payrolls. It would be much easier to set it all up at £624 per month in advance and let the software take the strain each month!

Anybody know of such software?

 

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Automatic threshold RTI filing...

rboggon.yahoo.co.uk wrote:

I think the original question was in part about what software to use and perhaps the frequency for the £624 per month Director.

Personally I don't particularly want to press the payroll button every month X number of one man band payrolls. It would be much easier to set it all up at £624 per month in advance and let the software take the strain each month!

Anybody know of such software?

 

We plan to have a "Robot" feature so you can do all your threshold/invariant filings each month with a single click.

I understand that Moneysoft intends something along the same lines.

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