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RTI - all employees below LEL but PAYE scheme

A common question I'm sure but HMRC seem have removed their FAQ's from the website.

I have a small number of clients with 1 or 2 employees paid under LEL and no tax deductions.  However they have a PAYE scheme as in the past they have paid the odd bonus which put them over the LEL for that month so needed to register.

My understanding is that as all under LEL no RTI reporting requirements, BUT do they still need to do monthly nil returns as they have a PAYE scheme?

There is a PAYE scheme number so I assume HMRC expect something from the client under RTI.  If nothing submitted HMRC will look to close the scheme (?) but I don't want them too.

Anyone know the answer to this?

Thanks.

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By jcace
20th Feb 2013 14:08

My understanding is that if a PAYE scheme is required, then details of all payments of wages to employees should be reported.

From HMRC:

Lower paid, temporary, irregular and casual staff

You'll need to report payments to all staff no matter how much you pay them, even those earning below the Lower Earnings Limit or those paid just once a year. So you'll have to enter details of these employees onto your payroll system. Be sure to get their employment status right.

If appropriate, set the irregular payment indicator so HMRC doesn't assume that they've left your employment just because they haven't worked for a while.

(http://www.hmrc.gov.uk/payerti/getting-started/rti.htm)

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20th Feb 2013 14:16

Agree with @jcace

Under RTI all payments (to staff or casual) should be recorded.

If your clients pay any staff you must have a PAYE scheme and therefore must use RTI

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By DMGbus
20th Feb 2013 15:07

No RTI reports if... (all or none!)

As I see it RTI reporting is an "all or none" situation...

EMPLOYER ONE

Runs a pub (partnership husband & wife).

All staff are "casual" have signed P46 to state no other job.

All staff paid below NIC LEL.

Therefore no PAYE scheme required to be operated.

Therefore no RTI reporting.

 

EMPLOYER TWO

Identical circumstances but one of the staff has another job and consequently code BR when working at the pub.

Pub therefore required to operate a PAYE scheme.

As a PAYE scheme is required and operated all wages (even below LEL limits and no tax/nic) have to be reported by RTI.

 

ADVICE TO EMPLOYER ONE: Close your PAYE scheme before 6th April 2013 if you have one.

ADVICE TO EMPLOYER TWO: Do NOT employ any staff who can't state "no other job" on P46, then close PAYE scheme.

ADVICE TO BOTH EMPLOYERS: Do not take any employees on unless each employee is able tocertify "no other job" and be paid below the NIC LEL.

ADVICE TO EVERY EMPLOYER: Change pay frequency to monthly instead of weekly if RTI reporting is required (should reduce HMRC "penalty opportunities" to 12 a year instead of 52 a year); should also reduce admin time / costs.

 

 

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By MGC
20th Feb 2013 15:58

Does no RTI advice apply if low pay staff are Co directors?
I.e. pub above is Ltd Co, husband & wife owner/directors and paid under NI LEL (plus divs).

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20th Feb 2013 16:19

@DMGbus

Not sure if i agree.

I thought that any payments to staff, whatever the level, had to now be reported under RTI.  The exemption for payments under LEL no longer exists.

????

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By DMGbus
20th Feb 2013 16:46

HMRC webpage FAQs - 21 Sept 2012

I made a pdf copy of HMRC's webpage (well, 29 pages actually) in September 2012.

Here we go, exactly (word for word) what HMRC then said [particularly read the last paragraph / final few lines referring to DWP] :

=========================================

Q: Is an employer required to submit RTI returns if they do not currently submit PAYE returns and do not have any employees earning above the Lower Earnings Limit (LEL)?

A: If an employer is operating PAYE then using RTI they will have to tell us about payments of earnings to all employees, even where an

employee earns less than the LEL. This is a change from now, where employers do not have to maintain a P11 if someone earns, for example, £20 a month.

Reporting details of employees earning below LEL is required to:

support Universal Credit which will be based on household income

help ensure people are paying the right amount of tax on their income

Where an employee earns less than the LEL and the income is not required to be reported under PAYE, the individual will be expected to inform DWP of their earnings. As part of Universal Credit, DWP will have alternative processes to collect information about income that is not reported through RTI.

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01st Sep 2013 13:34

PAYE and need for RTI

The following may also be helpful in respect of new employees or existing employees if all the conditions are satisfied:

 

When you need to register for PAYE

As soon as you first employ someone, you will need to register as an employer with HMRC if any of the following is true:

·              you're paying them at or above the PAYE threshold

·              you're paying them at or above the National Insurance Lower  Earnings Limit

·              The employee already has another job

·              they are receiving a state, company or occupational pension

·              you're providing them with employee benefits

You might need to register as an employer even if you're the only person working in your business (perhaps because you're the only director of your limited company). If any of the conditions above apply to you as an employee, you'll need to register - you'll be both the employer and employee.

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What about kiddies?

I am thinking about newsagents paying normal staff under PAYE but also kids for their paper-rounds?

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Paper boys and girls

Steve Holloway wrote:

I am thinking about newsagents paying normal staff under PAYE but also kids for their paper-rounds?

We've had a few newsagents call us asking about our software. They appear to believe that the paperboys should be reported under RTI if the newsagent has a PAYE scheme, and I haven't seen anything in the guidance to contradict that.

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Do they even have NI numbers?

I seem to recall I got mine when I was 16 ... but it was a long time ago! I thought RTI wouldn't work without these?

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No requirement for NI Number

Steve Holloway wrote:

I seem to recall I got mine when I was 16 ... but it was a long time ago! I thought RTI wouldn't work without these?

For a variety of reasons there is no requirement for an NI number when filing RTI.

If RTI filing isn't required for under 16s then it would be nice if there were a written statement of that fact somewhere in the guidance. (Maybe there is, and I haven't noticed it)

EDIT: This thread on AWEB references an HMRC expert saying that they would expect payments to paper boys to be reported (presumably only if the newsagent has a PAYE scheme)

EDIT EDIT: I've sent an email to the HMRC SDS team asking them to pass the question on to the appropriate central authority in HMRC for a definitive ruling on including paper boys in RTI submissions. They usually get back within a few days...

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20th Feb 2013 17:49

under 16s

I recently attended a HMRC course about RTI and they were quite sure that wages paid to under 16 year-olds did not have to be reported under RTI (whether there was a PAYE scheme or not).

 

 

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20th Feb 2013 19:33

Definitive

So is the definitive answer to a company where ALL staff are earning less than the LEL that no reporting under RTI is required?

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All staff earning less than LEL

AJBetts77 wrote:

So is the definitive answer to a company where ALL staff are earning less than the LEL that no reporting under RTI is required?

They should all fill in a P46 and if none tick box C then no PAYE scheme is required. If no PAYE scheme is active then RTI filing is not required.

The moment any one of them ticks box C, or any one of them earns above LEL in any period a PAYE scheme must be created and earnings to ALL employees must be reported, regardless of earnings level.

 

The situation I'm not clear about. What if a PAYE scheme already exists (perhaps because one was required in the past or one was created by mistake when it wasn't needed) but no-one earns above the LEL and they're all P46 A/B cases?

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21st Feb 2013 10:19

That's what the OP was asking

TomMcClelland wrote:

AJBetts77 wrote:

So is the definitive answer to a company where ALL staff are earning less than the LEL that no reporting under RTI is required?

They should all fill in a P46 and if none tick box C then no PAYE scheme is required. If no PAYE scheme is active then RTI filing is not required.

The situation I'm not clear about. What if a PAYE scheme already exists (perhaps because one was required in the past or one was created by mistake when it wasn't needed) but no-one earns above the LEL and they're all P46 A/B cases?

and I think you have answered his question.

Even though there are no employees being paid above the LEL and they do not have other jobs or pensions, the PAYE scheme remains active until it is marked by HMRC for closure.  The OP has a choice - keep the schemes alive and make RTI submissions or close the schemes and apply for a new one if the need arises.

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Definitive answer on Paper Boys

We got back an answer on the Paper Boy/Girl question very rapidly, as the SDS Team has been asked this exact question before:

HMRC wrote:
If the paper boys/girls are under 16 then there is no need to include these on an FPS as they cannot claim Universal Credits.
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21st Feb 2013 15:50

@DMGbus

Thanks for that.  You learn something everyday :-)  This contradicts what Sage have stated!

This thread (and others) highlights the problems facing us.  One person (be it HMRC, software providers etc) state one thing and another something different.

I am still relatively relaxed about RTI but there is certainly scope for some curve balls down the line.

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Thanks for persisting Tom!

Much appreciated!

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27th Feb 2013 12:18

Thanks

I asked for updates to this thread and got no emails so didn't think anyone had replied until I checked today, hence the silence.

Anyway thanks for all your comments.

From what I can gather, and was my understanding of it but wasn't sure, Euan MacLennan is correct in that if there is a scheme you HAVE to do a FPS

If ALL under LEL can be a nil FPS.

But if ONE employee over LEL you have to report ALL employees paid.

 

It just astonishes me that with one month to go these types of questions are still not clarified by HMRC.  There appears to be no FAQ section on HMRC website which could answer these very quickly.

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FPS should include all payments to employees if scheme exists

Mister E wrote:

I asked for updates to this thread and got no emails so didn't think anyone had replied until I checked today, hence the silence.

Anyway thanks for all your comments.

From what I can gather, and was my understanding of it but wasn't sure, Euan MacLennan is correct in that if there is a scheme you HAVE to do a FPS

If ALL under LEL can be a nil FPS.

But if ONE employee over LEL you have to report ALL employees paid.

 

It just astonishes me that with one month to go these types of questions are still not clarified by HMRC.  There appears to be no FAQ section on HMRC website which could answer these very quickly.

Doesn't sound right to me. Firstly there is no such thing as a nil FPS. There could be a nil EPS but it isn't appropriate in a scheme where someone was paid last month. Once there is a PAYE scheme you must report all payments to employees on an FPS, even if no employee reaches LEL.

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27th Feb 2013 13:22

EPS FPS FFS

TomMcClelland wrote:

Mister E wrote:

If ALL under LEL can be a nil FPS.

Doesn't sound right to me. Firstly there is no such thing as a nil FPS. There could be a nil EPS but it isn't appropriate in a scheme where someone was paid last month. Once there is a PAYE scheme you must report all payments to employees on an FPS, even if no employee reaches LEL.

Got my EPS and FPS mixed up!

OK so no employees paid then it is a nil EPS and if applicable set the inactivity signal (or whatever it is called) so HMRC know you have no RTI reporting for the next X months (I think the maximum is 6 months).

I understood that if all below LEL there is no reporting requirements even if a PAYE scheme open.  Sure I read that somewhere, or HMRC told me on a presentation.

Looking at this http://www.hmrc.gov.uk/payerti/getting-started/payroll-summaries.htm seems you are right. But the client is not operating PAYE it's just they have a scheme open for those odd months an employee goes above the limits. 

But this should not really even be a discussion, it should be clear from HMRC guidance which is poor in my opinion.  One month to go I feel there are so many queries and usually I am quite confident about changes like these and how they will work.

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08th Apr 2013 14:09

Answer per Employers Helpline

I've just spoken to an advisor on the employer's helpline and have been told that there is no requirement to report anything whatsoever until an employee earns over the LEL in a period.  From the pay-day which the LEL is exceeded until the end of the tax year every payment made to every employee must be reported under RTI.  This 'resets' from the next tax year.

 

 

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By jcace
08th Apr 2013 14:20

HMRC contradiction?

jjoddiiee wrote:

I've just spoken to an advisor on the employer's helpline and have been told that there is no requirement to report anything whatsoever until an employee earns over the LEL in a period.  From the pay-day which the LEL is exceeded until the end of the tax year every payment made to every employee must be reported under RTI.  This 'resets' from the next tax year.

 

 

Surely this contradicts the advice given on the HMRC website:

"You'll need to report payments to all staff no matter how much you pay them, even those earning below the Lower Earnings Limit or those paid just once a year. So you'll have to enter details of these employees onto your payroll system. Be sure to get their employment status right."

 

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08th Apr 2013 14:29

Well when i attended HMRC's

Well when i attended HMRC's RTI seminar they mentioned that there was no requirement to report if everyone was paid under LEL but they didn't sound too sure about it and advised a few people who were asking for clarification to call the employer's helpline, which is what I've just done.  I kept saying to him 'are you 100% certain about this?' and he assured me that it is the correct advice.  To be fair, once I'd got through the option selection process the phone was answered straight away so it might be good if others can call too and we can compare answers!

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