help needed with rti paye please

help needed with rti paye please

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Hi, I am a small business with hopefully two employees by next week.  One is a 17 year old who works part time in post office and the other is still at school studying for GCSE's.  Neither will work more than 5 hours per week for me.  As the 17 year old has another job, I know I have to set up RTI paye, which is fine.  I have been advised that I need to deduct 20% tax from the 17 year olds pay and set up paye code BR.  My question now is, as she is 17 (which I hadn't mentioned previously), do I still need to deduct the tax from her pay and also do I deduct tax from the employee who is still at school.  My job will be the only job she has, but I understand that I will also need to declare her on PAYE and any other employees I take on in the future.  Would be grateful for advice please.  I have starter checklist form completed from both of them.  Thanks.

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Euan's picture
By Euan MacLennan
23rd Sep 2014 18:28

Yes & No

Yes - I wish I was 17, but youngsters are not exempt from paying tax if they are on PAYE code BR.

No - If the one still at school has ticked Statement A on her Starter Checklist, her PAYE code is 1000L on a cumulative basis, and if she has ticked Statement B, her code is 1000L Week 1.  As the tax-free limit is £192 a week on 1000L, she will only pay tax if you are paying her very generously for her 5 hours.  As you have one employee for whom you are obliged to have a PAYE scheme, you must submit RTI reports including all your employees.

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By Carolynne
23rd Sep 2014 19:24

Remember

Hi,  remember that the employee still at school is exempt from paying NIC, and there is usually something you tick in your software to apply this factor, so it doesn’t deduct any.

 

I have faced the split tax code many times, and find it is much easier with the employee in the office with you. 

 

I tell HMRC I am the employer, and I have an employee who is going to give them permission to speak to me, I let them go through all the usual personal checks with the employee, then I ask them if they can split the tax code. 

 

For example if at the post office the employee will earn a lot more than in your job, you don't necessarily have to have a 50/50 split.  The employee can decide how much of the personal allowance to give to each job.

 

If at any time, your employee with 2 jobs, leaves, and you are down to just one who only works for you and earns under the NIC threshold.  You have no need to hold a PAYE scheme in the next year, and can close it down to save all the extra work

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By Marion Hayes
24th Sep 2014 11:44

@Carolynne

You say that school children are exempt from NIC - I have not heard of this and despite looking now can find no back up for your statement.

As far as I am aware NIC starts with your 16th birthday.

Please can you clarify your source of this information?

Thanks

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Euan's picture
By Euan MacLennan
24th Sep 2014 12:13

Students

Where students are required to do some real work as part of their educational course, they are not regarded as under a contract of service with the provider of the work and would therefore not be subject to NI contributions.

However, there is no such exemption for a student taking on a part-time job unconnected with their course.  NI contributions are payable by anyone over 16 under the general provisions of s. 6(1) SSCBA 1992.

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By Carolynne
24th Sep 2014 12:14

Ambiguous

Hi, I am sorry to have given an ambiguous response, I omitted to mention that I meant school children under aged 16, thank you for mentioning this Marion.

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