How do you document salaries with no PAYE scheme?

How do you document salaries with no PAYE scheme?

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A client employs his wife and pays her under the LEL so <£111 a week and has not issued payslips.  There is a PAYE reference for CIS but no payroll scheme as no other employees. 

The wife requires documentation for mortgage lender so how do I create a payslip with no payroll scheme?  I could manually prepare one with no PAYE reference or could I use the CIS reference even though the PAYE scheme is not operational?

If she was paid between £111 but less than £153 then I understand a scheme and RTI submissions would be required - could someone enlighten me as to why a scheme is required between these limits if no NI  due? 

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By onicholson
13th Feb 2015 13:42

No PAYE reference

You can produce a payslip without a PAYE reference. As long as it breaks down gross, deductions (none applicable here) and net, it's a payslip. You probably want to do more than that to make it look reasonable for the bank but the lack of PAYE reference isn't a problem.

Pay above the LEL is counted towards benefits like the state pension and must be reported to HMRC so that the correct benefits are accrued. An employee with a second job needs to be reported to ensure that the employee is paying the correct deductions (tax) across all of their employments. Reporting payroll means having a PAYE scheme.

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Euan's picture
By Euan MacLennan
13th Feb 2015 13:44

No problem

Presumably, the client has an XP PAYE scheme.  If not, RTI reports would need to be filed for the wife's wages, regardless of them being below the NI LEL.

Payslips do not usually show and certainly, do not need to show, the PAYE reference, so just produce one with YTD figures for the benefit of the mortgage lender.

Anyone paid between the NI LEL (£111 a week) and the primary contribution threshold (£153 a week) is treated as having paid NI contributions at zero rate, so that they establish a qualifying year for the state pension and other benefits.  HMRC would not know this if RTI reports are not submitted.

 

 

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RLI
By lionofludesch
13th Feb 2015 14:06

Manual Payslips

I've had a lender reject a manual payslip as evidence of earnings in the past.  At the end of the day, it's up to them to decide what information they require, I suppose.

As regards the PAYE reference, drifting away from the thread a bit, but my clients' payslips do show the PAYE reference.  It's not required, but it doesn't half cut down the number of calls I field from clients' employees, asking what their PAYE reference is.

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By Minnie136
13th Feb 2015 14:08

Thanks now I recall the difference in the limits.  I expect she claims child benefit so qualifies for state pension.

I am now thinking that £10k would be the optimal amount so may recommend that (if can be justified by her services) and then register scheme and claim employment allowance this year. They will have to pay me a small fee for running payroll tho.

However if she is paid £5,771 then any idea how to create a payslip in Moneysoft with no payroll scheme?  Obviously I would not be making RTI submissions so it is just to get a payslip to send to the bank.

 

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Replying to Accountant in London:
RLI
By lionofludesch
13th Feb 2015 14:21

Assumptions

Minnie136 wrote:

Thanks now I recall the difference in the limits.  I expect she claims child benefit so qualifies for state pension.

I am now thinking that £10k would be the optimal amount so may recommend that (if can be justified by her services) and then register scheme and claim employment allowance this year. They will have to pay me a small fee for running payroll tho.

However if she is paid £5,771 then any idea how to create a payslip in Moneysoft with no payroll scheme?  Obviously I would not be making RTI submissions so it is just to get a payslip to send to the bank.

Couple of assumptions in there !! You "expect she claims child benefit"?  And there's probably a long way to go before she qualifies for a pension - 35 fully paid years ??

But I don't think there's a problem with Moneysoft.  You may have to make up a dummy tax reference - just don't try to file RTI or include it on the payslip.

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By Minnie136
13th Feb 2015 14:16

XP PAYE scheme

Sorry Euan I did not reply to your question on the type of PAYE scheme.  They do their own CIS returns. I assume it is this kind of scheme since it dates pre-RTI and they don't seem to have received any RTI chasers.

I am not the tax agent for CIS so will not be able to speak to HMRC about it.

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By Minnie136
13th Feb 2015 14:43

Lion

I do not understand why you are picking me up on my assumption.

It is the client's decision not to have a PAYE scheme. I actually sent the client advice last year on child benefit and tax credits. If she gets a full contribution each year through CB then why would I recommend the added burden and fees of a PAYE scheme?  I thought that was sufficient.

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Replying to Wilson Philips:
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By lionofludesch
13th Feb 2015 15:11

Fine

Minnie136 wrote:

I do not understand why you are picking me up on my assumption.

It is the client's decision not to have a PAYE scheme. I actually sent the client advice last year on child benefit and tax credits. If she gets a full contribution each year through CB then why would I recommend the added burden and fees of a PAYE scheme?  I thought that was sufficient.

No problem.  Not germane to your original query anyway.

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By kealy
13th Feb 2015 14:56

You need to make sure what you put on the payslips reflects what goes into her bank account as lenders do now check this.  

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By pauljohnston
17th Feb 2015 15:28

using Moneysoft

This will cause you no problems there is even a box to tick for no rti submissions.

Just creatre the payroll as any other and leave the reference boxes blank.  We have a number of clients who pay his or spouse this way.

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RLI
By lionofludesch
17th Feb 2015 15:32

Your problem

As we said on Friday, Moneysoft will cover it.

Your problem might well be that the lender asks for a PAYE reference.

Which you don't have.

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