How many weeks can we pay emp'ee prior to receipt of PAYE reference?

How many weeks can we pay emp'ee prior to...

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HMRC - "Prior to receiving your PAYE reference number, you should still pay your employees"

My wife WAS the sole employee to 31/03/2013 and then stopped having been paid £4,700 that tax year.

We are resuscitating her employment and have registered and have been advised to pay employee while waiting for PAYE reference number.

How many weeks can we pay her prior to receipt of paye reference?

Is anything payable if she is paid £150 per week?

Are we going to get into trouble at all for any payroll issues bearing in mind my wife as director was sole director and paid £4700 until 31/03/2013?

Do you have to record weekly director's pay going forward or can it be monthly on HMRC payroll system?

Replies (13)

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By Gary Hornby
18th Feb 2015 20:38

How long ago did you apply?
I registered a client last Friday and received the scheme references by post today - so 5 days!

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By DMGbus
18th Feb 2015 21:03

HMRC guidance, c 17th September 2014

HMRC's guidance on penalties under RTI said the following:

We will not issue a penalty to a new PAYE scheme if their first FPS is received within 30 days of making the first payment to their employee(s). But after that, normal penalties rules will apply if there is a failure to file or file on time.

Aside from the above is the question "is a PAYE scheme necessary?" The answer depends upon a number of factors such as does the employee receive a pension or wages from another employment + what is the level of pay.   The suggested £150 per week requires a PAYE scheme whereas a figure of £110.99 per week or less (2014/15) would not (provided no pension income +  other job).

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By DMGbus
18th Feb 2015 21:02

Small employer easement

We will not charge a penalty for the first month in each tax year where you failed to file on time, the required number of times or at all. So we can charge a maximum of 11 penalties for late/non filing in a tax year. This won’t apply to the March 2015 tax month for schemes with fewer than 50 employees, which will incur a penalty if they file late for Month 12.

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RLI
By lionofludesch
19th Feb 2015 08:25

Reasonable Excuse

If HMRC don't send you a PAYE reference, it's not your fault that you're not filing RTI.

I'd be comfortable with paying her indefinitely (though there comes a point when you need to chase it up).

However, the likelihood is that you'll get the PAYE reference after a couple of weeks at most.

Adding to DMG's comments, yes, keeping her below £111 a week will save you having to register, but paying her £150 will earn her a free pension for no more than a few minutes work a week.

Or - pay her monthly to cut down the work.

All this assumes that - as David Ginola would say - she's worth it.

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By [email protected]
19th Feb 2015 09:15

   Payroo

 

Is      Basic PAYE tools is just that...basic tools to run a PAYE scheme      a system?

Would you recommend it?    Does it do monthly?

How about Payroo or the HMRC system please?

 

Supposing I pay another new employee - myself, who has used up personal allowance, £150 per week and place the lot into a personal pension - free state pension and no tax or nic? 

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Replying to Abbypayroll:
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By [email protected]
19th Feb 2015 12:32

Not sure what you mean

 

I am earning more than my allowance in personal pension.   My wife is not.

I have done over 31 years but not 35 for state pension.

My proposal is that my wife earns in a new business and I also but that I earn £150 pw and pay into pension which means I make up the state pension shortfall and I save on tax effectively because when I "cash" the pension I get 25% tax-free?

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RLI
By lionofludesch
19th Feb 2015 10:51

Basic PAYE tools will do monthly, so it will.

My issue with it was I needed something that'll do more than 9 employees so never looked at the wages calculation side of it too hard.

It was good for form filing, pre-RTI. P14, P60, P45, P46, P11d, P35 - did all those on it, maybe more, I can't remember. Never had a problem.

Occasionally still use it for clients who do their own payroll, but not often.

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By DMGbus
19th Feb 2015 09:40

Easiest to use free payroll software

I have hands on experience of using five different payroll software products (incl Basic Tools, Moneysoft, 12 Pay, Brightpay and Pegasus Opera).   I have seen the interface and problems with a sixth payroll product (An IRIS owned online product that lacked an EPS filing facility in the free version for CIS deductions sufferred on income).

Brightpay won hands down in terms of ease of use, speed of use and quality of support.

There is a free version available that handles a very small number of employees (at least 2 maybe 3 or 4 employees)...

https://www.brightpay.co.uk/

Support was found to be very poor with Moneysoft and Basic Tools.

Reliability has been poor with Basic Tools.

(I have seen reports of poor support for Payroo but having not used it myself can't say if these reports are valid or not).

I have seen some reports that Brightpay's Automatic Enrolment abilities are superior to those of Moneysoft.

Basic Tools lacks certain reporting abilities (eg. Summaries and payslips).

The only downside with Brightpay was lack of CIS module (but this may have recently changed).   

I will mention a further payroll software - a Sage product, currently a client has problems with this - lack of flexibility to put right past errors (and all Sage support could offer was the instruction to re-run 47 weeks payroll - yes re-input 47 weeks variable pay - where a client had used the wrong NI  table for one employee).  At least one alternative payroll software has the option to "re-open payslips" to go back and make corrections to individual (rather than all employees) payslips.

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RLI
By lionofludesch
19th Feb 2015 12:46

Financial Advice

Well, I can't comment on investments.

But if you're just wanting to make up those other four years, yes - get a job for at least £111 a week or monthly equivalent. Update that £111 every year.  What you do with your net pay is up to you and largely irrelevant to your state pension.

What is your role in the business ?  Is your work worth £111 a week ?   If not, your employer may not get tax relief for your wage.

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RLI
By lionofludesch
19th Feb 2015 12:50

On the other hand

If you're saying that the company will pay you £150 a week in company pension contributions and no real notes-and-coin cash, no, that won't work.  They wouldn't count for NI, so you wouldn't pay any contributions and you wouldn't get those missing four years' pension.

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Replying to Roland195:
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By dnicholson
19th Feb 2015 16:20

Accountant

<a href="mailto:[email protected]">[email protected]</a> wrote:

 

Supposing I get £111 salary per week from the company and get taxed paye and then invest £111 into a pension - I recover the tax and get the four years I require for state pension?

At this point I'd say supposing you get an accountant :)

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Replying to fawltybasil2575:
RLI
By lionofludesch
19th Feb 2015 16:36

Indeed

dnicholson wrote:

<a href="mailto:[email protected]">[email protected]</a> wrote:

Supposing I get £111 salary per week from the company and get taxed paye and then invest £111 into a pension - I recover the tax and get the four years I require for state pension?

At this point I'd say supposing you get an accountant :)

<chuckle>

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RLI
By lionofludesch
19th Feb 2015 16:09

Again, that's not how it works.

You'd have £22.20 tax deducted (assuming you were on a flat 20% tax), get £88.80 net, pay the £88.80 to PensionCo, and they'd reclaim the £22.20 for your pension pot.

You - personally - don't recover any tax.

You get a credit for your state pension - if you do it all tax year - just by getting paid. No need to pay into a pension plan.  That's an entirely separate decision which you should discuss with a Financial Adviser.

All numbers revised from 6 April next..........

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