I have a new client, who has an apprentice - the only employee. Apprentice started mid Sept 15, earning over LEL.
There is a PAYE scheme, but nothing has been reported thus far.
Any idea of potential penalties would be appreciated.
Thanks,
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PAYE due?
Were the earnings sufficiently over the LEL to require NIC? I am assuming that this is the apprentice's only job, so no tax would have been due below the NIC thresholds.
Bring it up to date. Penalties may be capped at £100 because:
30 day lead time for new PAYE scheme
No penalty for a first offence
Misunderstanding
The LEL is £112 a week (£486 a month). The threshold at which employee's NICs become payable is £155 a week (£672 a month). If his earnings have "crept" over the LEL, no NICs are payable and no PAYE would be due. If he is being paid the NMW for an apprentice, his earnings would be £132 for a 40 hour week, which is a bit more than just crept over the LEL.
If his pay has not exceeded the NIC threshold in any pay period, no PAYE would be due and HMRC may well not charge any penalty. Rather than going back and filing FPSs for every month (or every week if paid weekly) since mid Sept 2015 (which would give HMRC opportunity to penalise every late submission), I would just file an FPS for January which will update the YTD figures.
However, I agree that there is nothing to be gained by further delay. Just bring it up to date.
NMW increase = RTI fines?
I have had two enquiries in the last few weeks along these lines. When the apprentice minimum wage went up to £3.30 in October it meant apprentices would only need to work 34 hours to go over the LEL, not 40+ hours as previously. This makes me think this might be quite a widespread issue, and by April the fines could be substantial if handled wrongly.
I have prepared an FPS as suggested by Euan, but it doesn't show the year to date figures I have entered when setting up the employee. I am using BrightPay. Normally these figures would be from a P45, would therefore have been previously reported to HMRC and would only be of use to calculate tax due. Another scenario is that the year to date figures were wages below the LEL. Does it matter if the YTD figures don't get reported as long as the tax is right? The weekly NI will be right anyway. It seems a little harsh to incur hundreds of pounds of fines by complying with the NMW.
YTD figures are included
I have prepared an FPS as suggested by Euan, but it doesn't show the year to date figures I have entered when setting up the employee. I am using BrightPay.
The specification of what needs to be reported in an FPS includes the YTD pay and tax, so even if they are not printed on Brightpay's FPS report (and they are certainly not on the Moneysoft FPS report), they are probably included in the XML file actually sent to HMRC (they certainly are with Moneysoft).
Have you just set this scheme up for the year 15/16. If so, in Brightpay you can do a mid year start & you have the opportunity of a mid year start where you can insert the YTD figures. Then your first FPS will show YTD. Brightpay badvisors would put you on the right track if you are struggling .
Thanks
To both Euan and NYB - the end result would be the same with either method I think (?)
RTI
To both Euan and NYB - the end result would be the same with either method I think (?)
I think so