Help!
A client has been paying someone since April last year (she is definately classed as an employee) and has only just informed us of this.
I have set up a PAYE scheme and need to make the first submission. My problem is, if I include all the payments to date (£7k) as it is all going in one month, this exceeds the NIC limits and there is a sizeable payment to make although if the payments had been correctly spaced out throughout the year, it would not have exceeded it yet.
I have a rough estimate of what the payments will be in Feb and March and although they is not expected to be any PAYE there should be a few hundred pounds of NIC payable.
The employee has not had any other employments in the year, but in order to get the year to date figures correct for them for PAYE and NIC purposes, should I enter a P45 using this company's PAYE ref up to 31/12/13 and then the payment for January 2014 can be submitted by 5 Feb (under the small employers concession which I think is only for 2013/14) and then submit the correct feb and mar payments?
If I dont enter the salary to 31/12/13 then the NIC which would become payable in March isnt going to.
I hope this makes sense and lesson learnt - no payroll clients!
Many thanks for any advice
Chicka
Replies (6)
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Hand off to payroll specialist
Your suggested solutions are worse than the problem. You clearly are well out of your comfort zone in dealing with PAYE. Get someone who knows what they are doing to deal with it.
Just to cover immediate issues. You should not put all the wages in one period, as they have clearly not been paid in one period. You cannot enter a P45 using the company's PAYE reference as that would be falsely stating they had a previous employment. This goes double since you were intending to use the company's PAYE reference, meaning they still should have been reported historically anyway.
The other lesson to be learned is, make it clear up-front to your clients what information you need from them for PAYE. If you did, hopefully in writing, then this is their problem for not listening to you.
At least there are no penalties for RTI this year.
Will your software allow you to back date and report actual payroll for the correct months.
I have had a similar thing and I ran each month and got up to date. Thus no NI issue, yes late returns but no fines at the moment.
Either
Calculate it manually and stick in the actual proper year to date values or re run the payroll to take into account this new employee.
use the right tax code
Also make sure you follow the procedures for selecting the tax code for a new employee correctly. Don't assume what the tax code is.
Brightpay (FREE SOFTWARE) can sort this.
I've just had to help a client in this situation.
I installed the free Brightpay software.
I entered the past 11 months salary (one amount per month).
Brightpay generated the necessary FPS reports (one per month) and they have (yesterday) been filed all in one session sitting in front of the computer.
Fortunately no penalties this current tax year.
I expect that any other good payroll software could do the same as Brightpay. HMRC's own payroll product (also free) lacks certain functionality so I would not be surprised if it lacks the required ability to run a payroll for months already passed.
Brightpay is free only for a small payroll (from memory either less than 4 or less than 6 employees).
12pay also has a free option (greater number of employees than Brightpay in the free version).
Alternatively pay maybe £ 100 or more for other software options - or several hundred pounds to an accountant or bookkeeper.
So can Moneysoft
... but in a simpler way.
Just enter the gross monthly pay in Month 1 (April 2013) and click on the button to copy it to all subsequent periods. File an FPS today for Month 10 (January), but make sure to change the pay date to 4th (or 5th) February to avoid the RTI report being after the stated date of payment. The FPS will report not only the figures for the current month (10), but also the YTD figures.
Job done!
If you don't do payroll and don't want to pay £100 to acquire the software to run multiple payrolls, pass it on to someone who is already handling payrolls.