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Can I set Payroll frequency as I want in HMRC BPT?

I'd like to do my pay with irregular/unusual frequency, and to send zero EPS reports other months

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Hi , I have a small limited company and for the last few years have been paying my salaries in the first 3 months (about 3-4k each of those 3 months - I'm paid around or below the personal allowance for the year) and zero EPS's thereafter to save on making a payment from the company bank account and creating payslips each month (more often than i need or want to). I've set my payroll to monthly as advised is standard and HMRC appear not to allow annual payroll now anyway. This means the software calculates my tax due as if i were paid the same 4k amout every month of the year, and i am due refunds at the end of the year. I'm now using HMRC Basic Payroll Tools (BPT) and theres an option to pay Biannually or Annually, the ''help'' comment says :

Pay frequency - 
Confirm the pay frequency (pay period) that applies to this payment. For example, if this pay covers one week, you should select 'Weekly'.The pay frequency that applies to most of their payments is not relevant here.

Which I would take as meaning I can set this to Biannually one month, and Quarterly the next two, and set my pay accordingly. Is this correct, can I change it for the relevant month? It then seems to calculate the tax due as if the Biannual payment were for 6 months pay and Quarterly for 3 months each, which is what i want. Any isses with doing this , and would HMRC be ok with it? Ta

 

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03rd May 2019 08:17

So you're complicating your life immensely to save on a bit of admin. Your choice of course, but I would question the wisdom of this action.

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03rd May 2019 08:52

Since you're making the monthly submissions anyway, why not submit the same amount each month?

I have no idea why you want to do what you want to do, nor how to do it in HMRC BPT.

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03rd May 2019 09:50

Not many folk on here will use Basic PAYE Tools.

But I agree with stepurhan.

Stop trying to make your life difficult and just run with monthly pay. I take it you're a director, so you'll have an annual pay period anyway. It'll all come out the same over the year.

Basic PAYE Tools is, well, Basic. If you want to do something more off the wall, you'll need better software to deal with it. More cost, no benefit - makes no sense.

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By Hiss
03rd May 2019 15:25

Sure, to explain further - I understand most people wouldn't be bothered about doing a full pay run each month, but although the last few years my company did employ people, I'm now down to just myself. Doing payslips and making bank payments each month is something id rather skip if its easier (i can send teh zero EPS reports if needs be)- its a question of whether it is or could be a problem for HMRC to handle and if im reporting it correctly.

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to Hiss
03rd May 2019 15:38

If it suits you, go for it. Just wondering why

a. Sending an EPS every month is less work than sending an FPS every month
b. Why you feel the need to actually pay yourself every month or, indeed, give yourself a payslip. If you're not bothered, no-one else is. You can always pay yourself later if that's what you want.

But, at the end of the day, it's up to you. No obligation on you to listen to our advice. I've lost count of the number of threads where folk are trying to save work by having annual pay periods and end up tying themselves in knots. At least your thread is a new twist - different pay period every time you pay yourself. Very novel.

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By Hiss
to lionofludesch
03rd May 2019 16:30

Sure, it's because as mentioned the tax is calculated based on it being regular monthly pay -
April - I'm paid 4k gross, i get taxed as if id be paid 4k every month (about 600 quid)
May and June as above
July to next March - zero pay

Which means at the end of the year im due a tax refund I'd rather not do each year, it may bother HMRC too.

The setting in HMRC BPT of BiAnnual payment seems to avoid that whole issue

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to Hiss
03rd May 2019 16:37

Not sure you couldn't solve this more simply by paying yourself £1000 a month.

Up to you, though. Go for it if that's what you want.

Not to mention that paying yourself so much might not be the most tax efficient solution.

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By Hiss
to lionofludesch
03rd May 2019 18:49

In terms of tax efficiency the £12.5k Personal Allowance that was based on the past few years when I was employing a few people and the EA applied. I take it that £8632 is the magic number now since I'm the only employee, the PT/ST for NI?

I'd like to pay myself once or twice ideally, once at the start of the year with the PT/ST amount, and leave the option open for another payment if a decent amount of profit occurs. Given the option in the software says i can pay biannually (or quarterly) it does suggest that thats possible without trouble....

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to Hiss
03rd May 2019 17:18

Hiss wrote:

Sure, it's because as mentioned the tax is calculated based on it being regular monthly pay -
April - I'm paid 4k gross, i get taxed as if id be paid 4k every month (about 600 quid)
May and June as above
July to next March - zero pay

Which means at the end of the year im due a tax refund I'd rather not do each year, it may bother HMRC too.

That's because that is the way PAYE works. You can't calculate tax based on hypothetical future salary (or lack thereof). A little bit of thought should make it obvious why that would be a bad idea.

So your options are

- Stick with your plan, and claim back the overpaid tax after the end of the tax year.

- Report £1,000 per month instead and have no tax deducted to deal with.

Incidentally, there is a separate reason why £12k salary might be a bad idea regardless. Do you know it? If not, what else don't you know? Perhaps time to engage a paid professional?

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to stepurhan
03rd May 2019 17:23

stepurhan wrote:

Incidentally, there is a separate reason why £12k salary might be a bad idea regardless. Do you know it? If not, what else don't you know? Perhaps time to engage a paid professional?

As John Arlott once said about the NZ cricketer Bob Cunis, it's neither one thing nor the other.

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By Hiss
to stepurhan
03rd May 2019 19:57

stepurhan wrote:

Hiss wrote:

Sure, it's because as mentioned the tax is calculated based on it being regular monthly pay -
April - I'm paid 4k gross, i get taxed as if id be paid 4k every month (about 600 quid)
May and June as above
July to next March - zero pay

Which means at the end of the year im due a tax refund I'd rather not do each year, it may bother HMRC too.

That's because that is the way PAYE works. You can't calculate tax based on hypothetical future salary (or lack thereof). A little bit of thought should make it obvious why that would be a bad idea.

So your options are

- Stick with your plan, and claim back the overpaid tax after the end of the tax year.

- Report £1,000 per month instead and have no tax deducted to deal with.

Incidentally, there is a separate reason why £12k salary might be a bad idea regardless. Do you know it? If not, what else don't you know? Perhaps time to engage a paid professional?

Thanks for the response, shame about the condescending bit,

As i've explained there is another option in the HMRC BPT. theres an option to pay Biannually or Annually, the ''help'' comment says :

Pay frequency -
Confirm the pay frequency (pay period) that applies to this payment. For example, if this pay covers one week, you should select 'Weekly'.The pay frequency that applies to most of their payments is not relevant here.

So it suggests I can set a payment to biannual and it doesnt reflect on most of the payments. This prevents me having to claim tax back at the end of the year, no need for the hypothetical constant monthly pay that it assumes.

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to Hiss
03rd May 2019 22:10

Hiss wrote:

So it suggests I can set a payment to biannual and it doesnt reflect on most of the payments. This prevents me having to claim tax back at the end of the year, no need for the hypothetical constant monthly pay that it assumes.

As I said earlier, no need to listen to us.

Why did you ask ?

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03rd May 2019 23:29

condescending
- adjective
- having or showing an attitude of patronizing superiority.

Just so you know.

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