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Payslip Headaches?!?

Payslip Headaches?!?

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We use IRIS software as a payroll bureau.

We are running into problems around the dates given on the weekly payslips.

What we would ideally like to see on the payslip is pay date (the date the RTI has to be filed) and the pay period (the weekly period that the payslip covers)

At the moment the date which is given on the payslip is the date for the end of the pay period.

We understand that HMRC will be tightening up so that the date which should be on the payslip is the pay date.

We feel this will be confusing for clients and their employees who expect the payslip to carry the date at the end of the pay period.

Does anyone have any ideas how we can incorporate the Pay Date and Pay Period into the payslip?

What are others doing to work around this situation?

Any advice you can give will be gratefully received.

Adrian.

Replies (16)

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Euan's picture
By Euan MacLennan
13th Feb 2014 15:40

Oh! Dear!

"What we would ideally like to see on the payslip is pay date (the date the RTI has to be filed) and the pay period (the weekly period that the payslip covers)

At the moment the date which is given on the payslip is the date for the end of the pay period.

We understand that HMRC will be tightening up so that the date which should be on the payslip is the pay date."

Not will be tightening up.  It has always been the case that PAYE should be calculated on the (contractual) date of payment of the wages.  Under RTI, which came in for 2013/14 onwards, this is also the date "on or before" which the FPS must be filed.  If I understand you correctly, the PAYE for the payment made on (say) Thursday, 13 February, which is in tax Week 45, is being calculated as if it were on (say) Friday, 7 February, the end of the "pay period", which is in Week 44.  If so, you will have been filing your RTI reports late every week and you do indeed now have the problem of skipping a tax week with no pay in order to change to the correct date for the calculation of PAYE.  If, however, the end of your "pay period" is on Saturday and you pay within the next week, you don't have a problem because tax Week 45 runs from Saturday to Friday, 8 to 14 February.

You must put the (contractual) date of payment as the date on the payslip (and hence, the date which will be checked to see if the RTI report is late).  If you wish to show the end of the "pay period" as well, I can only suggest that you include it as the description of a pay element - for example, "Hours to 07/02/14" - which you will have to amend for each week's payroll.

 

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Replying to Echo1:
By tebthereb
13th Feb 2014 21:09

Payslip issue or RTI issue?

Euan MacLennan wrote:
You must put the (contractual) date of payment as the date on the payslip (and hence, the date which will be checked to see if the RTI report is late). 

I would be interested to see the legislation confirming the date required to be stated on a payslip.

Could you point me in the direction of the legislation confirming the requirement you mention, please?

To be honest when I read the opening query I thought it was a query about how to present a payslip rather than an admission of not operating payroll correctly under RTI.

I think the OP is correct to be saying that RTI  will be tightening up aren't they? As there are no penalties for late submissions at the moment.

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By stratty
13th Feb 2014 16:46

Agreed

I am afraid that Euan is spot on and at first impressions you are processing PAYE a week out of sync with reality.  

This is not an uncommon problem where people misunderstand the fundamentals behind PAYE.

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By Jekyll and Hyde
13th Feb 2014 18:53

just taken on a new client...
... with a similar issue

I had to explain the pay date was not the week ended worked. In the end we agreed that we would include a note on the payslip for week ended worked.

We use payroll manager so it is easy to include a note on the weekly payslips.

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By stratty
14th Feb 2014 10:42

Payment Dates

http://www.hmrc.gov.uk/payerti/reporting/correcting-reports.htm

The payment date has always been the tax point for calculating PAYE

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Euan's picture
By Euan MacLennan
14th Feb 2014 10:55

Legal requirement

The legal right to a payslip "at or before the time at which any payment of wages or salary is made" is set out in s.8 Employment Rights Act 1996.  It doesn't state explicitly that the payslip must show the date of payment, but it follows that the payslip must show the pay date in order to prove compliance with this law.

HMRC may eventually tighten up the enforcement of RTI with the introduction of penalties for late submission of RTI reports, but the point at issue has nothing to do with RTI.  It is, and always has been, a fundamental requirement of operating PAYE to calculate PAYE on the date of payment.

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By gary.ging
14th Feb 2014 11:11

No requirement for date on a payslip

***edit - it looks like Euan posted his reply just as I was writing mine ***

There are two distinct issues here.

Whilst is is very important to make sure that the correct date is used when calculating the amount of tax and NIC to deduct from the payment made to the employee (it should be the date the payment is made), and then use the same date when reporting the payment via the FPS to HMRC, there is no requirement to show any date on a payslip:

http://www.legislation.gov.uk/ukpga/1996/18/part/I/crossheading/right-to-itemised-pay-statement

Having a date on the payslip will make clearer to the employee which period they are being paid for, but there is no definition of what that date should be, if you choose to include one.

Regards

Gary

Sage (UK) Ltd

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By Adrian1975
14th Feb 2014 11:24

2 Issues - Payslip & RTI

Thank you so much for all your replies.  It is really helpful to get some insight into the various ways people have dealt with the problems we have.  I could have been clearer - I think we have an RTI issue and a payslip presentation issue.

I think Euan is right in what he said - we will most likely need to somehow skip a week in the reporting for some weekly payroll clients. We are in discussion with HMRC about the best way to resolve this.

 

As far as the issue of reporting the period that the payslip covers - I don't think the developers have an easy automated work around with IRIS unless anyone can enlighten me further.  It seems a shame that for every payslip produced we will need to think about including a comment - if we want to go ahead and be clear to our clients and their employees what the payslip is covering.

 

 

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By tebthereb
14th Feb 2014 20:25

I agree with Gary.

Euan MacLennan wrote:
The legal right to a payslip "at or before the time at which any payment of wages or salary is made" is set out in s.8 Employment Rights Act 1996.  It doesn't state explicitly that the payslip must show the date of payment, but it follows that the payslip must show the pay date in order to prove compliance with this law.

HMRC may eventually tighten up the enforcement of RTI with the introduction of penalties for late submission of RTI reports, but the point at issue has nothing to do with RTI.  It is, and always has been, a fundamental requirement of operating PAYE to calculate PAYE on the date of payment.

S8(1) ERA 96 doesn't explicitly state that the payslip must show the date of payment because this is not a requirement. Therefore it does not follow at all that putting a date on a payslip proves compliance with S8, or that not putting it on there is indicative of non-compliance.

To comply with S8 you would need to show that you have provided a statement of income at or before the time at which any payment of wages or salary are made. A payslip in itself doesn't prove that at all.

Obviously for the employee's sake it makes sense to have a sensible date on the payslip and that would be the date of payment on there. As far as compliance with the law though the only requirements for what must be on a payslip is at S8(2) ERA 96.

Seems like you hit the nail on the head with the week-skipping point, I didn't see that at all from the OP's comment.

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Replying to jcace:
By tebthereb
27th Feb 2014 22:57

S8

stepurhan wrote:

tebthereb wrote:
Therefore it does not follow at all that putting a date on a payslip proves compliance with S8, or that not putting it on there is indicative of non-compliance.

To comply with S8 you would need to show that you have provided a statement of income at or before the time at which any payment of wages or salary are made. A payslip in itself doesn't prove that at all.

If a payslip showing the date of payment (not required by law but good practice) does not show you provided a statement before payment in compliance of section 8, what would? Granted the payslip on its own technically proves nothing, since you cannot prove when a particular payslip was handed out, but neither would any alternative document. However, a dated payslip can be matched to a dated payment of wages. If the two match, then it is more likely than not that payslips were issued in accordance with s8. With an undated payslip, you have no real way of matching anything.

I suppose a letter or email enclosing/attaching the payslip?

Can't say as I have ever seen or heard of a challenge for failing to comply under S8 - has anyone?

I am not suggesting the payslip should not be dated accurately in practice.

Just that it is factually incorrect to say that a payslip must state a date.

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By Hyprosteps
25th Feb 2014 14:37

RTI 'on or before'

FPS must be sent 'on or before' payment is made. I think I've just realised why a lot of us are having a problem.

We are assuming 'on or before' physical payment is made, but what is actually meant is 'on or before' payroll processing date.

Our employees are paid up to the close of business on Wednesday, pay is processed on Thursday so (when they used to be paid by cheque), they could bank it on a Friday. The payslip has always been dated on the Wednesday, as this is when they are paid up to. Therefore, the FPS will always be late.

I took over doing the payroll, on a computer, nearly 10 years ago. I had no idea, until today, that a payroll week was set days. With the advent of payroll computer programmes, I think a lot of small businesses who now run their own payroll are also unaware and will start to receive fines in 2014-15 because there seems to be an assumption that everybody knows about the payroll week and the dates on the payslip.

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Replying to kestrepo:
Euan's picture
By Euan MacLennan
25th Feb 2014 16:20

No - I don't think you have got the point

Hyprosteps wrote:

I think I've just realised why a lot of us are having a problem.

...

I had no idea, until today, that a payroll week was set days. With the advent of payroll computer programmes, I think a lot of small businesses who now run their own payroll are also unaware and will start to receive fines in 2014-15 because there seems to be an assumption that everybody knows about the payroll week and the dates on the payslip.

The fundamental point is that PAYE should be calculated on the date of payment.  This has always been the case since PAYE was introduced many decades ago and RTI, which was introduced in April 2013, has not changed that - all that RTI is doing in this case is to flush out a basic error.  The payslip date is relevant only because that is the date on which you are telling your payroll software to calculate the PAYE.  You don't need to know about tax weeks - your software will take care of that (but it will usually print the tax week on payroll summaries, if not on the payslips themselves, so it is rather disingenuous to claim not to know about tax weeks).  If a lot of small businesses start to receive fines in 2014-15, it will not be because they do not know about tax weeks - it will be because they are filing their RTI reports after the date on which they have said that payment is being made to their employees.

 

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By Hyprosteps
26th Feb 2014 13:57

Date on payslip

I understand tax weeks (and yes my software does print it on the payslips) what I didn't know was that a tax week ran from Saturday to Friday. But, more to the point, our payslips have always been dated to reflect period paid, not payment date. I understand now that this is incorrect, but I took over payroll from someone else who ran it this way. Also, like many other small businesses I expect, I have had no training other than to learn the software used. While my payroll has always been run within the correct tax week, the small point with large ramifications for RTI regarding the date on the payslip, was unknown to me. I am very pleased to be able to correct this as of this week, but I think a lot of other small businesses will still be in the dark.

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Replying to Ruddles:
Euan's picture
By Euan MacLennan
26th Feb 2014 14:51

Tax weeks

Hyprosteps wrote:

I understand tax weeks (and yes my software does print it on the payslips) what I didn't know was that a tax week ran from Saturday to Friday.

No - you have misunderstood me.  I should have explained that tax weeks are based on dates, not days of the week.  Week 1 is 6th to 12th April and so on.  Week 53 is one day, 5th April, except in leap years when it is two days, 4th & 5th April.

Tax weeks only run from Saturday to Friday in 2013/14 because 6th April 2013 was a Saturday.  In 2014/15, they will run from Sunday (6th April 2014) to Saturday.  In 2015/16, they will run from Monday (6th April 2015) to Sunday.

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RLI
By lionofludesch
26th Feb 2014 14:26

The trouble is ...

.... that's it's not always easy to correct it once you've started doing it wrong.

Depends on the software.

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By Hyprosteps
03rd Mar 2014 09:54

Tax weeks

Thank you for that Euan, I'll go back now make sure that my processing date matches the tax weeks correctly.

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