PAYE and NIC Flashcards
payments in kind surrendable to cash
subject to PAYE (e.g premium bonds)
readily convertible assets
subject to PAYE e.g quoted shares, and assets for which a trading arrangement to exist (e.g employer has already organised for it to be sold)
when must excess PAYE be collected (PAYE not paid)?
within 90 days of end of tax year otherwise=benefit
what benefits cant be payrolled?
living accommodation and beneficial loans
what is the max tax that can be deducted under PAYE?
50% of that payment BUT does not apply when tax being deducted in respect of readily convertible assets (can be reduced to nil in that case)
what is a form p2
detailed breakdown of tax code for EE
what is a K code?
a negative code= benefits are greater than personal allowances. this increases taxable pay. REMEMBER TO DEDUCT 1 WHEN COMING TO THE CODE!!
notification of incorrect tax code?
by letter, email or telephone
what is used to report PAYE info to hmrc?
RTI
how is an RTI submitted
FPS- all ee’s even is earn <LEL (if all ee’s <LEL then dont have to do it)
when is FPS submitted
on or before date of payments. for readily convertible assets this should be no later than 14 days after end of tax month.
when is PAYE due
19th of each month (not electronic)
22nd of each month (electronic)
if employer has >250 ee’s…
mandatory to submitted PAYE electronically.
if total paye payment <1500 pm on average
can pay quarterly
what is a form p60
must be provided to ee’s by 31 may following tax yr
what form is given when ee’s leave?
P45
if a new starter has had another job but no P45….
employer will operate an emergency code on a non-cumulative basis
when a business first has an ee who has to paye PAYE…
they need to register with HMRC online
what does an FPS report?
details of payments made to employees
penalty for failing to pay PAYE?
-1st default-no penalty
2nd, 3rd default-penalty is 1% of amount paid late
4th,5th,6th default-2% of amount paid late
7th,8th,9th-3%
10th default and beyond-4%
if amount unpaid after 6 months- further 5% penalties applied
further 5% if amounts unpaid 12 months after
NOT PENALTIES FOR TIME TO PAY ARRANGEMENT
when should late payment penalties be made?
30 days after, or will be charged interest
if FPS or EPS is submitted late?
-not for 1st month late
-new er not charged penalty if first ever FPS submitted late (provided filed within 30 days)
-no penalty charged if FPS submitted 3 days after payment date (unless this becomes persistent)
late filing penalty: 1-9
100
late filing: 10-49
200
late filing 50-249
300
late filing 250+
400
if a return is 3 months late
further penalty of 5% tax and NIC (only in most serious cases)
example of reasonable excuse?
death of close EE and ill health
what is the p11d filing penalty?
£300 per form and in addition HMRC can charge £60 per day for continued failure
if an incorrect p11d is filed fraudulently or negligently….
penalty of up to 3,000 per form can be levied
FPS additional penalties
those behaviour penalties which are tested on revision cards elsewhere
how can an underpayment of PAYE be collected if PAYE operated incorrectly?
via a regulation 80 determination (becomes final if not appealed within 30 days)
payments which can be surrendered for cash…
subject to class 1 NIC
payments of readily convertible assets
subject to class 1 NIC
settlements of employee personal liability
not earnings for PAYE (go on P11D)
But is earnings for class1 NIC
pecuniary liability
vouchers
except childcare vouchers, always earnings for NIC
excess reimbursement of mileage
earnings for NIC
but not PAYE on earnings (put on P11D)
when do NIC contirbutions start
16
what is the current pensionable age
66
how is NIC calculated?
On earning periods- i.e monthly
how is NIC calculated for directors?
annually
is there an upper age limit for ER NIC contributions?
NO
for ee’s and directors under the age of 21…
NIC sec contributions are reduced to 0% on earnings between secondary and upper secondary threshold. they are 15.05% thereafter.
armed forces veterans and NIC
0% rate up to the upper sec threshold for ER NI, for first 12 months of civilian employment. (if they change jobs during this period then the new ER will get the 0% for the remaining out of the 12months)
free port tax site NIC?
0% rate applied up to the freeport upper secondary threshold of 25k
what is the employment allowance?
5000 (cannot be carried forward). class 1 NIC in prior tax year must be <£100,000 (if group companies, needs to be <100,000 for the group and only one co in the group can claim)
de minimis state aid and employment allowance
employment allowance cannot be claimed if state aid threshold for relevant sector would be exceeded
when can er allowance for NIC not be claimed?
-if all payments in the year are to 1 ee who is also a director (so one many companies cant get the allowance)
-for ee’s who are employed for purposes connected with er’s personal, family or household affairs (e.g nanny or housekeeper). BUT can claim for support/care worked who care for themselves or others.
-public authorities/businesses who work >50% of time for public sector/work of a public nature
who does the annual maximum for NIC purposes apply to?
People with more than 1 job- to see if NIC refund is due
what can taxpayers apply for if they know they will exceed the annual maximum?
deferment (need to be able to demonstrte that they willbe due a refund). should apply as soon as possible before the start of the day year, but it is acceptable until the end of the year.
what will the employee continue to pay when NIC deferred?
3.25% NIC on earnings in excess of primary thresholds
ER NIC for directors?
also cumulative (as well as EE NIC) BUT can deduct NIC’s monthly but then at year end compare NIC paid to calc with annual limits
ER NIC for directors if a bonus is paid
if they do it monthly then it might result in lots being payable at YE, so could swap to annual method. BUT then need to do annual earnings for the rest of the period
when are bonuses NICable
When made AVAILABLE to director
penaltys for late payment of class 1a and 1b?
30 days late-5%
>5 months after first penalty=5%
>11 months after first penalty= 5%
filing penalty for P11Db
£100 per month for each 50 ee’s
