axis diplomat Payroll User Guide Supplement March 2012

1. Information for axis diplomat 2008 users

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Please Note: The information contained in this Payroll User Guide Supplement applies to both axis diplomat 2008 payroll users and axis diplomat 2010 payroll users.

2. Preparation

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2.1 When Do I Install the Update?

You do not need to install this update until you have completed the final period of the year, however it is safe to install the update at any time.

 

2.2 Employer Bulletin

You are advised to read the February 2012 Issue of the Employer Bulletin which is available for download from the HM Revenue & Customs website.

 

 

2.3 Registering for HMRC's Online Services

To file online using the Internet, don't forget that you must first register and enrol with HMRC Online Services.

 

2.4 Year End Stationery

Ensure you have ordered the required year end stationery.

Supplies are available free of charge from HM Revenue & Customs - please refer to the Employer Orderline 

The available P60 stationery formats are:

Since all employers are now required to file their end of year returns online, P14s are no longer applicable.

NOTE. Since new copies of the stationery are issued every tax year, you should only order sufficient quantities to cover this year.

 

2.5 P45 Stationery

P45 forms are unchanged.

Supplies are available free of charge from HM Revenue & Customs Employer Orderline

The supported formats are:

Please note that AXIS Payroll does not currently support the printing of P45s onto plain paper.   

 

2.6 Week 53 / Week 1

If you pay your employees weekly on a Wednesday or Thursday, this tax year will include a week 53 payment on the 4th or 5th April respectively.

If you pay your employees weekly on a Friday, the final payment will be for week 52 on 30th March and week 1 of the new tax year will be on 6th April. Note: Since this is a Bank Holiday you may elect to make the week 1 payment on the 5th April if required.

3. Installing the Update & Installation Procedure

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3.1 Where Do I Install The Update?

The update must be installed on your AXIS Payroll Server. This will usually be your network server, but a number of axis diplomat Payroll Users run their payrolls on a stand-alone PC.

 

3.2 Installing the Update

Follow the Installation Procedure detailed below.

Please note that you need only install this update once for all axis diplomat Payrolls providing that all payrolls reside on the same machine. Where payrolls are ‘switched’ between ‘home’ and ‘office’, then both machines require the update.

 

3.2.1 Backup First

Ensure that a full backup of the system is taken. Use the 'Copy Data to Full Backup' function to create an archive backup of the payroll data on to removable media. We also strongly recommend that a full backup of the AXIS programs and data is made using a tape backup

 

3.2.2 Installing the Update

You should run the installation procedure from the axis diplomat Payroll server.

4. Year End Procedures

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The AXIS ‘Payroll Year End’ menu can be followed from top to bottom. Please ensure that a FULL SECURITY BACKUP is taken of the payroll data BEFORE installing the axis diplomat Payroll Legislation Update and running the last function ‘Year End Processing’.

Before producing your year end reports and documentation you are advised to review your employee records to ensure they all include the correct National Insurance Number and Date of birth. The ‘Print Employee Details’ function – located on the Employee Record Maintenance menu – will produce a list report of all your employees including their NI number and Date of birth.

Every P14 submitted must include the correct National Insurance number. Your return will be rejected if the P14’s show temporary numbers (‘TN’ plus date of birth and gender). You must change any temporary National Insurance numbers to the correct number before you complete your Return. If you cannot trace the correct number before completing the Return, leave the National Insurance number blank but ensure the date of birth and gender are set correctly. Use ‘010101’ if you cannot get the correct date of birth.

 

4.1 Reports to Run

4.1.1 Print Pay Component Year End Totals

The system will produce a 132 column plain paper report detailing the total amounts accumulated for each pay/deduction component, total PAYE and total NIC. Please read the associated help documentation for further details.

 

4.1.2 N.I.C. Year to Date Report

The system will produce a 132 column plain paper report (based on the NIC section of a P11) detailing N.I. Liable Earnings and N.I. Contributions for each employee on a period by period basis for the frequency selected.

We would advise that the report is kept for a minimum of 3 years, in case of query from HM Revenue & Customs.

Please read the associated help documentation for further details.

 

4.1.3 P.A.Y.E. Tax Year to Date Report

The system will produce a 132 column plain paper report (based on the PAYE section of a P11) detailing Taxable Earnings and Tax Paid for each employee on a period by period basis for the frequency selected.

We would advise that the report is kept for a minimum of 3 years, in case of query from HM Revenue & Customs.

Please read the associated help documentation for further details.

 

4.1.4 Year End Employee Absence Report

The system will produce a 132 column plain paper report with one page per employee showing each day of sickness absence, maternity leave, etc, taken during the year. Both April 2009 and April 2010 are printed for information.

Please read the associated help documentation for further details.

 

4.1.5 P35 Details Report

The system will produce an 80 column employee listing of NIC and tax deductions followed by a summary of payments for the year as required for completion of your ‘P35 - Employer’s Annual Return’.

You will be required to enter/confirm your Employer’s PAYE Reference and HM Revenue & Customs office.

We would advise that a copy of the report is kept on file for a minimum of 3 years in case of query from HM Revenue & Customs.

Please read the associated help documentation for further details.

 

4.2 P60 Print

A P60 must be printed and given to each employee still employed on 5th April.

NB. P14 documents are no longer applicable since end of year returns must be filed online.

Please refer to the Introduction of this supplement for further information on how to order stationery and which formats are available.

The documents are printed in surname order.

Please read the associated help documentation for further details.

 

4.3 End of Year Returns

4.3.1 Create Online EOY Submission File

This function will file the required End of Year Return details ready for subsequent submission to HM Revenue & Customs via the Internet.

You will be asked to select the required return submission type:

A 'Complete' return will include employee P14 details and the associated P35. Hence, this is only appropriate if all your employees are included on the current payroll company and single pay frequency and you are ready to submit your P35 Declaration.

If you operate more than one payroll company or pay frequency for the same PAYE reference you will need to create a 'P14 Part' return submission file for each, i.e. a 'P14 Part' return will only include the employee P14 details for the selected pay frequency.

A single 'P35 Part' return should be created when you have created and successfully filed all the required 'P14 Part' returns and will include the Employer's Annual Return, Declaration and Summary of Payments for all employees, i.e. this option should only be used once using a single selected pay frequency.

When you create a 'Complete' or 'P35 Part' return submission file, an additional screen will appear requesting the details required to complete your 'P35 - Employer's Annual Return'. If you operate more than one pay frequency or payroll for the same PAYE reference you will need to enter the appropriate combined totals from all your ‘P35 Print’ reports.

NB. The P35 includes a box for ‘Tax-free Incentive payment received’. This should only be completed if your PAYE payment record was credited this year with the payment for filing a previous year end return online. It should not be completed if the Incentive was repaid directly to you by cheque.

 

4.3.2 GovTalk – File by Internet

This function handles the actual sending of your end of year return submission file(s) to HM Revenue & Customs and the responses via the Internet.

It may be used anytime up until the filing deadline of 19th May 2012, i.e. this function does not have to be performed before the Year End Processing.

You are advised to avoid the peak online filing times (10:30am to 1:30pm and 2:30pm to 4:00pm Monday to Friday).

If you can use the quieter times - or even at the weekend if it is convenient - you are likely to have a faster filing experience.

You are advised to avoid sending files between 2nd April and 6th April before checking the Service Availability for PAYE.

If the service is busy you may need to ‘Connect’ again in order to receive confirmation that your return has been accepted.

Employer Annual Returns send in parts

HMRC will only send an acceptance or rejection message for a P35 part once it has been married up with all the P14 parts and the Return consolidated. P35 parts received before 6 April will be unaffected by this change. There will be no change to how P14 parts are validated and how acceptance or rejection messages are sent for them.

Remember, your whole Return must be sent by 19 May to avoid a late filing penalty.

HMRC have said that there will be no delay in messages going back to employers once they commence full processing. You also need to be aware of the following occasions when the P35 acceptance or rejection messages following consolidation will not go back immediately:

6 April to full processing – every year HMRC store online Returns and manage the build-up to full processing. This period has traditionally been 10 days to two weeks. The P35 submission status will show at 'At Government Gateway awaiting response'. Once you have received your email confirming that your P35 has been accepted go back into GovTalk File By Internet and connect, you will then receive the status update.

If the P35 part is not the last part received – HMRC will not send a response to the P35 until the outstanding P14 part is received and they have validated the complete Return. For example, where an employer sends the P35 part before their agent has sent the P14 part. HMRC recommend that you always send your P35 part last

HMRC ask that you do not try to re-send your P35 part in these circumstances if you do not get an acceptance or rejection message.

What happens if HMRC reject your Return?

HMRC will reject your P35 if any of the figures do not add up to the corresponding information on the P14 parts. For example, if the total tax paid figure on the P14 part(s) does not add up the total tax paid figure on the P35. They will hold the P14 parts but will treat the P35 as if it has not been received.

Remember, even though HMRC reject the P35, the cause of the error may be in one of your P14 parts. If your P35 is rejected, you must review all the information sent and, if necessary, replace an incorrect P14 part before resubmitting the P35.

Common errors

HMRC have provided details of the most common errors on part Returns.

Duplicate Unique Identifier

Each P14 part must be sent with a Unique Identifier. If you use the same Identifier on two different P14 part submissions before the return is fully consolidated, the second submission received will overwrite the first and HMRC will only have a record of one part received. An acceptance or rejection message will not be sent in response to the P35 in this instance because they will still be expecting a further P14 part.

Incorrect number of parts sent

The P35 must show the number of P14 parts being submitted. This figure must not include either the P35 or the P38A. HMRC will not send a response message for the P35 where the number of parts received does not agree with the number on the P35.

Note: this is the number of 'P14 Part' submission files as opposed to the number of P14s being submitted.

Please read the associated help documentation for further details.

5. Year End Processing

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5.1 Security Back Up

You should now take a Year End Security Copy of all axis diplomat Payroll Data using the 'Copy Data to Full Backup' function and selecting the ‘Retain backup indefinitely’ and 'Archive backup' options.

We would advise you to keep the backup archive for a minimum of 3 years in case of query from HM Revenue & Customs.

This is also important in case there is a problem with your end of year returns.

 

 

5.2 Year End Processing

The system asks for confirmation that a security back up has been taken.

The process then clears all accumulators to zero for the new tax year.

The previous years’ details are retained in the Payroll Payment Archive File.

The increase of 63 will be automatically applied to L suffix tax codes for all active employees, e.g. 747L will be amended to 810L.

Any existing Week 1 / Month 1 tax basis flags will be cleared for active employees so that their tax codes are operated on a cumulative basis from the start of the new tax year.

If you have been operating a Contracted-Out Money Purchase (COMP) pension scheme, any employee with NI category F, G or S will be amended to NI category A, B or J respectively.

6. The New Year

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After the Year End Processing has been completed you are ready to start the first payroll period of the new tax year.

N.B. You may run your first weekly payroll before completing your year end procedures for your monthly payroll.

 

6.1 Tax Code Changes

The standard personal allowance increases from £7475 to £8105.

The code for emergency use with effect from 6th April 2012 changes accordingly to 810L

There is a general uplift of L suffix tax codes by 63. The increment is applied automatically to all existing employees by the 'Year End Processing' routine.

Where you receive a code notification for an individual employee on Form P9(T) to be operated from 6th April 2012, the specified code must be entered after the year end has been run.

Refer to form P9X(2012) for further details.

 

6.2 National Insurance Contributions

Calculate Net Pay will check the tax year / pay date and automatically apply the following earnings thresholds effective from 6th April 2012:

Weekly Monthly Yearly
Lower Earnings Limit £107.00 £464.00 £5,564.00
Secondary Threshold £144.00 £624.00 £7,488.00
Primary Threshold £146.00 £634.00 £7,605.00
Upper Accrual Point £770.00 £3,337.00 £40,040.00
Upper Earnings Limit   £817.00 £3,540.00 £42,475.00

The standard Employee and Employer NI contribution rates are unchanged.

The contracted-out rebate rate has been reduced to 1.4% and 3.4% respectively.

Note: The 'Print Payroll Parameters' function, accessed from the 'Supervisor Functions' menu, may be used to produce a report of the rates applicable to each NI category and band of earnings.

Refer to Employer Help Book E12 for further details.

 

6.3 Statutory Sick Pay

The weekly rate increases from £81.60 to £85.85. 

The appropriate daily rate is determined by the number of qualifying days.

Eg. The daily rate for an employee with five qualifying days increases from £16.32 to £17.17. 

Unless you qualify under the Percentage Threshold Scheme you are not entitled to recover any of the SSP you pay to your employees.

For details of the scheme refer to Employer Help Book E14 and the F1 HELP for the ‘Calculate Monthly Remittance’ function.

 

6.4 Statutory Maternity / Paternity / Adoption Pay

The standard weekly rate increases from £128.73 to £135.45

The amount of SMP / SPP / SAP that may be recovered is unchanged for employers who do not qualify for Small Employers Relief (SER) who can recover 92% of the SMP / SPP / SAP paid to their employees.

Employers who do qualify for Small Employers Relief (SER) can recover 100% of the SMP / SPP / SAP paid to their employees plus NIC compensation of 3%.

A ‘small employer’ is one who paid (or was liable to pay) total gross class 1 NICs of £45,000 or less in the individuals qualifying tax year.

Refer to Employer Help Book E15, Employer Help Book E19 and Employer Help Book E16 for further details. 

 

6.5 Student Loans

The annual threshold for the collection of Student Loans increases from £15,000 to £15,795.

The deduction percentage rate remains unchanged at 9% of earnings above the threshold.

This is relevant to any employers who have received either an SL1 or a P45 with a 'Y' in the 'Continue Student Loan Deductions' box for an employee.

Refer to Employer Help Book E17 for further details.

 

 

6.6 PAYE Income Tax

Calculate Net Pay will automatically apply the appropriate annual tax bands for the tax year / pay date as follows:

2011 - 2012

2012 - 2013

Basic Rate 20% £1 to 35,000 £1 to £34,370
Higher Rate 40% £35,001 to £150,000 £34,371 to £150,000
Additional Rate  50% £150,001 and above £150,001 and above

The new bands for 2012-13 are effective from the first pay day on or after 6th April 2012.

NB. A report of all the current statutory deduction and payment rates can be produced using the ‘Print Payroll Parameters’ function which is located on the Supervisor Functions menu.

Refer to Employer Help Book E12 for further details.