axis payroll User Guide Supplement March 2016

1. What's New?

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1.1 axis diplomat Payroll and RTI

The March 2016 axis diplomat Payroll Legislation Update includes all of the required software changes to meet the latest requirements for RTI.

Please ensure you read the whole of the axis diplomat Payroll User Guide Supplement March 2016 prior to installing the update and running your year end procedures.
 

1.2 2015-16 Tax Year End and RTI?

All employers were required to report PAYE in real time from the first payday on or after 6 April 2013.

Reporting PAYE in real time (RTI) means that you send HMRC data about tax, NICs and other deductions using the axis diplomat payroll software on or before each earnings payment is made rather than at the end of the tax year.

The information you send tells HMRC how much you should pay to them.

You report your payroll information by submitting RTI Full Payment Submissions (FPS) as part of each payroll run you make in your axis diplomat payroll software.

If you need to offset any statutory payments, for example Statutory Maternity Pay, you will also submit a single RTI Employer Payment Summary (EPS) from one of your data sets within 14 days of that particular tax month/quarter i.e. by 19th so that HMRC can reconcile your payment to the figures submitted.

RTI also means that you file year end information by submitting a final EPS for the year which contains all of the required end of year information for HMRC. Further information on PAYE final submission for the year and end of year tasks is available from HM Revenue and Customs at http://www.hmrc.gov.uk/payerti/end-of-year/tasks.htm

Futher information regarding the creation and submission of RTI information from your axis diplomat payroll software is provided in the F1 function help for the relevant functions. 
 

1.3 New National Insurance Category H For Apprentices Under 25 Years Of Age

With effect from 6th April 2016, employers with apprentices under 25 years of age may no longer have to pay Class 1 National Insurance contributions on earnings up to the Upper Secondary Threshold (UST) for those apprentices, which will be £43,000 a year for the tax year beginning 6 April 2016.

Employees affected will need to be manually amended to National Insurance category H, after running the year end but before the first payroll period. When an employee reaches the age of 25 then Calculate Gross Pay will automatically set the employee National Insurance category to A.

To qualify, the apprentice must be under 25 years old, and working towards an apprenticeship in the UK following the government approved framework or standard.

More detailed guidance for employers is available at https://www.gov.uk/government/publications/national-insurance-contributions-for-under-25s-employer-guide
 

1.4 Scottish Rate of Income Tax (SRIT)

With effect from 6 April 2016, Scottish taxpayers will pay tax at the same level as taxpayers elsewhere in the UK. Although the tax rate will remain the same, employers must ensure they apply the S codes to identify employees who are Scottish taxpayers, if received from HMRC.

Scottish taxpayers will be identified via address information that is held by the HMRC, it is the employee’s responsibility to update HMRC with address changes to ensure the tax they pay is correct.

If an employer is provided with a P45 with a Scottish tax code they will need to follow the current process when taking on a new employee. If a new starter does not provide a P45, or an employer is unsure what tax code to use, an employer can use the rest of the UK tax code and rate. HMRC will inform an employer if the tax code needs to be changed.

Scottish rates do no need to be displayed separately on the P60 or payslips but these documents should show the Scottish tax code.

Further information is available on the Scottish Rate of Income Tax at https://www.gov.uk/government/news/the-scottish-rate-of-income-tax
 

1.5 Student Loan Deduction Plan 2

From 6 April 2016 there will be 2 student loan plan types which will be known as Plan 1 and Plan 2. Each plan will have a different threshold. You will need to deduct student loan repayments using the appropriate plan type.

For the tax year beginning 6 April 2016, the thresholds will be £17,495 for Plan 1 (which includes your employees already repaying student loans), and £21,000 for Plan 2.

How will I know which plan type to use?

From March 2016 the SL1 start notice we issue will show which student loan plan type you should make deductions against for your employee due to start repayment from April 2016.

From 6 April 2016 the starter declaration checklist will prompt you to ask new employees about their student loan plan type.

Form P45 will only indicate whether an employee is already repaying a student loan. It will not indicate a plan type and so you must ask the new employee for this information.

If your employee does not know their plan type you should use Plan 1 by default and ask your employee to check their correct plan type with Student Loans Company.

In some cases a plan type could change in year. HMRC will notify you by sending a new SL1. When a new SL1 is received showing a different plan type you should simply amend the student loan deduction for the new plan type and deductions will continue uninterrupted. In these circumstances an SL2 Stop Notice will not be issued to you, only a new SL1.
 

1.6 Payrolling Benefits in Kind

In last October’s Employer Bulletin HMRC advised that from April 2016 the government is introducing a voluntary framework to allow you to payroll most Benefits in Kind (BiKs).

If you want to payroll your BiKs for the tax year beginning 6 April 2016, you must have registered using the online Payrolling Benefits in Kind (PBIK) service.

One of the biggest benefits of payrolling in line with the framework is that you do not need to submit P11Ds for payrolled BiKs.

Starting to Payroll – tax year beginning 6 April 2016

If you want to start payrolling you need to register with HMRC to let them know the BiKs you are going to payroll.

Axis payroll now supports a “Benefit in Kind” pay component which will be included in taxable pay but excluded from amount paid.

Further information on payrolling on BiK’s is available at https://www.gov.uk/guidance/paying-your-employees-expenses-and-benefits-through-your-payroll
 

1.7 End Of Contracting Out

Contracting-out of the additional State Pension on a defined benefit (DB) basis will end on 5 April 2016.

This means that from 6 April 2016 you will not be able to use your Contracted-out Salary Related (COSR) occupational pension scheme to contract employees out of the new State Pension Scheme.

Contracted-out National Insurance tables and category letters D, E, I, K, and L will no longer be valid.

Further information is available at https://www.gov.uk/government/publications/employer-bulletin-december-2015

2. Employment Allowance 2016-2017

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If you are an eligible employer the employment allowance is increasing to £3,000 a year from April 2016. If you aready claim the allowance and will continue to claim you will just need to continue to make the appropriate deductions from the amount of Class1 secondary National Insurance Contributions that you would have paid to HMRC. 

If you have been eligible to claim the 'Employment Allowance'  and have not yet submitted your claim for 2016-2017, you will need to go to 'Amend Employer Details' for the payroll data set through which you wish to claim the allowance and tick the 'Employment Allowance' option. Note: if you are operating more than one payroll data set, you should only claim through one data set.

Your final Calculate Monthly Remittance for the year will then include your claim for the allowance. You will then need to set 'Employment Allowance claim' to 'Yes' when submitting your final end of year EPS to advise HMRC that you are making the claim.

3. Information for axis diplomat 2012 users

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The information contained in this Payroll User Guide Supplement applies to axis diplomat 2012 and axis diplomat 2014 payroll users.

Please note: From 1st January 2016, Payroll Legislation updates are no longer available for axis diplomat 2008 and axis diplomat 2010 payroll systems as these versions are out of mainstream support.

4. Preparation

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4.1 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.

 

4.2 Dates Of Birth

In order to correctly allocate employees to the correct NI category for the changes to Employers NI for Under 21's you must ensure that you hold the correct date of birth against each active employee record.

 

4.3 Employer Bulletin

You are advised to read the February 2016 Issue of the Employer Bulletin which is available for download from the GOV.UK website.

 

4.4 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:

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

 

4.5 P45 Stationery

P45 forms for leavers are unchanged.

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

The supported formats are:

 

4.6 Week 53 / Week 1

If you pay your employees weekly on a Monday or a Tuesday, this tax year will include a week 53 payment on the 4th and 5th of April.

5. Receiving and Installing the Update

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5.1 Where Do I Install The Update?

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

 

5.2 Downloading The axis Payroll Software Update

Customers using axis payroll 2012 or 2014 will download the update from our website. It is assumed that this will be the method used unless we receive a request for a copy of the update to be sent out on either a USB memory stick or DVD. The software will be available from Tuesday 22nd March 2016.

 

To download the update:

 

 

5.3 Installing the Update

Follow the Installation Procedure detailed below.

Please note that you need only install this update once for all axis Payrolls providing that all payrolls reside on the same machine. Where payrolls are 'switched' between 'home' and 'office', then each such machine requires the update.

 

5.3.1 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.

 

5.3.2 Installing the Update

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

6. Year End Procedures

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Ensure that you have installed your axis diplomat Payroll Legislation Update before proceeding with the year end procedures. Please ensure that a FULL SECURITY BACKUP is taken of the payroll data BEFORE installing the axis diplomat Payroll Legislation Update and again before running the last function ‘Year End Processing’.

You also need to ensure that you have:

Please note: HMRC accept the 'final submission for the year flag' in either the last submitted FPS file for the year or in the final EPS file. axis diplomat payroll only supports submission of this flag in the EPS and the file is automatically flagged in the background as the final submission for the year. The 'end of year questions and declaration' are also no longer required and so have been removed from the summary. Refer to http://www.gov.uk/payroll-annual-reporting/send-your-final-payroll-report for further information.

 

 

6.1 Reports to Run

6.1.1 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.

 

6.1.2 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.

 

6.1.3 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.

 

6.1.4 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 2013 and April 2014 are printed for information.

Please read the associated help documentation for further details.

 

6.1.5 Year End Payment Summary Report

The system will produce an 80 column employee listing of NIC and tax deductions followed by a summary of payments for the year.

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.

 

6.2 P60 Print

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

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.

 

6.3 End of Year Returns

You must ensure that you have successfully submitted an RTI Employer Payment Submission file if this is your only payroll frequency and payroll data set for the employer PAYE reference or is the payroll frequency/payroll data set from which you have chosen to submit combined figures before proceeding to use the Year End Processing function. You will need to submit a final year end EPS even if you have no statutory payments to recover in order to advise HMRC that you are making the final submission for the year.

Please note: HMRC accept the 'final submission for the year flag' in either the last submitted FPS file for the year or in the final EPS file. axis diplomat payroll only supports submission of this flag in the EPS and the file is automatically flagged in the background as the final submission for the year. The 'end of year questions and declaration' are also no longer required and so have been removed from the summary. Refer to http://www.gov.uk/payroll-annual-reporting/send-your-final-payroll-report for further information.

7. Year End Processing

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7.1 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.

 

 

7.2 Year End Processing

The system asks for confirmation that a security back up has been taken and asks you to confirm that you have read and understood this guide before proceeding.

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 40 will be automatically applied to L suffix tax codes for all active employees, e.g. 1060L will be amended to 1100L.

The corresponding increase of 44 and 36 will be applied to M and N suffix tax codes.

Re-enter your payroll system, identify any qualifying apprentices, for whom zero rate of employer Class 1 National Insurance contribution can be applied and amend their National Insurance category to H using the function Amend Employee NI Category.

 

8. The New Year

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8.1 Employment Allowance

The Employment Allowance increases from £2000 to £3000 from 6th April 2016.

If you were eligible for and claimed Employment Allowance for the tax year ending 5th April 2016 no action is required to claim from 6th April 2016.

If you have become newly eligible to claim the 'Employment Allowance' you will need to go to 'Amend Employer Details' for the payroll data set through which you wish to claim the allowance and tick the 'Employment Allowance' option. Note: if you are operating more than one payroll data set, you should only claim through one data set. Calculate Monthly Remittance will then include your claim for the allowance. You will need to create and submit an RTI Employer Payment Summary in the first month of the tax year to advise HMRC that you are claiming the allowance setting the 'Employment Allowance claim' option to 'Yes'.

 

 

8.2 Tax Code Changes

The standard personal allowance increases from £10600 to £11000.

The code for emergency use with effect from 6th April 2016 changes accordingly to 1100L

There is a general uplift of L suffix tax codes by 40 and a corresponding uplift to M and N suffix tax codes by 44 and 36 respectively. 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 to be operated from 6th April 2016 (on Form P9(T) or via your online HMRC account), the specified code must be entered after the year end has been run.

Refer to form P9X(2016) for further details.

 

8.3 National Insurance Contributions

Calculate Net Pay will check the tax year / pay date and automatically apply the following earnings thresholds effective from 6th April 2016:

 

  Weekly Monthly Yearly
Lower Earnings Limit £112.00 £486.00 £5,824.00
Primary Threshold £155.00 £672.00 £8060.00
Secondary Threshold £156.00 £676.00 £8112.00
Upper Earnings Limit   £827.00 £3,583.00 £43,000.00

 

The Employee and Employer NI contribution rates for NIC categories A, B, C, J, M and Z remain unchanged.

Contracted-Out NIC categories D, E, I, K and L have been removed and the Upper Accrual Point for earnings is no longer required. Employees will automatically change to the corresponding non-Contracted-Out category as part of the 'Year End Processing' function, i.e. an employee in N.I. category D in tax year 2015-2016 will be moved to category A.

From 6 April 2016 employers will no longer be required to pay Class 1 secondary National Insurance contributions (NICs) on earnings up to the upper earning limit (UEL) for apprentices under the age of 25. The new NIC category H and the associated rates have been added.

Calculate Gross Pay will check employees in the 'under 21' and 'under 25' N.I. categories and amend their category to a standard category if that employee has achieved the age of 21 or 25 by the pay date of the period being run.

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.

 

8.4 Statutory Sick Pay

The weekly rate remains unchanged at £88.45. 

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

Eg. The daily rate for an employee with five qualifying days is unchanged at £17.69.

 

 

8.5 Statutory Maternity / Paternity / Adoption Pay

Statutory Maternity Pay (SMP) is paid at 90% of the employee's average weekly earnings for the first six weeks. The standard weekly rate for the remaining weeks is £139.58 or 90% of the employee's average weekly earnings, whichever is lower.

Statutory Adoption Pay (SAP) is paid at 90% of the employee's average weekly earnings for the first six weeks. The standard weekly rate for the remaining weeks is £139.58 or 90% of the employee's average weekly earnings, whichever is lower.

Statutory Paternity Pay (SPP) is payable for 1 or 2 weeks at the standard weekly rate of £139.58.

Shared Parental Leave and Statutory Shared Parental Pay (ShPP) is payable at the standard weekly rate of £139.58 or 90% of the employee's average weekly earnings, whichever is lower. Information for employers is available at http://www.gov.uk/shared-parental-leave-and-pay-employer-guide/entitlement

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

Employers who do qualify for Small Employers Relief (SER) can recover 100% of the SMP/SPP/ShPP/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.

 

8.6 Student Loans

The annual threshold for the collection of existing Plan 1 Student Loans increases from £17,335 to £17,495.

The annual threshold for the collection of new Plan 2 Student Loans is £21,000.

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

 

 

8.7 PAYE Income Tax

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

 

   

2015 - 2016

2016 - 2017
Basic Rate 20% £1 to 31,785 £1 to £32,000
Higher Rate 40% £31,786 to £150,000 £32,001 to £150,000
Additional Rate  45% £150,001 and above £150,001 and above

 

The new bands for 2016-17 are effective from the first pay day on or after 6th April 2016.

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.