axis payroll User Guide Supplement March 2016

1. What's New?

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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.

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. 

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

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

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.

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

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

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