1. Tax codes are now more refined. Under the new dynamic coding system, HMRC issues an updated tax code once it becomes aware of a change that will affect an employee’s tax. The trigger may be the employer submitting a full payment summary (FPS). The employee’s annual tax bill is then recalculated to include any underpayment of tax. Employers should update payroll systems to reflect the change as soon as they receive the code.
2. HMRC can charge late filing penalties. Therefore, details of staff pay and deductions must be lodged on or before the day the payment is made to the employee. Where a late filing penalty is charged, the amount depends on the number of employees you have in your PAYE scheme, ranging from £100 for small employers to £400 for larger employers. Further penalties are possible if a report is submitted more than three months late.
3. Late filing appeals can be submitted if you think the penalty is not due or is inaccurate. HMRC is strict on the criteria applicable and valid grounds for appeal include ill health, death/bereavement, fire, flood or natural disaster.
4. Some employers will need to make pay deductions to cover student loan repayments. Deductions are made only where the employee’s income exceeds the threshold for their loan type (Plan 1 or Plan 2). The SL1 start notice will tell you which type of student loan your employee has.
5. Employers that implement auto-enrolment for employees’ pension contributions need to operate the correct software and ensure that the chosen pension provider’s system works well with their payroll system. It’s important to maintain records of auto-enrolment activity, including details of staff enrolled and their contributions, as well as details of staff that have opted out or left the company. Penalties for non-compliance with auto-enrolment can be very high.