HMRC PAYE update (RTI, National Minimum Wage and Employee queries)

HMRC have provided a further informal update on PAYE related matters for sharing. The update covers Real Time Information, the national minimum wage and employee queries where operation of ‘week 53' payment results in an underpayment of tax.

PAYE UPDATE STARTS HERE:

Real Time Information

The pilot continues to go well and is on track. No significant issues have emerged and employers have given us positive feedback, saying how easy reporting in real time has been.

At 9 September, 1,431 PAYE schemes covering 1.91 million individuals had submitted information in real time. This means we have exceeded our target of having up to 1,300 schemes reporting PAYE in real time by end of September.

We have a wide range of employer types and sizes in the pilot, ranging from one to over one million individuals, and including users of commercial software, payroll services and HMRC’s Basic PAYE Tools.

External confidence is growing with more software developers and large payroll bureaux asking to come on board or extend their existing involvement – more evidence that the pilot is going well.

National Minimum Wage

The Department for Business, Innovation and Skills has announced that the rates of national minimum wage applicable to pay reference periods starting on or after 1 October 2012 will be as follows:

  • the main adult rate (for workers 21 and over) will increase by 11p to £6.19 an hour (currently £6.08 an hour)
  • the rate for 18-20 year olds will remain at £4.98 an hour
  • the rate for 16-17 year olds will remain at £3.68 an hour
  • the rate for apprentices will increase by 5p to £2.65 an hour (currently £2.60 an hour).

From the same date, the daily accommodation offset rate will increase from the current £4.73 to £4.82.

Employee queries where operation of ‘week 53' payment results in an underpayment of tax

In some tax years, the way dates fall mean that employers will end up making one more payment than usual to their employees towards the end of the tax year. If employees are paid weekly this would be a 53rd weekly payment, if paid fortnightly it would be a 27th fortnightly payment and if paid four-weekly it would be a 14th four-weekly payment. These extra payments are often referred to as ‘Week 53 payments’. Further information can be found at www.hmrc.gov.uk/paye/payroll/paydays/week-53.htm

This may lead to an underpayment of PAYE as an individual’s personal allowance for the year is worked out on the basis of 52 weekly, 26 fortnightly and 13 four-weekly paydays.

Employees who have been notified by HMRC that they have underpaid and query this with their employer should be advised to read the notes enclosed with the calculation or go to www.hmrc.gov.uk/incometax/p800.htm for further information.

Technical Team

Posted in: News