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CLiP IT Solutions

    
CLiP IT Solutions Ltd
Construction Industry Accounts

phone: 01935 443 340
email: support@clipitsolutions.co.uk
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Tax Year End Update - April 2020

We will be releasing the Tax Year End update week commencing Monday 16th March 2020. This will be a staggered release to help ease congestion on our Support Line, so please do not be alarmed if you do not get prompted to download the update immediately. However, if you have not been prompted by 1st April 2020 please contact the Support Department. The latest versions will be:- CIA (Version 3.1 (Build 1) and PAYE Plus (Version 3.1 (Build 1)). These latest versions of the software contain the necessary programs to enable you to finalise the Tax Year End on the Payroll. Please follow the separate instructions "PAYE Plus Tax Year End 2020" for this.

 
 
! When paying week 52 payroll, if you wish to pay holiday pay which relates to week 1 of the new tax year, you must not advance the pay week. Monies paid within the tax year must not overlap into the next tax year, therefore, pay basic and holiday pay in week 52 and do not select the option to advance the Pay Week. Please refer to HMRC document CWG2 (2019 to 2020: Employer further guide to PAYE and NICs) Section 2.7 Holiday Pay, subsections 2.7.4 Working out PAYE on holiday pay and 2.7.5 Working out NICs on holiday pay https://www.gov.uk/government/publications/cwg2-further-guide-to-paye-and-national-insurance-contributions (select 2019 to 2020) for more information.
 

! When you submit your FPS for Week 52/53 or Month 12 you will notice that the Checkbox ‘Final Submission for Year’ will become available – select YES only when it is the final submission for the year. If you run a weekly and a monthly payroll, you only need to show the ‘Final Submission’ for the last payroll submitted. If you submit an EPS, tick () 'Final Submission for Year', however, this is only necessary if you have not shown 'Final Submission' on the FPS.
 

Legislation Changes from April 2020

Employment Allowance:-

From April 2020, employers will only be eligible for EA if their total Secondary Class 1 liability in the previous tax year was under £100,000. If eligible, the amount to claim remains at £3000.

A claim can no longer be carried forward from one year to the next. A new claim will need to be made each tax year. If you are eligible this must be done via the EPS. It would be best to do this in Month 1 of the Tax Year 2020/21. Further information is available:- https://www.gov.uk/claim-employment-allowance

Off-Payroll Working Rules for Private Sector:-

The new rules will affect businesses in the Private Sector who engage individuals who work through their own company (often referred to as a Personal Service Company – PSC). The responsibility for determining the tax status of an individual will shift from the PCS to the engager (the business taking on the worker). These rules only apply to engagers who are medium or large, small businesses will be exempt from the changes. The definition of small has yet to be determined, but the Government say they intend to use a definition similar to that in the Companies Act 2006. Under the Act, a company is defined as small if it meets two out of three of the following criteria:-

  • Turnover does not exceed £10.2 million
  • Balance sheet total does not exceed £5.1 million
  • Not more than 50 employees

It is important to be aware that the size test applies to the engager and not the workers PSC. The Government expects that 95% of businesses will meet the definition of small and will not have to apply the new measures.

Further information is available:- https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-intermediaries

If the Off-Payroll working rule applies, you must deduct Tax and National Insurance from the worker and show this on your FPS. Therefore, you will need to set them up as an Employee within PAYE Plus. Within Employee>Employees, there is a tick box for "Off Payroll Worker" in the "Other Details" tab.

Statutory Parental Bereavement Pay (SPBP):-

This new entitlement will provide employed adults who have parental responsibility and have suffered the loss of a child under the age of 18 with two weeks of paid leave at the statutory rate as long as they have had 26 weeks of continuous employment. Without 26 weeks continuous employment, they are entitled to two weeks unpaid leave. This entitlement will also apply to parents who have suffered a stillbirth after 24 weeks of pregnancy. Parental responsibility includes adopters, foster parents and guardians. For more information :- https://www.gov.uk/government/news/uk-set-to-introduce-jacks-law-new-legal-right-to-paid-parental-bereavement-leave

 

Also included within this version are the 2020/21 Tax Year NI,SSP,SMP,SAP, SPP, ShPP & SPBP Tables and Student Loan Deductions. With effect from 6th April 2020 the rates are as follows:-

Student Loans:-

Student loan deduction is 9% for both Plans 1 & 2.

Plan 1 -
English and Welsh students who started their studies before 1 September 2012 and all Scottish and Northern Irish students. Employees on Plan 1 will only start repaying their student loan when they earn over £19390.

Plan 2 -
English and Welsh students who started their studies on or after 1 September 2012. Employees on Plan 2 will only start repaying their student loan when they earn over £26575.

Postgraduate Loan:-

The employee earnings threshold is £21000 and the deduction is calculated at 6%.

UK Tax Rates:-

  • Basic Rate 20% £1 to £37,500
  • Higher Rate 40% £37,501 to £150,000
  • Additional Rate 45% £150,001 and above

Scottish Tax Rates:-

  • Starter Rate 19% £1 to £2,049
  • Basic Rate 20% £2,050 to £12,444
  • Intermediate Rate 21% £12,445 to £30,930
  • Higher Rate 41% £30,931 to £150,000
  • Additional Rate 46% £150,001 and above

Welsh Tax Rates:-

  • Basic Rate 20% £1 to £37,500
  • Higher Rate 40% £37,501 to £150,000
  • Additional Rate 45% £150,001 and above

The threshold for PAYE is raised to £240 per week and £1042 per month.

There are no changes to Tax codes with a suffix of L, M or N.

Do not carry over any Week 1 or Month 1 markings

The emergency code will remain at 1250L W1/M1

There are still 6 levels of earnings used to calculate NICs, these are Lower Earnings Limit (LEL) Primary Threshold (PT) Secondary Threshold (ST) Upper Earnings Limit (UEL) Upper Secondary Threshold (Under 21) (UST) and Apprentice Upper Secondary Threshold (AUST). Upper Earnings Limit (UEL) Upper Secondary Threshold (Under 21) (UST) and Apprentice Upper Secondary(AUST) Threshold are the same value. It is possible that indexation may result in these thresholds having different values in future years. In view of this and in order to avoid making unnecessary changes the UEL, UST & AUST values are the same resulting in earnings between UEL, UST & AUST being zero, as will the NICs rebate for that portion of the earnings.

The rates for these are:-

  Weekly Monthly Yearly
LEL 120 520 6240
PT 183 792 9500
ST 196 732 8788
UEL 962 4167 50000
UST 962 4167 50000
AUST 962 4167 50000


The Weekly rate of Statutory Sick Pay (SSP) is £95.85 for employees with average weekly earnings of £120 or more.

The Weekly rate of Statutory Payments for SMP/SAP/SPP/ShPP & SPBP is £151.20 or 90% of the employee’s average weekly earnings, whichever is the lower. The proportion of your payments you can recover from HMRC is 92% if your total Class 1 National Insurance (both employee and employer contributions) is above £45,000 for the previous tax year or 103% if your total Class 1 National Insurance for the previous tax year is £45,000 or below.

The above rates will be updated automatically when you run the PAYE Tax Year End Procedure and select the option to Switch to the New Tax/NI Rates for 6th April 2020.

For more information and guidance on PAYE and NICs rates or calculation of SMP, SPP and SAP please refer to www.gov.uk/guidance/rates-and-thresholds-for-employers-2020-to-2021 from HMRC.


! Please ensure you have the correct Year End Forms, these can be ordered from HMRC via the internet http://www.hmrc.gov.uk/payerti/forms-updates/forms-publications/onlineorder.htm#0x1 or by phoning the HMRC Orderline on 0300 123 1074. Delivery is usually within 5 working days. For Online filing you require P60(SingleSheet-Shortened)(2019-2020) – Certificate of Pay. For manual completion or with a Laser Printer. Please ensure you order enough to cover any employees who have left within the tax year. All forms must be Laser Portrait.

P45's - P45's to print for Leavers can be obtained from HMRC Orderline. You will require P45(Laser Sheet)-3 part. Details of employees leaving work: for use with a Laser Printer. PAYE Plus will print on the 3 Part, so if you have any existing 4-part stationery, you will just need to discard part 1 before printing.

The Pensions Regulator – Re-enrolment

Every three years after your automatic enrolment staging date, you need to re-assess your employees to identify if you have any employees to re-enrol or no employees to re-enrol. Either way you must complete a re-declaration of compliance to inform the Pensions Regulator that you have met your duties. You can choose a date within a 6 month window (3 months before – 3 months after the 3rd year anniversary of your staging date). For more information refer to www.thepensionsregulator.gov.uk/en/employers/re-enrolment or contact your Pension Provider.

Minimum contribution effective from 6th April 2020 remains at :-
  • Employer minimum contribution – 3%
  • Employee minimum contribution – 5%
  • Total minimum contribution – 8%
 

Don't forget, PAYE Plus incorporates the facility to "View Archived Databases". This will enable you to run the Tax Year End procedure without having to print your Employee Deductions Working Sheet, P60's or file your Final EPS, but will enable you to clear tax year details so that Week 1 can be run. (You must follow the Year End Procedure Steps 1 through to 4 inclusive, to clear all records). Then at a later date (before May 19th 2020, as this is the deadline from HMRC for filing returns) you can access the 2019/20 records by selecting Company - View Archived Databases and selecting the relevant database and then follow the Year End Procedure document, preparing, printing and filing online correctly.

If you have any queries, or are unsure on any of the above, please do not hesitate to contact the Support Department. A reminder of our telephone number is 01935 443340. Please be aware that our phone lines tend to be extremely busy at this time of year, so please bear with us.

 

! If you are a new user, or you are only planning to start going LIVE as of April 2020, and therefore have no need to run a Tax Year End, please change the 'Use Tax/NI Rates from' to 'From April 2020' within Company>Company Setup>General Preferences or alternatively, contact the Support Department to have this module loaded.
 

Regards,

Melanie Ditch
Support Manager
For and on behalf of CLiP IT Solutions Limited

CLiP IT Solutions Limited
Freetrade Exchange, 37 Peter Street, Manchester, M2 5GB