Payroll

PIID | a quick overview

What is PIID

Said “P -eleven-D” this is an annual report that employers of staff are required to submit to HMRC if any of their staff are provided with any benefits or expenses. It tells HMRC the value of these benefits, and so how much tax and NI is due.

P11D and P11D(b) Filing and Payment Deadlines

P11D forms due must be sent to HMRC by 6 July; failure to do so may result in a penalty.

So for this year, the deadline for telling HMRC about Class 1A National Insurance contributions (NICs) that you owe for the tax year ending 5 April 2019 is 6 July 2019 at the latest.

The payment of the Class 1A NIC must then reach HMRC by 22 July (19 July if you pay by cheque).

What do I need to file?

If you paid any benefits and/or non-exempt expenses, or payrolled benefits you should file a P11D(b). Include all benefits liable to Class 1A NICs, even if you taxed them through your employees’ pay.
You should send a P11D for each employee receiving benefits, unless you registered before 6 April 2018 to tax them through the payroll.

You only need to tell us that you don’t need to make a return if we sent you a paper P11D(b), an electronic notice to file a P11D(b) or a reminder to file a P11D(b) letter.

Salonfrog Clients

If you have our Payroll Service, then we take care of all this for you.

Further reading

https://www.gov.uk/government/publications/paye-end-of-year-expenses-and-benefits-p11d

NI Number | if not known, how to find it

When taking on a new employee you will need to know their National Insurance (NI) number (amongst other things).

There are 4 possible ways to obtain this, if your employee doesn’t know it.
In order of speed:

National Minimum/Living Wage for employers

Key links to NMW/NLW:

  1. HMRC has added two new short webinars to its series on National Minimum Wage for employers (there are now 4 to watch). Each webinar is under 10 minutes long and covers common errors we see employers make when calculating the National Minimum Wage:

    https://www.gov.uk/guidance/help-and-support-for-employing-people#the-national-living-wage-nlw-and-the-national-minimum-wage-nmw

  2. Low Pay Commission (LPC) welcomes acceptance of its 2019 minimum wage rate recommendations:
    https://www.gov.uk/government/news/lpc-welcomes-acceptance-of-its-2019-minimum-wage-rate-recommendations
  3. Current levels:
    https://www.gov.uk/national-minimum-wage-rates

Automatic Enrolment – the cost continues to increase from April 2018

Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘automatic enrolment’. If you employ at least one person you are an employer and you have certain legal duties. 

Under law, the minimum automatic enrolment pension contributions are set to increase this coming April and again in April 2019. Employers will be required to take steps to prepare for the increase in minimum contributions towards their employee’s pension pots.  

The total minimum contribution will increase from 2% to 5% where employers must contribute a minimum of 2% and employees must contribute the remaining 3%.  

Contributions will increase again on the 6th April 2019, from 5% to 8% where employers must contribute 3% and employees making up the difference, contributing 5%.  

Employers can choose to pay the full 5% in April 2018 and 8% in April 2019. In these cases, the employee will not need to pay any contributions unless the rules of the pension scheme say otherwise. 

 

The Pension Regulator has a good guide here: 

https://www.thepensionsregulator.gov.uk/en/employers 

National Minimum and National Living Wage 

The government is increasing the National Minimum and National Living Wage rates on 1 April 2018; which includes the largest increases in a decade for the rates that apply to 18-20 and 21-24 year olds.  

As the minimum wage increases, more Salon Owners than ever will be directly affected, including those who currently pay above the minimum. Remember that the minimum wage depends on both your employees age and whether they’re an apprentice. 

It’s worth adding the birthdays of your employees to your calendars so you capture any moving between age bands. And also remember to update their increased pay when submitting your payroll to us each month.

 

The rates and other HMRC guidance (including examples) can be found here: 

https://www.gov.uk/national-minimum-wage-rates 

Class 2 NIC changes postponed until 2019

Affecting anyone operating as a self-employed stylist (including anyone renting a space or chair from a salon) the much publicised changes to class 2 have been delayed – a year later than first thought – now with effect from April 2019.

Class 2 NICs are flat-rate weekly contributions paid by the self-employed to gain access to contributory benefits. The self-employed also pay Class 4 NICs on profits above the Lower Profits Limit. Class 4 NICs do not currently give access to contributory benefits. The main change in April 2019 is that class 2 National Insurance will be abolished.

The government has decided to implement a one-year delay to allow time for consultation on the impact of the abolition of class 2 National Insurance on self-employed individuals with low profits. When these are abolished, those with profits below the small profits threshold (currently £6,025) will have to pay class 3 contributions (£14.25 a week), which are five times as much as class 2 (£2.85 a week) if they want to build up an entitlement to contributory benefits such as the state pension.

The Low Incomes Tax Reform Group is keen for a way to be found for low-income, self-employed people to be able to make affordable savings towards their pension at a rate similar to class 2, perhaps by introducing a lower rate of class 3.

LITRG chair Anne Fairpo said: ‘We welcome the announcement that the government intends to consult with organisations such as ours that have concerns relating to the impact of the abolition of class 2 on self-employed individuals with low profits. This will be a significant change to how people contribute to qualify for certain benefits and the state pension.’

She added that the ‘breathing space’ was welcome because of concerns that the abolition of class 2 was being rushed through without adequate consultation, together with a lack of publicity and guidance.