tax and NICs it’s elementary
tax details on the payroll record. Employers must only include pay and
tax figures from the new employment and not the year to date figures on the first FPS that includes the new employee. There is no need to report to HMRC a recalculated tax figure for the previous employment. The tax code to be operated depends on when the individual left their previous employer and their start date with the new employer.
If the student loan indicator is shown on the P45 employers must start deducting student loan repayments from the next pay date, unless the employee has answered the student loan question with a ‘No’ on the starter declaration, in which case the starter declaration statement takes precedence over the P45 indicator.
No form P45
If a new employee is unable to provide a form P45, it is necessary to establish which one of the three starter statements applies to their employment situation and if student loan repayments are recoverable from their pay. HMRC has produced an optional
‘Starter Checklist’ to keep a written record of the answers given and gather information required for the FPS report. The ‘Starter Checklist’ must not be sent to HMRC. Employers can obtain the starter information for the FPS using their own forms and practices. For 2014/15, the tax code to use for the new employee’s first payday depends on the answers given to the starter statements as follows:
Starter statement Tax code to use A
B c
Employee does not complete
starter declaration prior to first payday
BR cumulative 0T week1/month1 1000L cumulative
1000L on a week 1/month1 basis
...LARGELY
DETERMINED BY WHETHER THE EMPLOYEE IS A MEMBER OF A CONTRACTED-OUT SALARY RELATED (COSR) OCCUPATIONAL PENSION SCHEME
work for an employer in the UK there is a different procedure to follow in which seconded employees must consider a series of questions, with ‘Yes’ or ‘No’ answers given in the first FPS.
NICs category letter Under RTI, employers are required to report about each payment of earnings, the NICs payable by both the employee and employer in the earnings period, in addition to ‘year to date’ figures. Employers must also record a NICs category letter on the FPS.
Employers determine which NICs category letter applies to a new employee, based on circumstances relating to the current employment. The NICs letter is largely determined by whether the employee is a member of a contracted-out salary related (COSR) occupational pension scheme.
Employees who are not members of a
If a new employee provides a starter declaration or P45 after submission of the first FPS report to HMRC, then if HMRC have issued a tax code for the employee, employers must continue to use the tax code, and any previous pay and tax information stated on a P45. If a new employee is seconded to
COSR scheme should have table letter ‘A’ applied on earnings paid, other than for three exceptions: l certain married women and widows eligible to pay a reduced rate liability (use table letter ‘B’) l those over state pension age, where the employee has no liability (use table letter ‘C’, even if a member of a COSR scheme), and l where a deferment certificate for NICs has been issued, because the individual is already paying the maximum liability in other employment(s) (use table letter ‘J’). Employees who are members of a
COSR scheme should have table letter ‘D’ applied to their payroll record, with employers using table letter ‘E’ for those few remaining women eligible to pay reduced rate contributions, and table letter ‘L’ for deferment cases.
PP PayrollProfessional 29
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