By Neilson Watts (Associate Product Manager, Sage One Payroll).
With more certainty than a Zombie Apocalypse, every business in the UK has to pay taxes and that includes employees. And as much as you try and avoid or fight them, HM Revenue & Customs will hunt and track you down… and make you pay!
Avoid being bitten by HMRC (by understanding your responsibility as an employer)
So to avoid the hordes of zombies you need to prepare yourself for the fight and understand how to keep the fines at bay. As an employer you are:
– Required by law to keep records of pay, tax and National Insurance contributions (NICs)
– Keep your PAYE records for the current and previous three tax years
– Failure to keep records, or retain for long enough, may be charged a penalty of up to £3,000
– Most employers in the UK are required to submit payroll information returns electronically on-line to HMRC.
To do this you will need to register with HMRC Online Services (https://online.hmrc.gov.uk).
Zombies have Rhyme (deducting Tax and National Insurance on time)
As Michael Jackson proved in his 80’s monster hit Thriller, the best way to stop a zombie hoard is to get them dancing en mass…but another less known method is to ensure through the PAYE system that you calculate and deduct tax and national insurance from your employees each time you pay them.
Income Tax – your employees will be issued a tax code from HMRC which will entitle the employee to receive a certain amount of ‘tax free pay’ before they are taxed. In the majority of situations, employees will be on a cumulative tax code which will ensure all earnings within the tax year are considered
National Insurance – not only does your employee have to make a contribution through National Insurance, but the employer is also responsible for making a contribution
Keep the zombies in suits at arm’s length by paying HMRC outstanding PAYE and NIC liability
To avoid being chased by a plague of zombies in suits, every month you will need to pay HMRC the tax and NI contributions you have deducted from employees by 19th of the following month.
If you are a small employer who believes you will be paying less than £1500 per month, you can arrange to pay quarterly. Failure to make a payment on time can result in penalties or fines.
For more information on your responsibilities in paying HMRC visit http://www.hmrc.gov.uk/payinghmrc/paye.htm
Zombies don’t have to be decapitated to be stopped (National Minimum Wage)
You don’t need to decapitate a zombie in order to stop it. You just need to ensure that anybody you employ is not paid below the National Minimum Wage!
Regardless of whether the employee works full or part-time, most employees in the UK are entitled to be paid the National Minimum Wage (with exception to self-employed or children who are still of compulsory school age). The National Minimum Wage rates historically get updated each year on 1st October with three different age rates of an apprentice rate.
To find out more about the National Minimum Wage visit http://www.hmrc.gov.uk/payerti/payroll/pay-and-deductions/nmw.htm
Zombies are quick runners – there’s no point hiding (PAYE in Real Time)
If you’ve ever tried running away from a zombie they are deceptively quick, so it’s easier to stand up to your responsibility under the new Real Time Information for PAYE legislation.
From April 2013, most businesses in the UK were required to submit information to HMRC every time they made a payment to an employee, rather than once a year at Payroll Year End. (This includes any employee who earn below the tax and National insurance Thresholds).
This new reform is called Real Time Information or RTI for short. A temporary relaxation of the rules was introduced for ‘some’ businesses but by October 2013 it will be mandatory for everyone.
If you’re not sure what RTI is, take a look at ‘What is Real Time Information (RTI) and who does it affect?‘
Zombies need love too (so use professional payroll software)!
Just like humans, zombies desire to be loved and the perfect solution to keep zombies happy is to use our cloud-based Sage One Payroll software which costs just £5, £10 or £15 + VAT per month.
So should you be chased by a herd of wild zombies (or the HMRC), you’ve got the confidence that you can access your payroll anytime, anywhere from a PC, laptop, Macbook or tablet 24hrs a day, 365 days a year – enabling you to pay your employees whilst ensuring you submit your RTI returns to HMRC on time and accurately.
Try Sage One for FREE
If you’re starting a business, our Sage One Cashbook, Accounting and Payroll software comes with free 24hr telephone and email support from our super-friendly Customer Support Team in Newcastle.