RTI (Real Time Information) – last Full Payment Submission (FPS) due soon

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Exactly eleven months ago at time of writing, HMRC launched ‘RTI’ (Real Time Information) in the UK. This is the mechanism through which employees now have to report PAYE information for employees on the day it actually happens, or alternatively before that day, for example to confirm to HMRC each time an employee is paid through PAYE, including any NI or Income Tax deductions. RTI is, almost without exception, for all employees including those whose earnings fall below the NIC’s Lower Earnings Limit (‘LEL’), e.g. students.

The RTI reporting has to be done electronically using payroll software, whether that’s the employer themselves reporting it, or their nominated accountant, payroll bureau or bookkeeper. The information reported to HMRC will also now need to include new information which includes the usual hours worked by each employee and any unusual break in the normal working pattern, for instance if an employee takes unpaid leave. RTI also includes other changes to how various things are reported e.g. starter and leaver dates and also employers no longer need to submit end of year forms P14 and P35 because this will be handled on the last Full Payment Submission (‘FPS’) for the tax year in question – this is due in less than a month  at time of writing as the new tax year begins Read more

(Time Sensitive): Tax Year End Changes for Pension Allowances

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The start of the new Tax Year on 6 April 2014 – just 6½ weeks away at time of writing – will see two very important changes in relation to pensions allowances.

The first change will affect the ‘Annual Allowance’ (or ‘AA’) which is the annual limit on pension savings attracting tax relief. This limit will be reduced from £50k to £40k (having been as high as £255k back in 2010/11) and includes contributions made by anyone into your pension whether that’s you or your employer. Should your pension savings be greater than this amount then you will have to pay a tax charge and include such information on your Self Assessment tax return. A calculator is available to work out whether you have any unused annual allowance available, this being particularly useful because you are eligible to carry forwards any unused allowance if it exists from the 3 previous tax years. If present the unused allowance can be used to offset against any tax charge.

The second change will affect the ‘Lifetime Allowance‘ (or ‘LTA’) which is the amount payable from a private and/or work pension scheme (excludes State pension) before tax also becomes payable. Having already recently been cut from £1.8 million the LTA is currently set at £1.5 million but will be reduced to £1.25 million from 6 April 2014. The LTA is only applied to pension savings when you actually take your pension benefits, or at certain key events such as reaching the age of 75. Other examples of applicable key events are explained here. Read more