Paying an employee after giving them a P45

You need to tell HM Revenue and Customs (HMRC) when one of your employees leaves or retires, and deduct and pay the right tax and National Insurance.

You must give your employee a P45 when they leave.

Paying an employee after giving them a P45

If you have to pay an employee after they leave (including someone you’re giving a taxable redundancy payment over £30,000):

  • use tax code 0T on a ‘week 1’ or ‘month 1’ basis (use the code S0T if they’re taxed at the Scottish rate or C0T if they’re taxed at the Welsh rate)
  • deduct National Insurance (unless it’s a redundancy payment) and any student loan repayments as normal – but if it’s an ‘irregular’ payment like accrued holiday pay or an unexpected bonus, treat it as a weekly payment
  • report the payment and deductions in your next FPS, using the employee’s original ‘Date of leaving’ and payroll ID, and set the ‘Payment after leaving’ indicator
  • give the employee written confirmation of the payment showing the gross amount and deductions
  • add the additional payment in the ‘Year to date’ field if the payment is in the same tax year

The payment should be the only one in the ‘Year to date’ field if it’s being paid in the next tax year.

You must not give the employee another P45

Keeping Up To Date

checklistWe’ve put together a checklist for you to help you to keep up to date with all your responsibilities. Hope you will find it useful!  Don’t forget that we are here to guide you through if you need any help!

Have you:

  • filed your Charity Commission Annual Return?
  • had your annual accounts examined?

If you are a charitable company, have you –

  • filed your annual accounts with Companies House?
  • checked when you should complete your Companies House annual return?
Have you:
  • registered with the Information Commissioner’s Office re Data Protection Fees?
  • checked when your insurance is up for renewal?
  • planned how to continue delivering services under conditions of COVID?
  • established working from home procedures, and will you need to change contracts of employment?
  • thought about how you will recruit new trustees and hold meetings?
  • started preparing your annual budget? If you need any help, do contact DCAS
 …..and finally – don’t forget to feel a sense of pride for all the work your charity does, and the important role charities play in the life of Derby!

Safeguarding and protecting people

Charity Commission LogoProtecting people and safeguarding responsibilities should be a governance priority for all charities. It is a fundamental part of operating as a charity for the public benefit.

As part of fulfilling your trustee duties, whether working online or in person, you must take reasonable steps to protect from harm people who come into contact with your charity.

This includes:

  • people who benefit from your charity’s work
  • staff
  • volunteers
  • other people who come into contact with your charity through its work

10 actions trustee boards need to take to ensure good safeguarding governance

Click on the picture below

10 Actions Safeguarding

More detailed information and advice can be found here

Flexible Working

flexible workingFlexible working is a way of working that suits an employee’s needs, for example, you may want to
  • reduce your hours to work part-time
  • change your start and finish time
  • have flexibility with your start and finish time (sometimes known as ‘flexitime’)
  • do your hours over fewer days (‘compressed hours’)
  • work from home or elsewhere (‘remote working’), all or part of the time
  • share the job with someone else

All employees have the legal right to request flexible working – not just parents and carers.

This is known asmaking a statutory application’.

Employees must have worked for the same employer for at least 26 weeks to be eligible.

If this is of interest to you, and you want to find out more, ACAS have really helpful advice here

Ted Cassidy Memorial Award Winners

BF220EC6-DB93-4C67-B884-ED172A65A0BFSadly, Derby Community Accountancy Service lost our Honorary President, Ted Cassidy, in January 2021.

In memory of Ted, and to celebrate the great contribution he made to DCAS and our service users, it was decided to reward a local charity for playing their part in bettering the lives of the people of Derby.

We are pleased to announce that the winners of the Ted Cassidy Memorial Award 2021 for the outstanding contribution given by a charity to life in Derby, goes to Derby Refugee Forum.

Ferid Kevric is pictured here receiving the certificate on their behalf at our AGM last month. They also received a cheque from Mrs Una Cassidy.

Many congratulations to Derby Refugee Forum!

Introduction to PAYE

HMRC PAYE jpegAs an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.

You do not need to register for PAYE if none of your employees are paid £120 or more a week, get expenses and benefits, have another job or get a pension. However, you must keep payroll records.

Payments and deductions

When paying your employees through payroll you also need to make deductions for PAYE.

Payments to your employees

Payments to your employees include their salary or wages, as well as things like any tips or bonuses, or statutory sick or maternity pay.

Deductions from their pay

From these payments, you’ll need to deduct tax and National Insurance for most employees. Other deductions you may need to make include student loan repayments or pension contributions.

Reporting pay and deductions

If you run payroll yourself, you’ll need to report your employees’ payments and deductions to HMRC on or before each payday.

Your payroll software will work out how much tax and National Insurance you owe, including an employer’s National Insurance contribution on each employee’s earnings above £170 a week.

You’ll need to send another report to claim any reduction on what you owe HMRC, for example for statutory pay.

Paying HMRC

You’ll be able to view what you owe HMRC, based on your reports. You then have to pay HMRC, usually every month.

If you’re a small employer that expects to pay less than £1,500 a month, you can arrange to pay quarterly – contact HMRC’s payment enquiry helpline.

Other things to report

As part of your regular reports, you should tell HMRC when a new employee joins and if an employee’s circumstances change, for example they reach State Pension age or become a director.

You have to run annual reports at the end of the tax year – including telling HMRC about any expenses or benefits.

More details can be found here

State Pension Update

state pensionIn November 2018, State Pension age was 65 for men and women.  The State Pension age is regularly reviewed to make sure that the State Pension is affordable and fair.  People are living longer, and spending a larger proportion of their adult life in retirement than in the past.  State Pension age is gradually increasing for men and women, and will reach 67 by 2028.

Proposed new timetable for State Pension age increases

The government has announced plans to bring this timetable forward. The State Pension age would therefore increase to 68 between 2037 and 2039.

Your date of birth How the proposals affect you
On or before 5 April 1970 No change
Between 6 April 1970 and 5 April 1978 Your State Pension age is currently 67. It would increase to between 67 years and 1 month, and 68 years, depending on your date of birth
After 6 April 1978 No change. Your State Pension age remains 68

These proposed changes would have to be approved by Parliament before they are agreed.

When can I retire?

Your State Pension age is the earliest age you can start receiving your State Pension.  Use the link below to check:

  • when you’ll reach State Pension age
  • your Pension Credit qualifying age
  • when you’ll be eligible for free bus travel

Click here to start

Check your State Pension forecast to find out how much money you’ll get

Working after State Pension age

  • You can keep working past your State Pension age.
  • You can usually work for as long as you want to. ‘Default retirement age’ (a forced retirement age of 65) no longer exists.
  • You don’t pay National Insurance if you work past State Pension age.
  • You could pay tax – it depends on the size of your total income.

You can find more information here

Sick Pay and Holiday Pay

Sick Pay and Holidays jpegACAS answers questions about sick pay and holiday pay

Employees cannot get sick pay and holiday pay at the same time.

Taking holiday while off sick

An employee can take holiday (annual leave) while off sick. For example, if they: 

  • are not physically able to work, but physically able to take a holiday
  • have a mental health condition that might be helped by a holiday
  • are off sick long term and a holiday might help with their recovery

It’s up to an employee to request holiday while off sick. An employer cannot force an employee to take holiday while off sick.

If the employer approves the employee’s holiday request:

  • sick leave can be paused while the employee takes holiday
  • the employee should get holiday pay while they are on holiday

After the employee has taken the holiday, sick leave can continue if they’re still not well enough to return to work.

If an employee is sick on holiday 

An employee must report their sickness to their employer if they want to take any holiday as sick leave.

In this case the employee can:

  • get sick pay for the time they were sick (as long as they areentitled to sick pay)
  • keep the time they were sick to use as holiday another time

More information from ACAS can be found here

More information from the government can be found here