Final Payment Submissions to HMRC

D55F3A85-4C8C-4000-8482-9D1DEE8C5C44It’s time to prepare for making your last Full Payment Submission or Employer Payment Summary of the year

Your last Full Payment Submission (FPS) or Employer Payment Summary (EPS) of the year (up to and including 5 April 2022) needs to include an indicator that you are making the final submission. This tells us you have sent us everything you expected to send and we can finalise our records for you and your employees.

Some commercial payroll software will not let you put the indicator on an FPS. If that’s the case, send your last FPS and then send an EPS with the indicator ticked. You can also send an EPS with the indicator ticked if you forgot to put the indicator on your last FPS submission for the tax year.

You also need to prepare to give your employees a P60 if they are in your employment on 5 April 2022. You have got until 31 May 2022 to do this.

If you are not going to pay anyone again this tax year, remember to send an EPS with the indicator ticked to show you did not pay anyone in the final pay period and it is the final submission. You have until 19 April 2022 to do this, but you will get a message from the Generic Notification Service if you file it after 11 April 2022.

Student and postgraduate loans: updated thresholds and rates from 6 April 2022

The student and postgraduate loans thresholds and rates are as follows:

Plan 1 ― £20,195

Plan 2 ― £27,295

Plan 4 ― £25,375

Postgraduate loan ― £21,000

Deductions for:

  • plans 1, 2 and 4 remain at 9% for any earnings above the respective thresholds
  • postgraduate loans remain at 6% for any earnings above the respective thresholds

Gift Aid Declarations

33E713CC-CCCF-4814-B5DB-A033FAEAC0AAA Gift Aid declaration allows charities and community amateur sports clubs (CASCs) to claim tax back on eligible donations.

It’s important that you keep records of declarations and Gift Aid payments.

If you make a Gift Aid claim without collecting a declaration from the donor, HMRC may ask you to repay the equivalent amount in tax.

Declaration formats

A declaration by a donor can be made in writing, verbally or online. Whichever format you use, donors must provide the required information for your Gift Aid claim to be valid.

HMRC template declarations

HMRC provides free template declaration forms for you to use. You don’t have to use a template, but if you do, you can be sure that declarations will meet HMRC’s requirements.

You can include additional information to suit your charity or CASC’s needs, eg reference numbers.

What declarations must include

There is no set design for a declaration form or a verbal declaration, but it must include:

  • the name of your charity or CASC
  • the donor’s full name
  • the donor’s home address
  • whether the declaration covers past, present or future donations or just a single donation
  • a statement that the donor wants Gift Aid to apply (this could be a tick box on a written or online declaration)
  • an explanation that the donor needs to pay the same amount or more of UK Income Tax and/or Capital Gains Tax as all charities and CASCs will claim on the donor’s gifts in a tax year and that the donor is responsible to pay any difference   

For more detailed information click here

The 6 Main Duties of Trustees

7CF0F4E4-98CB-4DC0-A5EF-6A1ABE6BCA14Trustees have overall control of a charity and are responsible for making sure it’s doing what it was set up to do. Their main duties are:

1. Ensure your charity is carrying out its purposes for the public benefit

You and your co-trustees must make sure that the charity is carrying out the purposes for which it is set up, and no other purpose.

2. Comply with your charity’s governing document and the law

You and your co-trustees must:

  • make sure that the charity complies with its governing document
  • comply with charity law requirements and other laws that apply to your charity

3. Act in your charity’s best interests

You must:

  • do what you and your co-trustees (and no one else) decide will best enable the charity to carry out its purposes
  • with your co-trustees, make balanced and adequately informed decisions, thinking about the long term as well as the short term
  • avoid putting yourself in a position where your duty to your charity conflicts with your personal interests or loyalty to any other person or body
  • not receive any benefit from the charity unless it’s properly authorised and is clearly in the charity’s interests; this also includes anyone who is financially connected to you, such as a partner, dependent child or business partner

4. Manage your charity’s resources responsibly

You must act responsibly, reasonably and honestly. This is sometimes called the duty of prudence. Prudence is about exercising sound judgement.

5. Act with reasonable care and skill

As someone responsible for governing a charity, you:

  • must use reasonable care and skill, making use of your skills and experience and taking appropriate advice when necessary
  • should give enough time, thought and energy to your role, for example by preparing for, attending and actively participating in all trustees’ meetings

6. Ensure your charity is accountable

You and your co-trustees must comply with statutory accounting and reporting requirements.

Find out more here

Prepare for the Health and Social Care Levy

D55F3A85-4C8C-4000-8482-9D1DEE8C5C44Your National Insurance contributions might increase when the Health and Social Care Levy comes into effect in the UK (England, Scotland, Wales and Northern Ireland) on 6 April 2022.

For tax year 6 April 2022 to 5 April 2023

Employer Class 1, employee Class 1, Class 1A, Class 1B and Class 4 National Insurance contributions will increase, for one year, by 1.25 percentage points.

From 6 April 2023

The National Insurance contribution rates will go back down to 2021 to 2022 levels, and the levy will become a separate new tax of 1.25%.

How the levy will affect you

Between 6 April 2022 and 5 April 2023

If you are an employer, employee or self-employed (and below the State Pension age), you will pay the 1.25 percentage points increase in National Insurance contributions.

From 6 April 2023

The separate levy of 1.25% will apply to the same amounts for the following classes of National Insurance contributions:

  • Class 1 that are above the primary and secondary thresholds
  • Class 1A and Class 1B for employers
  • Class 4 for the self-employed

If you’re an employer

If your business pays Class 1, Class 1A or Class 1B National Insurance contributions, you’ll need to start paying the 1.25 percentage points increase in contributions from 6 April 2022. You’ll then need to pay the separate 1.25% levy from 6 April 2023.

You may also have to pay the separate levy from 6 April 2023 for employees who are over State Pension age.

HMRC is asking employers, where appropriate, to include the following message on payslips:

1.25% uplift in NICs, funds NHS, health & social care

Find out more details here

Supporting mental health at work

2817455C-98F1-4E72-9769-8E9C7D242422Information from ACAS

Employers have a ‘duty of care’. This means they must do all they reasonably can to support their employees’ health, safety and wellbeing.

If an employee has a mental health issue, it’s important their employer takes it seriously. For example, it’s a good idea to talk to the employee to find out what support they might need at work.

There are many types of mental health issue. An issue can happen suddenly, because of a specific event in someone’s life, or it can build up gradually over time.

Common mental health issues include:

  • stress (this is not classed as a medical condition but it can still have a serious impact on wellbeing)
  • depression
  • anxiety

Less common ones include:

  • bipolar disorder
  • schizophrenia

Creating a supportive environment

It’s helpful if employers create an environment where staff feel able to talk openly about mental health.

For example:

  • treating mental and physical health as equally important
  • making sure employees have regular one-to-ones with their managers, to talk about any problems they’re having
  • encouraging positive mental health, for example arranging mental health awareness training, workshops or appointing mental health ‘champions’ who staff can talk to

Employers can find out more about promoting positive mental health at work, including:

  • understanding mental health 
  • creating a mental health strategy
  • educating the workforce 

More information can be found here

What happens if you do not report payroll information on time

D55F3A85-4C8C-4000-8482-9D1DEE8C5C44When penalties are charged

You can get a penalty if:

HMRC will not charge a penalty if:

  • your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday, however employers who regularly file after the payment date but within 3 days may be contacted or considered for a penalty
  • you’re a new employer and you sent your first FPS within 30 days of paying an employee
  • it’s your first failure in the tax year to send a report on time (this does not apply to employers who register with HMRC as an annual scheme)

How much you pay

What you pay depends on how many employees you have.

Number of employees Monthly penalty
1 to 9 £100
10 to 49 £200
50 to 249 £300
250 or more £400

If you run more than one PAYE scheme, you can be charged penalties for each.

How we estimate what you owe

HMRC may raise a specified charge based on an estimate of how much we think you should pay if you do not:

  • submit your FPS on time
  • tell HMRC, by sending an EPS, that you have not paid any employees

This is based on your previous PAYE payment and filing history. You’ll be able to see any specified charge by looking at your PAYE account online.

A specified charge does not replace the need for you to send your FPS or EPS. Only submitting the missing FPS or EPS for each month will:

  • replace the charges with the amount that is due for each month
  • support an appeal you make against a late filing penalty

If you send updated year-to-date figures in your next FPS instead, the specified charges will remain in place. However, your accounting record will be adjusted to reflect the year-to-date figures given in the later month.

If you get a penalty

HMRC sends penalty notices every quarter. A notice will include:

If you pay the penalty within 30 days of getting the notice you will not be charged interest.

You can appeal if you think:

  • the penalty is not due
  • the amount of the penalty is wrong
  • you had a reasonable excuse for sending your reports late

Reasons you can give for grounds of appeal are:

  • data on the returns was incorrect
  • death or bereavement
  • filing expectation incorrect
  • filed on time
  • fire, flood or natural disaster
  • ill health
  • IT difficulty
  • missed correction or easement
  • no longer have any employees
  • no payments to employees
  • theft or crime
  • other – only use this option if your reason for appeal does not fall into any of the categories in the online system

More information can be found here

Insolvency and Redundancy Payments

Insolvent jpegPreviously, if your employer became insolvent, and you were therefore made redundant, you used to have to go to an employment tribunal to claim all redundancy payments, but now you can apply direct to the government’s  Insolvency Service for the money that you are owed.

How to claim for redundancy and other money you’re owed by an employer

To apply, you must complete the online application. The Insolvency Service will then assess your claim and pay you the money you’re entitled to.

Separate payments are made for different parts of your claim, such as redundancy pay, holiday pay and arrears of pay. You will then be sent a letter each time that the Insolvency Service makes a payment. This means that you may get several different letters from the Insolvency Service.

Further Government Guidance

If you were made redundant on or after 6 April 2021, your weekly pay is capped at £544. If you were made redundant before 6 April 2021, these amounts will be lower. This means if your gross weekly pay was more than this, we have capped each one of your payments.

If you are owed more than the maximum we can pay, you can register as a creditor in the insolvency for any outstanding money you’re owed.

Further details can be found here

Employment Contracts

Employment Contract jpegAll employees have an employment contract with their employer. A contract is an agreement that sets out an employee’s:

  • employment conditions
  • rights
  • responsibilities
  • duties

These are called the ‘terms’ of the contract.

Employees and employers must stick to a contract until it ends (for example, by an employer or employee giving notice or an employee being dismissed) or until the terms are changed (usually by agreement between the employee and employer).

Accepting a contract

As soon as someone accepts a job offer they have a contract with their employer. An employment contract does not have to be written down.

A contract between an employer and an employee or worker is a legally binding agreement. This could be a ‘contract of employment’ or a ‘contract of service’.

A contract can be agreed verbally or in writing.

What an employer must provide in writing

Anyone legally classed as an employee or worker has the right to a written document summarising the main terms of their employment.

Those legally classed as workers do not have the right to written terms if they started the job before 6 April 2020.

The legal term for this document is the ‘written statement of employment particulars’. It includes information such as pay and working hours.

This document is often referred to as the ’employment contract’. But by law, the employment contract is broader than just these written terms – for example, employment law is also part of an employee’s contract but usually the law will not be written in full in the document.

Contract terms

The legal parts of a contract are known as ‘terms’. An employer should make clear which parts of a contract are legally binding (for example, an employer must pay employees at least the National Minimum Wage)

More detailed information can be found here on the ACAS site, and here on the Government website

Shared Parental Leave and Pay

Parents and children jpegHow it works

You and your partner may be able to get Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) if you’re:

  • having a baby
  • using a surrogate to have a baby
  • adopting a child

You can share up to 50 weeks of leave and up to 37 weeks of pay between you.

You need to share the pay and leave in the first year after your child is born or placed with your family.

You can use SPL to take leave in blocks separated by periods of work, or take it all in one go. You can also choose to be off work together or to stagger the leave and pay.

To get SPL and ShPP, you and your partner need to:

Eligibility for birth parents

To be eligible for Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP), both parents must:

  • share responsibility for the child at birth
  • meet work and pay criteria – these are different depending on which parent wants to use the shared parental leave and pay

You’re not eligible if you started sharing responsibility for the child after it was born.

More details and information can be found here