Plan and loan types and thresholds
With effect from April 2019, the thresholds for making Student Loan deductions are:
- Plan 1 – £18,935 annually (£1577.91 a month or £364.13 a week)
- Plan 2 – £25,725 annually (£2143.75 a month or £494.71 a week)
Repayments for Plan 1 and Plan 2 are calculated at 9% of the income above the threshold.
Postgraduate Loans (PGL) – £21,000 (£1750 a month or £403.84 a week)
Repayments for PGL are calculated at 6% of the income above the threshold.
Starting Student loan and PGL deductions, checking plan and loan type
You should work out the correct figure of employee earnings on which Student Loan and PGL deductions are due. The figure to use is the same gross pay amount that you would use to calculate your employer’s secondary Class 1 National Insurance contributions.
From 6 April 2019 your employee may be liable to repay a PGL at the same time as a Plan 1 or Plan 2 loan. If so, they’ll be due to repay 15% of the amount they earn over the threshold.
Start making Student Loan and PGL deductions from the next available payday using the correct plan and loan type, which you will select on your HMRC submission, if any of the following apply:
- your new employee’s P45 shows deductions should continue – ask your employee to confirm their plan and loan type
- your new employee tells you they’re repaying a Student Loan – ask your employee to confirm their plan and loan type
- your new employee fills in a starter checklist showing they have a Student Loan – the checklist should tell you which plan type and loan type to use, if your employee has both plan type 1 and 2, ask them to check with the Student Loan Company for the correct plan type to take deductions under otherwise, default to plan type 1 until you receive a student loan start notice SL1 that HMRC sends you
- HMRC sends you form SL1 ‘Start Notice’ – this will tell you which plan type to use
- HMRC sends you form PGL1 ‘Start Notice’ – this will tell you they have a PGL
- you receive a Generic Notification Service Student Loan reminder – ask your employee to confirm their plan and loan type
If your employee does not know which plan or loan type they’re on, ask them to check with the Student Loan Company (SLC). If they’re still unable to confirm their plan or loan type, start making deductions using Plan type 1 until you receive further instructions from HMRC – defaulting to Plan 1 is only available for Plan 1 or Plan 2 loans.
More detailed information can be found here
Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right
VAT-registered businesses with a taxable turnover above the VAT threshold are now required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns for VAT periods that started on or after 1 April 2019.
HMRC provides a wide range of digital services and support for businesses and the self-employed.
As an employer running payroll, you need to:
- report to HM Revenue and Customs (HMRC) on the previous tax year (which ends on 5 April) and give your employees a P60
- prepare for the new tax year, which starts on 6 April
| What you need to do
|Send your final payroll report of the year
||On or before your employees’ payday
|Update employee payroll records
||From 6 April
|Update payroll software
||From 6 April (or earlier if the software provider asks you to)
|Give your employees a P60
||By 31 May
|Report employee expenses and benefits
||By 6 July
Tax codes that are applied on a cumulative basis means that tax calculations look at the entire tax year when performing the tax calculation. Using a tax code on a cumulative basis means that every payday, the calculation performed is to work out the tax due on an employee’s earnings for the (tax) year to date then deduct from it the tax they have already paid on their earnings that (tax) year. The remaining figure is the tax due for the pay period.
A Cumulative Tax Code allows for an individual’s weekly / monthly Tax Free Allowance to be carried forward if it is not used. As an example – if an individual were to have a break from work (for example, due to unpaid leave or sickness etc), when they resume, it is often the case that they will pay little or no Tax until they have caught up with their Tax Free Allowances.
A non-cumulative tax code would be signified by an “X” or “W1/M1″ following the code. In these cases the tax would be worked out purely on the taxable pay for each individual pay period. Each payday is treated as if it is the first week or month of the tax year. Previous pay and tax details are ignored.
Company Tax Returns
You must complete a Company Tax Return if your charity is a limited company or unincorporated association when this is required by HM Revenue and Customs. You need to include the supplementary pages for charities and community amateur sports clubs (CASCs).
A charity is a limited company if it was set up by a:
- memorandum and articles of association
- royal charter or Act of Parliament
Limited companies must also send annual accounts to Companies House. You must complete a tax return when HMRC asks you to, even if no tax is due. You may have to pay a penalty if your tax return is late or you don’t complete one when you should.
You can find more information about charities and tax here
You may be put on an emergency tax code if you change jobs. HM Revenue and Customs (HMRC) will correct it automatically after you’ve given your employer details of your previous income or pension.
Your employer will get these details from your P45 – if you don’t have one, they should ask you for further information.
HMRC will also update your tax code when:
After your tax code changes
HMRC will adjust your tax code so you pay the right amount of tax across the year. They’ll write to you or email you when your tax code has been updated.
They will also tell your employer or pension provider that your tax code has changed. Your next payslip should show:
- your new tax code
- adjustments to your pay if you were paying the wrong amount of tax
Find out more here
When to apply to register your charity
Usually, you must register with the Charity Commission if your charity is based in England or Wales and has over £5,000 income per year. The commission will take action to secure compliance if it identifies a charity which isn’t registered but should be.
If your charity is a charitable incorporated organisation (CIO) it must register whatever its income.
Charities that don’t have to register
Small unincorporated charities
If your charity is based in England and Wales and isn’t a CIO, you don’t have to apply to register it if its annual income is less than £5,000. But you can still apply to HM Revenue and Customs for recognition as a charity to get charity tax breaks and claim gift aid.
You can apply to the commission to register this sort of charity voluntarily, but the commission will only consider applications in exceptional circumstances. For example, if you can prove that your charity has been offered significant funds but has to provide a registered charity number before it can receive the funds.
More details can be found here
Happy New Year everyone! Now we are all back at work, maybe it’s time to clarify who is a ‘worker’ in your organisation
A person is generally classed as a ‘worker’ if
- they have a contract or other arrangement to do work or services personally for a reward (your contract doesn’t have to be written)
- their reward is for money or a benefit in kind, for example the promise of a contract or future work
- they only have a limited right to send someone else to do the work (subcontract)
- they have to turn up for work even if they don’t want to
- their employer has to have work for them to do as long as the contract or arrangement lasts
- they aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client
Workers are entitled to certain employment rights, including:
- getting the National Minimum Wage
- protection against unlawful deductions from wages
- the statutory minimum level of paid holiday
- the statutory minimum length of rest breaks
- to not work more than 48 hours on average per week or to opt out of this right if they choose
- protection against unlawful discrimination
- protection for ‘whistleblowing’ – reporting wrongdoing in the workplace
- to not be treated less favourably if they work part-time
More details can be found here
We received this cry for help recently – ‘My employee is entitled to Statutory Maternity Pay, but we can’t afford to pay it – what can we do?‘
Help is available from HMRC
If you can’t afford to make payments
You can apply for HM Revenue and Customs (HMRC) to pay you in advance if you can’t afford to make statutory payments.
How to apply for advance payment
Apply online to be paid in advance for:
- Statutory Maternity Pay (SMP)
- Statutory Paternity Pay
- Statutory Adoption Pay
- Statutory Shared Parental Pay (ShPP)
You can apply up to 4 weeks before you want the first payment
You can find more details here