Tag: payroll

Query on P60

After nanny is issued with her P60, she may look at it and query some of the details.

One common question from both nanny and the employer is that the total gross pay is too low. The gross pay is for the previous tax year only, not the whole of the employment and may also include earnings from a previous employer if nanny started part way through that tax year.

Another query regarding the pay is that it is too high. If nanny is paid a net salary say £1000 a month, they would expect the pay to say £12,000. However, that is the net salary, the tax, employee national insurance, employee pension costs and student loans are on top of this and then added to the net to give the gross salary.

HMRC Payment Deadlines

In order to avoid penalties and interest, it is important to make sure you pay HMRC on time for tax, employee and employer national insurance and student loan deductions.

Here is a note of each quarter’s payment and payment deadlines:

 

Quarter                       Period for                                  Payment Date

Quarter 1                     6th April to 5th July                       22nd July

Quarter 2                     6th July to 5th October                 22nd October

Quarter 3                     6th October to 5th January           22nd January

Quarter 4                     6th January to 5th April                 22nd April

 

If your PAYE exceeds over £1,500 a month, you will have to pay HMRC monthly instead of quarterly.

The best way to pay them is directly via their website, you will get a confirmation email from them stating all the transaction details in case there was ever a dispute of payments- https://www.tax.service.gov.uk/pay-online/epaye

Change to Payslips from April 2019

Some employers may not be aware that there was a crucial change to the Employment Rights Act 1996 coming into effect at this date as well.

The change affected anyone who receives a payslip. Employers are obliged to present all their workers with an itemised pay statement. This applies to not just “employees” but also “workers” who may not currently be processed through the payroll system and should provide a greater degree of transparency for the worker to establish the hours of work for which they are being paid. More information on employment status can be found here: https://www.gov.uk/employment-status.

On top of that, in the case of employees whose pay is dependent on the time worked, the number of hours worked must be shown on their payslip.

What do you need to do?

Employers must provide payslips for ALL their workers from April 2019. They must also “include the hours worked on itemised pay statements, but only if the pay varies as a consequence of the time worked”. So those staff filling out timesheets with fluctuating hours will need those hours displayed on every payslip.

The employer must either:

  • Show the combined number of hours worked for which payment is being made; or
    • Itemise the figures for different types of work worked and/or different rates of pay.

Similar to National Minimum Wage (NMW) implementation, the new amendment will not apply to wages, or salary paid in respect of a period of work, which commences before the date the order comes into force on 1st April 2019

The reason for these changes is that by introducing these changes the Government hopes to reduce the NMW violations and encourage better transparency, which in result will lead to workers being more in control of their rights.

Nannies and your Company

I have my own company; can I pay nanny through my payroll?

No. Nannies are considered a personal employee and should not be under a company’s PAYE. Nannies should not be paid through your company, but through your own personal bank account.

Therefor you need to register yourself as an employer of a nanny and register nanny through this new company and process and submit payroll through this new company.

You can either do this yourself through HMRC or contact us at payrollfornannies.co.uk and we will then hopefully take the responsibility of doing this on your behalf

Employment Allowance

HMRC allow most employers to get £3,000 off their National Insurance liability.

Unfortunately, if you employ someone for personal, household or domestic work you are unable to claim this as the employees are being employed in a personal capacity to support the running of a household.

It is important to know the rules otherwise you could end up paying back this money to HMRC.

You can claim on the following:

old age

mental or physical disability

past or present dependence on alcohol or drugs

past or present illness

past or present mental disorder

You cannot claim the Employment Allowance if you are employing a nanny unless the nanny is employed for an individual who needs care because of one of the reasons set out above.

To claim for the Employment Allowance, it will need to be submitted via payroll software by means of sending an EPS (Employment Payment Summary).

NMW National Minimum Wage 2020/21

From April the NMW (National Minimum Wage) rates are changing for the 20/21 tax year.

As an employer you must comply with the national minimum wage, if you do not you could end up in an Employment Tribunal or be reported to HMRC and face a fine of up to £20,000.

The new hourly rates for the tax year 2020/21 are:

  • Apprentice   – £4.15
  • 16 to 17 year old   –  £4.55
  • 18 to 20 year old   –  £6.45
  • 21-24 year old   –  £8.20
  • 25+   –  £8.72

If nanny lives in the family home and not separate accommodation provided by the employer, then the national minimum wage does not apply.

For live in nannies, there is a daily accommodation offset rate of £8.20 per day, £57.40 a week. These rates are set every April, so it is important to keep up to date with the new legislation. These rates are from April 2020.

For accommodation provided to nanny other than the family home, this will need to be declared as a Benefit In Kind.

Zero-Hours contracts

‘Zero hours contract’ is a non-legal term used to describe many different types of casual agreements between an employer and an individual.

Generally speaking, a zero hours contract is one in which the employer does not guarantee the individual any hours of work. The employer offers the individual work when it arises, and the individual can either accept the work offered, or decide not to take up the offer of work on that occasion.

Regardless of how many hours are offered, the employer must pay at least the National Minimum Wage.

Everyone employed on a zero hours contract is entitled to statutory employment rights. There are no exceptions.

A person will benefit from the employment rights associated with their employment status and individuals on a zero hours contract will either have the employment status of a ’worker’ or an ‘employee’.

Any individual on a zero hours contract who is a ‘worker’ will be entitled to at least the National Minimum Wage, paid annual leave, rest breaks and protection from discrimination.

Nanny and Additional Employment

When nanny gets an additional job whilst still in your employ, it is her responsibility to make sure her tax codes in each employment are correct.

As an employer, you could always notify her of her tax situation in your employment and what should happen in her 2nd job. This way you have mitigated any risk of an under payment for nanny and potentially your costs increasing if you have agreed a net wage.

If you are nanny’s main job and have the tax code 1250L for her, if she gets another job, Basic Rate tax (BR) must be applied in her other job.  This can be indicated by nanny completing a starter checklist and ticking statement C –

https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/PersonalTax_iForms/1.0/SC&template=SC.xdp

 

Bank Holidays

Bank Holidays 2020

2020 is upon us and it is always handy to have a list of the bank holidays for the year and what day of the week they fall on.

These are the dates of the bank holidays in 2020 for England.
1 January Wednesday New Year’s Day
10 April Friday Good Friday
13 April Monday Easter Monday
8 May Friday Early May Bank Holiday
25 May Monday Spring bank holiday
31 August Monday Summer bank holiday
25 December Friday Christmas Day
28 December Monday Boxing Day

 

If a bank holiday is on a weekend, a ‘substitute’ weekday becomes a bank holiday, normally the following Monday.

It is worth noting that if nanny does not work 5 days a week that she is still entitled to bank holidays on a pro rata basis, for example if nanny only works 3 days per week then she is still entitled to 3/5ths of the 8 bank holidays whether her working day falls on a bank holiday or not.

Tax Year End Adjustments

As the end of the tax year approaches, are nanny’s payslips correct?

It is important to make sure that what is being submitted to HMRC is correct, and the P60 we will shortly produce is right.

Has nanny had a pay change that is not reflected on the payslip?

Have you given nanny a bonus recently?

Has nanny recently changed address or changed her name?

Always check nanny’s payslips as her tax code may have changed causing her net pay to differ