National Minimum Wage (NMW)
These rates are for the National Minimum Wage and the National Living Wage from 1 April 2018.
|Adult 25 and over||£7.83|
|Adult 21 -24||£7.38|
|Adult 18- 20||£5.90|
Statutory Sick Pay (SSP)
The weekly rate of SSP for days of sickness from 1 April 2018 is £92.05
Late Payment Penalties
The late payment penalties apply to all employers and contractors – whether you employ one or several hundred employees or subcontractors. They apply to monthly, quarterly and annual periods of PAYE starting on or after 6 April 2010.
HM Revenue & Customs (HMRC) charges late payment penalties on PAYE amounts that are not paid in full and on time. This includes:
monthly, quarterly or annual PAYE (Pay As You Earn)
student loan deductions
Class 1 National Insurance contributions (NICs)
annual payments of employers’ Class 1A and Class 1B NICs
determinations made by HMRC where it appears that there may be further tax payable
decisions for example about a person’s liability to pay NICs and the amount payable
Penalty charges for late monthly and quarterly PAYE payments
You will not be charged a penalty if only one PAYE amount is late in a tax year – unless that payment is over six months late. The amount of the penalty will depend on how much is late and how many times your payments are late in a tax year. The table below shows how the penalties are calculated.
Note: The first failure to pay on time does not count as a default.
|No. of defaults in a tax year||Penalty percentage||Amount to which penalty percentages apply|
|1-3||1%||Total amount that is late in the tax year (ignoring the first late payment in that tax year)|
|10 or more||4%|
Example: ABC Ltd paid four payments late in the tax year 2016-17. The first late payment is not counted as a default; therefore they have three defaults in total, which means that a penalty of 1% is due on the total amount of PAYE paid late (excluding the first late payment).
Additional penalties for monthly and quarterly payments over six months late
If you have still not paid a monthly or quarterly amount in full after six months, you may have to pay a penalty of 5 per cent. A further penalty of 5 per cent may be charged if you have not paid after 12 months. These penalties may be charged in addition to the penalties for monthly and quarterly payments described in the previous section and apply even where only one payment in the tax year is late.
PAYE Late Filing Penalties
You will not be charged a penalty if only one full payment submission (FPS) is late in a tax year. There is also a 3 day period of grace from the strict due date of 19th of the month.
|Number of employees||Monthly Penalty|
|1 – 9||£100|
|10 – 49||£200|
|50 – 249||£300|
|250 or more||£400|
Additional penalties for returns over 3 months late are 5% of the tax & NIC due on that return.
|The three types of tax code|
|Type of tax code||What the tax code means|
One or more numbers followed by L, P, T, or Y
|Example: 345L, 456P or 0T. The number plus ‘9’ is the amount of pay an employee can earn from you in a tax year before they pay any tax. For example a tax code 508L means the employee is entitled to £5,089 of tax-free pay in the tax year.The letter determines how we’ll ask you to adjust the number part of the code to take account of any Budget changes that may affect the employee’s tax-free pay.|
Start with D or K
|Example D0, D1 or K123. The code D0 means you must deduct tax at the higher rate from all pay and code D1 means you must deduct tax at the additional rate from all pay.The letter K means your employee has already used their tax-free allowances for the year. The number plus ‘9’ indicates how much must be added to their taxable income to make sure they pay tax on all the taxable income they have received. This may mean you end up deducting tax from their pay at higher rates than normal. For example, K123 means £1,239 needs to be added to their taxable income to ensure they pay the right tax.|
|Letter only codes
BR or NT
|BR means you must deduct tax at the basic rate from all their pay. NT means you mustn’t deduct any tax from their pay.
Note: Only refund any tax deducted from an employee before the issue of an NT code when HMRC tells you to operate it on a cumulative basis.
Week 1/month 1 tax codes
Most tax codes have the effect of deducting tax evenly over the full tax year – that way your employees’ take-home pay doesn’t change much from week to week or month to month. These tax codes operate on a ‘cumulative’ basis.
However sometimes you’ll have to use a special method of working out their tax deductions – called a ‘Week 1’ or ‘Month 1’ basis depending on how often you pay them. With this method, you ignore all previous pay and tax in the year. HMRC will sort out the final position with your employee at the end of the tax year.
You must use the Week 1 or Month 1 basis if:
HMRC tells you to
HMRC issues a code that says Week 1 or Month 1 – for example 522L M1 or 522L W1
our new employee gives you a P45 with a Week 1 or Month 1 code on it
It’s the 53rd pay week in a tax year
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