Useful Information

National Minimum Wage (NMW)

These rates are for the National Minimum Wage and the National Living Wage from 1 April 2017.

Adult 25 and over £7.50
Adult 21 -24 £7.05
Adult 18- 20 £5.60
Under 18 £4.05
Apprentice £3.50
For more information click here

Statutory Sick Pay (SSP)

The weekly rate of SSP for days of sickness from 1 April 2017 is £89.35

For more information click here

Penalties

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

  • CIS 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)
4-6 2%
7-9 3%
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.

Initial penalties:

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.

Coding Notices

The three types of tax code
Type of tax code What the tax code means
Suffix codes

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.
Prefix codes

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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