Reviewing your payroll processes
Once you start reporting in real time, the way in which you deal with new starters, employees who leave, and End of Year also changed.
It’s vital that you get correct personal information for new people you take on as soon as possible. In particular, their:
- full name
- date of birth
- National Insurance number
A big advantage of reporting in real time, is you won’t have to report new starters separately to HMRC; instead, information about them will be sent automatically when you report your PAYE information. But if a new starter turns up without a P45 you’ll still be able to use form P46 to collect the information required to determine which tax code to use for them. However, unlike now, you will keep the form and instead send the information to HMRC in real time.
Employees who leave
As with new starters, you won’t have to report information separately about employees who leave, form P45 (Part 1) will no longer be sent to HMRC, you’ll tell them about leavers as part of your routine reporting of payroll information. But please note that you will still give Parts 1A, 2 and 3 of form P45 to employees who leave. The information on this will help any new employer the leaver goes to.
End of Year
When you instigate real time reporting, you (or any third party acting on your behalf) will no longer need to complete forms P14 and P35. This is because your payroll software will tell HMRC about all payments made each time you report payroll information in real time. You will, however, need to indicate on your last payment submission on or before 5 April (the end of the tax year) that this is the final submission for the tax year. And you’ll still need to complete the end of year declarations and questions. You’ll also need to continue to give those workers still employed by you at the end of the tax year an End of Year Certificate on form P60.
Employers reporting PAYE information to HMRC in real time will play an important role in supporting the introduction of Universal Credit by the Department for Work and Pensions (DWP). This change provides the opportunity to transform the existing benefit system into a service fit for the 21st century.
HMRC will pass to DWP some of the real time information provided by employers, DWP will use the information in the Universal Credit award calculation. Information reported in real time will mean Universal Credit payments can be adjusted according to a claimant’s earnings, this will lessen bureaucracy making it easier and less risky for people to move from benefits, as the system is responsive to fluctuations in working patterns and earnings.
As many pubs employ temporary or part-time staff (who may be in receipt of benefits) this in turn could be advantageous for you as you could offer flexible working hours, increasing hours in line with your pub’s business demand without the need to recruit and train new staff.
Avoiding employing someone illegally
If you’re going to employ someone, you need to make sure that they’re entitled to work in the UK before they start working for you. Just because they can give you a National Insurance number doesn’t prove that they’re entitled to work in the UK.
The UK Border Agency recommends that employers conduct checks on entitlement to work for all new employees to prevent illegal migrant working. If you don’t complete these checks, you could be charged a civil penalty of up to £10,000 per illegal worker. If as part of these checks you have reviewed the employee’s passport, you should make a note of the passport number because you need to send this to HMRC in the employee’s first Full Payment Submission (FPS) to report their payroll information.
For more information on the Immigration Act 2016 and how it affects pubs and employing staff please see this article.