Free payroll at HMRC.

If you have a small payroll for your business you can run this for free by using HMRCs' own payroll calculator. The service is an online one and although I have not used it, I understand from those that have that it is reasonably simple to use. I would stress though that you thoroughly read all the support pages so that you know what you need to do throughout the payroll year and that you have a good idea of what you should expect to see on the payslips.
This link will take you to the HMRC page to get you started. You can also register for online payroll on this page.

It's gift voucher season and the tax man wants a share!

With Christmas fast approaching I thought this would be a good time to give you some info about any Gift vouchers that you might be giving to your employees as a seasonal thank you or bonus. These are taxable!
Although I suspect that most people already know this in their hearts, they do on the whole, ignore this.
To treat them correctly they should be shown on the payslip and included in the calculations for National Insurance purposes. For company directors and anyone earning above £8,500 per annum they should then be added to the P11d (P9d for those earning less than £8,500 per annum) at year end for calculating the tax that is due. Sorry about this folks but Mr. Tax Man says you are not allowed to have any benefits without him grabbing a portion of it. Even at Christmas!

N.I. NUMBERS NOW ON PAPER

Since October 2010, HMRC have been phasing out the use of plastic National Insurance Number cards and from October 2011, any new or replacement National Insurance Numbers will be sent instead by way of a letter. Employers should now expect to see an employees’ N.I. number in either format. Individuals of course will need to keep the letter safe in the same manner as with the plastic cards. Personally, I prefer the card as I think a letter with this vital information is more likely to get lost or destroyed but I guess the government have to make savings somewhere other than just finding ingenious ways of taxing ‘Joe Public’.

If you have lost or don’t know your N.I. number you can request HMRC to send it to you by filling in the form Your National Insurance number at www.hmrc.gov.uk/forms/ca5403.pdf

Employers can trace N.I. numbers on behalf of their employees by filling in the form Employees National Insurance trace at www.hmrc.gov.uk/forms/ca6855.pdf

Both forms can be filled in on-screen then printed before signing and posting to HMRC.

HR and finance departments debate who should own payroll

A kind fellow networker from 4Networking sent me details of this article recently and I thought it was worthwhile posting on here. Please accept my apologies for being uber lazy and just copying and pasting the whole article however, I didn't think it needed any editing. I have taken the liberty of posting the comment that is also shown on the original article as a debatable point.

HR Editorial, 02 Sep 2011

Opinion is divided as to where the payroll function should sit within an organisation, according to a survey published yesterday by UK business management and information systems provider, Advanced Business Solutions.

The majority of respondents do, however, agree that payroll needs to be connected with the HR and finance departments regardless of where the function resides.

Advanced Business Solutions carried out the research with 79 HR and payroll professionals from both the UK and the USA.

The survey reveals that 36% of HR and payroll professionals believe the payroll function should sit between an organisation's HR and finance departments. A quarter state that the payroll function should reside within HR and 24% believe that the function should be part of the finance function.

The remaining 15% of participants took the view that payroll should be outsourced to a third party payroll specialist.

Simon Fowler, MD of Advanced Business Solutions (Commercial), said: "These findings highlight the uncertainty about the payroll function in general. As payroll naturally spans both HR and finance, it appears to be the precious orphaned child of an organisation - highly valued but without a clear home.

"If payroll systems and processes operate in isolation from the rest of the organisation, the payroll function is not operating as efficiently as it could be. By duplicating data entry across the different payroll, HR and finance systems, this could result in administration errors and lengthy processes. A standalone approach to payroll also fails to deliver a single, holistic view of each employee, which could result in ill-informed decision making."

www.HRmagazine.co.uk

Comment made by Audrey Ciccone 02 Sep 2011

Payroll is a transactional function which belongs in Finance. Human Resources owns compensation and compensation practices. Placing payroll under the HR umbrella keeps HR in the transactional and paper pushing role which we have finally begun to climb out of. HR's role is to support and drive business strategy through effective people practices. Compensation and reward strategies are set in HR. Leave the data entry to the accountants!

Tax Free Money for Directors

As the director of your own limited company you are actually the employee too and it is worthwhile considering putting yourself on the payroll. All taxpayers have a tax free allowance of approximately £7,500 a year (for the year 2011-12)  and my reliable accountant sources assure me that if you were to take this in dividends, it would be taken after the Corporation Tax has been calculated.   

The figures work like this; to take a dividend of £7,500 your company would need to make around £9,400 in profits before tax. If you take the same £7,500 as a salary you would save over £1875 in tax this year. This is true for all directors of your company. Of course, it will depend on your profits for the year and your accountant is the best person to advise you on this and the need for you to be on PAYE.

There is another benefit to running a payroll for directors and that is the NI contributions. Even if your earnings are below the limits for deducting NI, you will still be credited for being ‘in the system’ however, I think most accountants would agree that it is worthwhile making some NI contributions.