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What Employers Need to Know About an Employee’s P6 Tax Code Notice

What Employers Need to Know About an Employee’s P6 Tax Code Notice 1368 912 Growth Partners

At intervals throughout the year, it may be necessary to change your employee’s tax code, and a P6 tax code notice from HMRC will usually be sent to you when it is time to do this.

These changes can occur for a variety of reasons, the main ones being:

  • An employee’s tax-free income, or personal allowance, has either increased or decreased
  • A new employee has provided you with a P46 and HMRC inform you of the correct tax code
  • You have sent new tax codes for your employees at the beginning of the tax year

 What is a P6 tax code notice?

Issued by HMRC, a P6 form provides new details of an employee’s tax code to their employer, such as previous pay and tax.

A P6 is a form issued by HM Revenue and Customs (HMRC) to employers to provide details of an employee’s tax code, previous pay, and tax.

Should you receive a P6 tax notice from HMRC, you must check and/or change the respective employee’s tax code and, if applicable, enter previous pay and tax.

How do you get a P6 from HMRC?

P6 tax code notifications are now sent online as opposed to the traditional paper form. This can help employees to keep on top of requests and ensure everything is accessible in one easy place – your HMRC gateway.

Does a P6 override a P45?

In most cases, a P6 form will actually override a P45.

For example, if you take on a new starter who joins without a P45 as they have not yet received it from their previous employer, but they fill in a new starter checklist instead, the P6 will override the P45, even if it eventually becomes available at a later date.

This is because a P6 is issued by HMRC and is therefore considered more up to date and relevant than a late P45.

Do you need help handling your employee tax code changes?

The team at Growth Partners have many years of experience helping businesses to deal with tax code notifications, ensuring all matters are dealt with quickly and efficiently.

Simply contact us today to find out more about our services and how we can help you to change your employee’s P6 tax code as per HMRC requests.

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14 of Our Most Commonly Asked Payroll Questions: Answered

14 of Our Most Commonly Asked Payroll Questions: Answered 1413 886 Growth Partners

The world of HR and payroll continually changes, leaving many business owners with a multitude of questions.

Luckily, as experts in all things payroll, we’ve answered some of our most commonly asked questions, hopefully shining a light on any issues you may be facing yourself with your own managed payroll.

  1. What form do I need to complete if we stop SSP, but the employee is still off sick?

If you stop SSP when an employee is still off sick, you should complete an SSP1 form and send it to the employee. This will help them claim employment and support allowance.

  1. What is classed as a linked period of sickness?

A linked period of sickness is when an employee has regular periods of sickness that last four or more days each, separated by less than eight weeks, which have lasted for longer than three years. In this case, SSP will stop.

  1. When can I stop paying SSP? 

The maximum amount of SSP is 28 weeks. Additionally, If an employee has had continuous series of linked sickness that has gone on for more than three years, you no longer have to pay them SSP.

  1. What happens to SSP if an employee is off-sick or self-isolating because of COVID-19?

Since 13 March 2020, employers should start paying an employee SSP from the first qualifying day they are off work – if they’re off for at least four days in a row. Employees do not qualify for SSP if they are self-isolating solely because they are entering or returning to the UK after going abroad.

  1. What should I do when an employee’s tax code is wrong?

Usually, for new employees, if they haven’t completed a new starter checklist, their tax code will be wrong.  The new starter checklist is a HMRC form which all employees should complete on their first day of employment.

  1. My employee insists they have paid too much in deductions – what do I do?

Many employees don’t fully understand the payroll legislation for both Tax and NI and when this becomes payable. It is your responsibility to explain the process to them and clearly show them that they have in fact paid the correct amount in deductions.

We provide our clients’ employees with a dedicated customer service team to help explain all pay documents and any deductions over live chat, email or phone.

  1. Why has an employee not been enrolled into the pension automatically? 

Auto-enrolment is based on age and earnings. All employees are automatically enrolled after the 3-month postponement period if they meet the qualifying criteria (age 22 and earn over £10000).

  1. How do I opt an employee out of the pension scheme?  

Under The Pensions Regulator rules, it is up to the employee to complete an opt-out form which they must get directly from the pension provider. You cannot opt an employee out on their behalf.

Please note, rules around SSP and payroll are different for some workers, so you should always refer to the latest advice on GOV.UK.

Transferring your payroll 

  1. Does a transfer of payroll providers need to take place at the start of a tax year?

No, you can transfer payroll providers at any time without any disruption to payroll.  However, depending on who you choose to outsource payroll to, it may cost you more if you choose not to transfer at the start of the tax year. This is because some payroll providers will be required to recreate your whole payroll since the start of the tax year. This will take time and therefore increase your costs.

You can outsource your payroll to Growth Partners at any time of year without disruption to payroll and without any set up costs.

  1. What is a Real Time Information Pay ID?

The RTI Pay ID captures your company’s employee reference. You enter this when you set up a new employee on your payroll. The Full Payment Submission (FPS) must be sent on or before payday and an Employers Payment Summary (EPS) must be submitted by the 19th of the following month to avoid fines from HMRC.

  1. What’s involved in transferring payroll providers?

If you transfer payroll providers at the start of the tax year, employers need to send the new payroll provider a list of all current employee data along with salary details. If you transfer providers at any other time, your payroll provider will require a lot more data from you regarding previous salary payments.

However, you can transfer payroll to Growth Partners as part of SMART Employment model at any time with minimal data.

  1. What’s involved in transferring payroll providers to a PEO model? 

When you are transferring payroll providers and the HMRC liabilities as part of the PEO model, you need to send the new payroll provider a complete list of all current employee data, along with salary details. You also need to ensure employees are set to ‘leavers’ in the old payroll and produce a P45 for each of them. The P45s are not sent out to employees – they are sent to the new payroll provider only.

  1. How long does it take to transfer payroll providers?  

Depending on the size of the business and the complexity of the payroll, it can take between one to two weeks for small to medium businesses, and up to four to six weeks for larger businesses.  Some payroll providers may require longer than this – particularly if you wish to transfer your payroll midway through a tax year.

  1. Do I need to contact HMRC if I change payroll providers?

You do not usually need to contact HMRC if you change payroll providers. However, if you wish to outsource your payroll to specialists like Growth Partners who take on the HMRC responsibilities for you, then you will need to complete a year-end submission.

The year-end submission will confirm to HMRC that you have closed your old PAYE. This is usually done via an EPS submission once you have processed your final payroll. You will also need to confirm the cessation date on the submission.

Payroll business solutions

When you’re investing time into running your successful business, it can become difficult to keep on top of everything. By outsourcing your payroll, you can reduce your costs and save essential business time, allowing you to focus on areas that are important to contributing towards your continued growth.

Contact the team at Growth Partners today to find out more about our all-in-one solution for payroll, pensions, benefits, wellbeing, and employee engagement services.

What are the IR35 tax changes and how do they apply to you?

What are the IR35 tax changes and how do they apply to you? 1800 1200 Growth Partners

The rules around IR35 and off-payroll working are changing, and from 6 April 2021, the new tax changes will come into force for the private sector. In this post, we discuss what’s changing, for who, and what the options are if you think you could be affected.

What are the IR35 tax changes?

From 6 April 2021, all private sector companies employing off-payroll staff – usually referred to as contractors – may have to take them on as an employee. If the employer dictates their terms, they can no longer be treated as contractors – they must, by law, be treated as employees.

Private sector companies receiving the services of a contractor will be responsible for deciding on the workers’ employment status.

The new rules make sure that all workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees. These rules are sometimes known as ‘IR35’. The changes are all about making sure you have consistency in how you treat employees.

Who is affected by the IR35 tax changes?

The IR35 tax changes – also known as changes to off-payroll working rules – may affect any company receiving services from a worker who isn’t on their payroll. In most cases, these are companies that work with contractors. It could also be any worker who provides their service to a company through their own limited company or another type of intermediary such as:

  • a partnership
  • a personal service company
  • an individual

The company receiving the service is responsible for determining if the changes apply to them, rather than the worker providing the service.

You can use the employment status for tax tool to help you determine any workers’ employment status.

What are your options?

  1. Do nothing

HMRC published a statement about supporting companies through this change and explained a ‘light touch’ approach to penalties will be taken in the first 12 months, unless there is evidence of deliberate non-compliance.

  1. Take the workers on as staff

Onboard these employees the way you would any new starter and include them in everything you do for your existing staff. This means a contract of employment agreeing pay, auto-enrolment pension, sick leave entitlement and the ability to accrue holiday leave and pay.

  1. Get business support from payroll and pension experts

You can outsource these responsibilities and the compliance that comes with it to a specialist payroll and pensions expert. You can do this just for the contractors or for all your staff.

How we can help

The change is coming, and we can help.

As payroll and pensions experts, we can advise you on your situation and the options available to you. Through our services, we can help process the increase in employees you are likely to have on your payroll and look after all of their needs. This means taking on the HMRC responsibilities – leaving you to focus on growing your business.

Through our SMART Employment model, we can also provide your new employees with the same range of benefits as other employees – making it clear your company is treating the new workers the same.

If your business is affected, contact us for a chat about your options or arrange a free, no-obligation consultation.

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