PAYE Updates for 2014: Essential Information

Are you completely up to date about how changes to PAYE affect the financial health of your company? From 2014, significant changes have been introduced to the PAYE system. These changes will affect anyone who employs people to work for their company. Find out more about the impact of PAYE changes and what you need to do to keep in good financial health – and play by the tax rules.

  1. Real Time Information

Real Time Information (RTI) is a process whereby the payroll information is provided to HMRC at the same time (or before) the employee is paid. In most cases this is set up and processed automatically using payroll software, according to http://www.berkeleyhamilton.co.uk, but if this is not the case for you then you need to work out how to integrate RTI into your PAYE system. RTI hasn’t exactly enjoyed a smooth introduction so if you are experiencing problems get some professional advice on how late penalties or other issues like interest will affect you.

  1. National Insurance Changes

2014 sees some major changes to the way national insurance is calculated and managed. These include how much an employer can deduct from their Class 1 national insurance bill. Also, 2015 changes include age limits and national insurance abolishment in certain cases. There is a new class 3A contribution that is in place from October 2015. Again, if you need help with clarification or you wonder whether you are completing the process in the correct way then it helps to be able to talk the issue over with a financial professional.

  1. Pensions Considerations

As of April 2014 the annual limit that applies to tax relief for pensions is brought down from £50,000 to £40,000. These changes affect how much employees are paid and whether a pay rise will exceed the limits, and will also affect employees with a relatively high amount of money in pension savings.

4. Income Tax

There will be an increase in the personal allowance from £9,440 to £10,000, starting from 6th April 2014. Also, there will be a reduction of the band where tax is paid at a rate of 20 %. This reduction is from £32,010 to £31,865. The point at which an employee will pay the higher rate of tax will rise from £41,450 to £41,865. This is a small increase but it will mean that some employees pay more tax – if you need advice on this matter, contact a qualified accountant. From 2015 there will be a transferable tax allowance of up to £1,050.

  1. Company Cars and Fuel

If an employee has a company car they may be taxed more in 2014 as there is a one percent rise in the rates used to work out the company car taxable benefit. Further changes have also been introduced regarding company cars, as well as changes to share and option schemes, limited liability partnerships, and unused PAYE schemes.

 

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