employer update - October 2004

We have been reviewing the Payroll services which we currently offer you in light of recent events and forthcoming changes. There are three main areas we would ask you to consider. These may apply to you.

Online Filing

As you may be aware the Inland Revenue are encouraging employers to make payment of tax and national insurance contributions electronically and also to file their future employee forms together with employers annual returns (P35) and P14 forms online. Large employers are already obliged to file and this was from 6th April 2004; however the Inland Revenue are offering an incentive to encourage small employers to do this in advance of the 2009/2010 deadline set for those who have fewer than 50 employees.

The incentive payments available amount to a maximum of £825! Spread over a five year period as follows:

2004/05 £250
2005/06 £250
2006/07 £150
2007/08 £100
2008/09 £ 75

With this in mind we have been developing our systems to ensure that the necessary hardware is in place so we can transfer your computer records in the correct format next April. This will allow you to maximise on the tax free amounts the Inland Revenue will offer you!

If you already use our payroll bureau it is anticipated that our fees for undertaking your payroll affairs will continue at similar levels, however to contribute to additional technology and work involved with on-line filing we will need to charge a small annual filing fee. In order for us to proceed on your behalf it will be necessary for us have your authority.

We also intend to offer our on-line filing service to those clients who operate their own PAYE schemes throughout the year but would like to consider using us for a checking and filing service at the year end to take advantage of the Inland Revenue incentives. A pricing structure for our package of services will be available for this. So please ask for further information.

For those clients wishing to pursue this area themselves, filing may be done personally by using the Inland Revenue internet service.

Contracts of Employment

We are becoming increasingly aware that many employers are not providing their employees with contracts of employment and as a result are infringing basic employment laws, which will be heavily penalised. A contract of employment forms the basis of agreement between both parties and will provide the employment structure required should any disputes arise. Other changes to regulation also came in on the 1st October 2004 which you will need to know about.

We are in the process of developing a contract of employment preparation service which can be taken up in a number of ways depending on the size of your organisation and the number of employees you employ. We will be holding a seminar in the next couple of months to furnish employers with full details about their obligations and our new service that will be available.

Employee Status

The Inland Revenue are taking an extremely active interest in the employment status of individuals who are undertaking services for someone, to ensure they are correctly classed as being an employee or self-employed. The clarification process for this is not always obvious and there are a number of tests which should be considered. In particular they are looking at those engaged in the Construction Industry with a view to having the status of all workers correctly classified prior to the implementation of the new construction industry scheme to be operated from April 2006.

We will be contacting all our clients, who are within the construction industry throughout next year, to assist with their preparation for the new scheme and advise on changes which may have an impact on their business.

In the meantime, the status issue is something which should be considered now, by all businesses who have self-employed workers. The Inland Revenue will look at these carefully and as a result, the National Insurance implications should they consider these individuals are employed, may be substantial.

As each person’s circumstances are unique, we would be happy to provide advice as appropriate. Please give us a call.

Should you like further information on any of the above aspects, please contact our tax department or the person you normally deal with.

To see more articles, visit our archive page.