RTI Electronic Exchange (ElEx)

Transcription

1 RTI Electronic Exchange (ElEx) User Guide & Data Items Version 16.0 February 2016 P Simon Parsons MSc FCIPPDip MBCS Ian Brennan MSc FCIPPdip Steven McKenna MCIPPdip 2016 Ceridian Corporation. All Rights Reserved. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 1

2 Information This guide relates to the live operation of RTI (HM Revenue and Customs Real Time Information) for the 2016/2017 tax year onwards and the Ceridian Pay Solution. Additional resource in relation to tax year end, other statutory changes and Real Time Information (RTI) can be found at If you are a Linked-In user, Ceridian run a group which we would very much like you to participate in, there are a number of interesting discussions going on at any one time and it is a good vehicle on which to get answers to your questions. If you are interested in joining select the link Ceridian & UK Legislation on twitter If you have any queries regarding this document please contact your usual Ceridian Support Desk For further information about our products and services, please see our web site RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 2

3 Table of Contents What does the Ceridian RTI ElEx service do?...6 Clean Data and Data Improvement... 6 Changes to employee name and address... 7 The on or before principle... 8 Late PAYE Reporting Reason & Date (RTI field 154)... 9 Share related income Payroll ID and RTI No National Insurance number (NINO)! I have employees who are not to be reported on HMRC RTI Transferring an Employee from one payroll to another (same PAYE ref) Additional information and RTI BACS Hash and the Random number Taking on a new employee RTI and form P Using the right tax code for new employees and completing the starter declaration HMRC Starter Checklist Student Loans When is starter information sent to HMRC? Retirement and Pensions You won't be paying the employee a pension You will be paying the employee a pension A new pensioner Pensioner gives you a form P45 late New pension to deceased employee's dependant If a pension recipient dies If the pension passes to a body other than an individual RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 3

4 Pensions Trivial Commutation & Special Situations Flexibly Accessing Pension Rights Foreign Employees Right to Work Eligibility to work in the UK The General Rule PAYE tax exceptions (foreign employees) Using the right tax code for a seconded employee Shared Parental Pay (ShPP) & RTI Leavers Payments after leaving (PAL) Death PAYE & One-Off payments (including redundancy) Errors and Corrections Employee's personal details have changed Employee start date is wrong Employee leaving date is wrong Electronic messages sent by HMRC to employers Will the employer still receive paper notifications? How do I know what messages have been applied to the payroll? What happens with P6s and P9s where the tax codes may change within a couple of weeks of being issued, they would normally take the latest one but how would this work in the electronic system? The NINO is different. What s happened? I would like my bulk annual P9s/P6(b)s to be sent through electronically, what is the latest date by which this can be requested? HMRC notification in relation to National Insurance Numbers (NINO) HMRC Misbalance / Penalty letter / Interest charges Ceridian Data Items and HMRC RTI data requirements E012 Passport Number (RTI field 12) E013 Irregular Employment Payment Pattern Indicator (RTI field 40a) RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 4

5 E014 Number of normal hours worked (E058 / E059) (RTI field 54) E015 Late PAYE Reporting Reason & Date (RTI field 154) M780 Partners Surname or Family name entered on the ShPP claim (RTI field 74) M781 Partners Forename or Given name entered on the ShPP claim (RTI field 75, 76) M782 Partners Second Forename entered on the ShPP claim (RTI field 76, 77) M783 Partners NINO entered on the ShPP claim (RTI field 78) T170 Payment to a non-individual (RTI field 147) T171 Trivial Commutation Type (Pensions) (RTI field 146) T172 Trivial Commutation Amount (Pensions) (RTI field 148) T173 Value of benefits taxed via payroll - year to date (RTI field 149) T174 On Strike (RTI field 152) T175 Unpaid Absence (RTI field 153) T176 Old Payroll ID for this employment (RTI field 39 & 40) T177 Flexibly accessing pension rights T178 Pension Death Benefits Indicator T179 Flexible drawdown taxable payment T180 Flexible drawdown non-taxable payment RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 5

6 What does the Ceridian RTI ElEx service do? All employers who operate PAYE are obligated to report data to HM Revenue & Customs under Real Time information. Employers may choose to undertake their own filing with HMRC directly or utilise the service offered via Ceridian ElEx. Each time you pay an employee via Ceridian payroll it will send information to HMRC relating to: Deductions, Income Tax and National Insurance and other Statutory Payments Starter information (such as start date and starter declaration along with P45 details where applicable) Leaver information Flexible drawdown of pensions Payments after leaving information Adjustment and correction data as a result of payroll change updates Employers potentially need to include the details of all employees, including those who earn below the NICs Lower Earnings Limit (LEL). Employers are required to provide employees employed on 5 th April each year a P60 or ep60 if they have been subject to PAYE. Employers are required to pay to HMRC Collector of Taxes amounts owing and to send a new associated report Employer Payment Summary (EPS) to enable the recovery and compensation of Statutory Payments and also claim the new Employment Allowance. HMRC systems are not yet able to automatically calculate the offset amounts due to employers. If the payment due matches the detail on the Full Payment Submission (FPS) created from payroll there is no need to send an EPS. Clean Data and Data Improvement Providing HMRC with accurate employee and pensioner information helps ensure the right amount of tax and National Insurance Contributions (NICs). It also protects entitlements to certain state benefits and State Pension. Accurate data saves time - you will receive fewer enquiries from HMRC and employees/pensioners. Information entered on payroll feeds into the RTI you send to HMRC systems. If you have the wrong information it will result in the wrong data being applied resulting in wrong information coming out - Rubbish In, Rubbish Out. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 6

7 Changes to employee name and address Employees may notify their employer of changes of name (due to marriage, divorce or other reasons), also changes of address (due to house move). It is appropriate to apply these changes to payroll and pension records. Although the employer may be using new details, HMRC will ignore any new data changes notified by the employer alone. Employee or pension recipients must contact HMRC and notify them of such changes separately. The preferred method is to use the HMRC address change template at If you routinely provide advice or assistance to your employees as to how to notify their changes of address or other personal details to HMRC, please ask them to use this on-line facility. It is in their interests to keep HMRC up-to-date with changes. Each year repayments are returned to HMRC undelivered because they do not hold up-to-date information. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 7

8 The on or before principle RTI information must be reported on or before payments are made to the employee except in the following circumstances: Ad hoc payment made outside of the standard payroll cycle such as a late starter, correction of payroll error (missed overtime etc.) Payments to individuals where a P11 is not required: temporary casual staff working for less than one week or a permanent employee who earns less than the LEL Payments which vary according to work done on the day given to the employee on the day of work through non-electronic methods of payment; such as crop pickers or hospitality staff for one-off events Items which are not subject to Tax but are subject to Class 1 NICs Notional payments such as shares Earnings and Notional payment operated overseas Specific guidance can be found at Ceridian RTI ElEx service reports information to HMRC following a live, committed or closed payroll process. Mid period changes and adjustments and share options are reported on the next regular submission in accordance with HMRC requirements for reporting revised year to date values along with information on the normal regular payments. Where items are being reported late there is a requirement to provide a Late PAYE Reporting Reason. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 8

9 Late PAYE Reporting Reason & Date (RTI field 154) An entry is only required if the employee is to be reported with a Late PAYE Reporting Reason for activity that relates to a reported payment date that has passed (or will pass) at the point of the Full Payment Submission (FPS). The reason and date is only reported on the FPS where the payment type is not T for credit Transfer or where the Net Payment this time is zero. Where the payment type is T and there is a payment this period, then no reason is reported and the current standard payment date is reported. Maximum length 1 character followed by / and an override this time payment date Valid characters - A, B, C, D, E, F, G or H (space to remove) Where: A = Notional payment: Payment to Expat by third party or overseas employer B = Notional payment: Employment related security C = Notional payment: Other D = Payment subject to Class 1 NICs but P11D/P9D for tax E = NO LONGER USED RESERVED FOR FUTURE HMRC USE F = No working sheet required; Impractical to report. G = Reasonable excuse H = Correction to earlier submission Followed by an override reporting payment date in the format /DDMMYYYY In some circumstances of making corrections where there is no payment this time, HMRC guidance asks for employers to report the last payment date. This would ordinarily generate a late reporting fine unless the employer also notifies a later reporting reason. Ceridian as a default reports the current period payment date even when there is no payment being made. The last payment date can be entered along with the later reporting reason. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 9

10 Share related income The taxation position on shares and share options has been a challenge for many years. The HMRC expectation was that tax and NICs would be accounted for at the point shares were available or vested by the employee, the reality is that neither the settlement of monies nor the employer awareness of the transaction taking place was ever a reality. With the onset of RTI, HMRC have outlined their position on reporting requirements for Shares: "Employment income paid in respect of employment-related securities (for example, on the exercise of share options). Where the employer is operating reasonable and currently accepted payroll/administrative practices and it is not possible to operate PAYE and/or calculate NICs to be deducted by the PAYE deadline, HMRC indicate that they will apply a common sense approach in-year where employers in these situations have a reasonable excuse for not reporting the information by the end of the pay period or 19th of the following month. HMRC now expect that the late reporting would normally be no later than the next regular payroll date". Where the payment date is to be set in the past, then the late reporting reason B (Notional Payment Employee related Security) is to be entered against data item E015 along with the payment date to be reported. Payroll ID and RTI Ceridian use the RTI Payroll ID to identify an employee in interchanges with HMRC and the following format is used: CPcccccceeeeeee Where: CP identifies Ceridian Payroll as the payroll engine cccccc is the Ceridian Payroll number (leading zeroes will be present) eeeeeee is the Ceridian Payroll 7 digit employee number (leading zeroes will be present) Any RTI submission which relates to an individual employment will contain this Payroll ID. Equally HMRC messages sent back to the employer will also contain this Payroll ID. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 10

11 No National Insurance number (NINO)! If the employer is not provided with a National Insurance number then they are expected to ask the employee for further information such as an old pay-slip or form P60. If there is no document available then NINO verification will be requested when the regular RTI submission is made. Never make up a NINO, use temporary numbers or use defaults, if the correct number is not available but appropriate evidence is provided of entitlement to work in the UK, then leave the NINO field either blank or use your suppliers appropriate nil value such as NONE or other appropriate alternative. I have employees who are not to be reported on HMRC RTI If you have any individual on the payroll who is not subject to PAYE and therefore not reportable to HMRC via RTI, you may exclude them from reporting by setting Data Item T010 (Tax Basis) to the value X for exclude. This should not be confused with the Week 1 / Month 1 basis which is indicated as a value 1 on Ceridian systems. Types of individuals or payments you would not report are: Payments to self-employed individuals or corporate institutions that are not subject to PAYE reporting Overseas employees not subject to PAYE reporting Transferring an Employee from one payroll to another (same PAYE ref) It is important that Ceridian understand when details are to be sent to HMRC and for what purpose. When an employee is currently being reported to HMRC on RTI but is being transferred from one payroll to another (whether from one Ceridian payroll or external payroll to another Ceridian payroll but within the same PAYE scheme), there is a requirement to prevent inappropriate starter and leaver elements of RTI being submitted to HMRC and equally the transfer of certain new values in addition to the standard payroll transfer values. N.B. Failure to operate transfers correctly will often result in duplicate record creation on HMRC systems which leads to misbalances and also secondary employment tax codes being issued to employees. To suppress the leaver segment of the RTI message being sent to HMRC use data item E110 with a value of # and do not populate a leaver date. In the subsequent period set the Tax Basis to exclude by setting data item T010 to X. To suppress the starter segment of the RTI message being sent to HMRC use the data item E105 with a value of #. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 11

12 Also when setting up a transfer employee the following items are important: T173 Value of benefits taxed via payroll - year to date (if applicable) T176 Old Payroll ID for this employment the payroll ID used on the former payroll required for all payroll transfer cases If the PAYE Scheme is different then it is not a transfer, but a leaver and starter which requires reporting to HMRC. The earnings histories would generally not be transferred from the old PAYE scheme to the new and the Old Payroll ID is irrelevant as this is a new employment instance. Additional information and RTI With RTI employers are required to collect and provide payroll with additional information: Passport Number (data item E012) for any new employee who has provided a passport as part of the Right to Work evidence Hours Worked (data items E058, E059 or E014): Information is needed on how many hours an employee normally works in a week (the contract hours). This aids with the assessment of Working Tax Credits Payroll and RTI now additionally allow the reporting of the following: Lower paid, temporary, irregular and casual staff: Employers must now report payments to all staff no matter how much they are paid. If appropriate the employer may set the irregular payment indicator (data item E013) so HMRC does not assume that they have left employment. Change to employee working patterns: Employers may also need to provide information in certain circumstances, for example, if an employee takes unpaid leave, then set the irregular payment indicator (data item E013) or else HMRC may assume that they have left employment (after 13 weeks). Payment to a non-individual (data item T170) On-Strike (data item T174) when an employee has taken industrial action within the period being paid Unpaid absence (data item T175) Do not use RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 12

13 BACS Hash and the Random number Where an employee is identified as being paid via BACS Credit Transfer (payment method T ), Ceridian will populate the appropriate RTI random number in the BACS submission via the Ceridian BACS Bureau service and will also report the HASH formula value on the RTI submission to HMRC. The Hash and Random number do not apply to non-credit Transfer payments and are not generated for any other payment method. Employers may need to review their payments process where they indicate an alternate payment method in the payroll but actually do make BACS payments outside of the Ceridian payroll service. The Hash is calculated by utilising elements of the employer and employee bank account details along with the Net Payment and the payroll generated Random Number reported on the BACS file. All the elements must be present in the payroll process to generate the Hash. Use of the Credit Amendment functionality in changing any of the bank account details or payments will impact the Hash value calculated by Vocalink and passed to HMRC and will result in the Hash not matching that provided on the Ceridian RTI submission as there has been an external change. N,B, There is no legal requirement to pay employees via BACS Credit Transfer, only a requirement to provide the random number and hash where they are. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 13

14 Taking on a new employee Starters are no longer reported to HMRC separately through the use of P45, P46, P46(PEN) or P46(EXPAT) as these now form part of the regular Ceridian RTI submission. Employers must implement appropriate business processes ready to collect and record the correct personal information when an employee or pensioner starts, HMRC will not accept later changes in subsequent RTI submissions. When you take on a new employee and prior to their first payment, they must either provide you with an In date P45 (for tax year this is one issued since 6 th April 2015), or you must get specific information from them and report it to HMRC the first time you pay your new employee. RTI and form P45 Employers need the following details from form P45 received for a new employee and added to the payroll. This will result in the information being appropriately reported to HMRC via RTI when the employee is paid: full name National Insurance number Previous employment leaving date tax code (including week 1/month 1, if appropriate) total pay and tax paid to date for the current tax year student loan deduction status (you must then ask the employee for the Student Loan Plan Type 1 or 2) Using the right tax code for new employees and completing the starter declaration For the 2016/2017 tax year, the tax code you need to use depends on when they left their previous employer and their starting date with you. When you enter a start date for a new employee you (the employer) must also complete a starter statement A, B or C (data item T330) The following tables (applicable for the 2016/2017 tax year) explain what action you need to take: RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 14

15 In date P45 received no starter checklist required Date of leaving on P45 (Data Item E086) Start date (data item E081) Tax code on P45 (Data Item T320 & T325) Starter Declaration declared by employee Starter Declaration to be reported on FPS (Data Item T330) Tax code to use (Data Item T000 & T010) 6 April 2016 to 5 April 2017 (16/17) On or after 6 April 2016 Code other than BR, 0T or D prefix whether an S prefix tax regime is present or not Not needed B (to be declared by the employer) Use the tax code on the P45 (including any S prefix tax regime if present) 6 April 2015 to 5 April 2016 (15/16) 6 April 2016 to 24 May 2016 Code other than BR, 0T or D prefix Not needed B (to be declared by the employer) Use the tax code on the P45 and add budget increase +40 to any code ending in L, +36 for N or +44 for M - for example 1060L 1100L (but do not carry forward any week1 / month 1 markings from the P45)+ 6 April 2015 to 5 April 2016 (15/16) On or after 25 May 2016 Code other than BR, 0T or D prefix Not needed B (to be declared by the employer) Emergency code 1100L on a week 1/month 1 basis Any of above Any of above If tax code on P45 is: BR / SBR Not needed C (to be declared by the employer) Use the tax code on the P45 0T / S0T D0 / SD0 D1 / SD1 RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 15

16 No P45 received or the P45 has a leave date before 6 th April 2015 Employer must obtain a starter checklist declaration - Employer reports the starter statement the employee has given Employee's date of leaving on P45 Employee's start date with you Tax code on P45 Starter Declaration declared by employee Starter Declaration to be reported on FPS (Data Item T330) Tax code to use (Data Item T000 & T010) No P45 or P45 dated prior to 6 April 2015 On or after 6 April 2016 Not to be used A A 1100L B B 1100L on a week 1/month 1 basis C C BR None C (to be declared by the employer) 0T on a week 1/month 1 basis P45 received after first payment If the student loan indicator is shown on the P45 you request completion of the new starter checklist and ask the student loan plan type questions. You must deduct student loan repayments, unless you've been told by HMRC to stop, from the date the employee started with you. If the employee does not know the student loan plan type, then deduct using plan type 1. If you have received a tax code from HMRC for this employee Continue to use the tax code, and any previous pay and tax information, supplied by HMRC. Do not use the tax code from the P45. If you have not received a tax code from HMRC for this employee If the figures on the P45 (if dated after 6 April 2016) are incorrect, you should use the corrected figures Decide which tax code to use as detailed above Adjust the employee's entries for the week you started to show the total pay and tax and tax to date from the P45 (if dated after 6 April 2016) - or the correct figures if those on the P45 are incorrect RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 16

17 Starter declaration received after first payment Add any personal details and store the information If you have not received a tax code from HMRC operate the code that relates to declaration A, B or C (refer to table above) If you have received a tax code from HMRC, continue to use it. HMRC Starter Checklist Please note that under RTI the new HMRC Starter Checklist replaces the former use of the P46 or P46(Short) and in accordance with the information above, is required for completion even when a P45 is presentedwhen an employee presents an out of date P45. Employers are permitted to create or use their own version of the form or incorporate the starter checklist questions into employer created induction or new starter documents. The example or template starter checklist can be downloaded at: Please note that it is possible to print blank copies of the forms or employers may the form for completion by their employees as necessary. Employers must ask these new employees to confirm whether: A This is their first job since last 6 th April and they have not been receiving taxable Jobseeker s Allowance, Employment and Support Allowance, taxable Incapacity Benefit, state pension or occupational pension B This is their only job, but since last 6 th April they have had another job, or have received taxable Jobseeker s Allowance, Employment and Support Allowance or taxable incapacity Benefit. They do not receive state or occupational pension C They have another job or receive a state or occupational pension New starter information must be retained by the employer for two years. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 17

18 Starter Checklist no statement ticked or the employee has not provided a Starter Checklist or a P45(3) HMRC rules ask that you give the employee a Starter Checklist for completion asking them to tick the relevant box and sign the form. If they have not then the following entries should be made: Tax Code T000 0T (0T is the only valid code, not BR or D0) Tax Basis T010 1 (non-cumulative basis only) Statement T330 C If they have ticked a statement and signed the form then the following action should be taken according to the selected statement. Starter Checklist statement A Tax Code T L (based on tax year 2016/2017) Tax Basis T010 0 (cumulative basis) Statement T330 A Starter Checklist statement B Tax Code T L (based on tax year 2016/2017) Tax Basis T010 1 (week 1 / month 1 non-cumulative basis) Statement T330 B Starter Checklist statement C Tax Code T000 BR (BR is the only valid code, not 0T or D0) Tax Basis T010 0 (cumulative basis only) Statement T330 C RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 18

19 Student Loans Employers must ask their new employee to confirm if they have left a course of UK Higher Education before last 6 April and received their first student loan instalment on or after 1 st September If they have, then they must also find out if they have not fully repaid their student loan. If the new employee responds Yes and indicates a plan type (1 [L1] or 2 [L2]) to the student loan question, the employer commences making student loan deductions using the appropriate plan type. If the plan type is not known then they must use plan type 1 [L1] until notified otherwise. When is starter information sent to HMRC? Starter information may be applied to your payroll at any time. However, the information is not sent to HMRC until the employee is due to receive their first payment (as required by HMRC). It is important to remember: Include all relevant information from the employee s P45 Only include pay and tax figures from the former employment if they are relevant Include your employee s employment situation statement A, B or C - the first time they are paid HMRC systems use the address associated with new employees so it is important that you provide a full and valid address especially as this can impact on whether they are considered a Scottish Tax payer If you re-employ a former employee in the same tax year, they must have a separate PAYE record and RTI Payroll ID you must not re-use the same Ceridian payroll number for multiple employment instances RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 19

20 Retirement and Pensions Pension and annuity payments are treated as income and treated in a similar way to earnings - if the pension scheme is registered with HMRC then there is no NIC deduction. Pension payments must be put through payroll although they are not the same as standard wages or salary payments to employees. You won't be paying the employee a pension If an employee retires and the employer is not paying them a pension in the same PAYE scheme, then the leaving details form part of the RTI submission. You will be paying the employee a pension (a) Pension payments to employees not continuing in employment Continue paying them using the existing payment information but with some changes: Yes on the occupational pension indicator (Data Item E105 with value P ). the date the pension started (Data Item E079) amount of annual occupational pension (this is derived from Allowance 001 basic pay) tax code - unless you're told to use a new tax code by HMRC, continue to use the same tax code you were using for the individual's employment income, but on a week 1/month 1 basis don't deduct any further Class 1 NICs (set to NIC Category X ) (b) Pension payments to employees continuing in your employment The employer must setup a separate record for the pension and use tax code 0T on a week 1/month 1 basis on the employee's pension payment and continue to use the same code as before on the employment income. Set the Occupational Pension indicator (Data Item E105 with the value P ). You must include with the first pension payment: the date the pension started (Data Item E081) the annual amount of the occupational pension Derived from the allowance 001 permanent amount tax code (Data Items T000 & T010) - unless you're told to use a new tax code by HMRC, use code 0T on a week 1/month 1 basis RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 20

21 A new pensioner Set up the pension recipient's personal information in their payroll record Set the Occupational Pension indicator (Data Item E105 with the value P ). This value is automatically set on a pension payroll. You must include with the first pension payment: the date the pension started (Data Item E081) the annual amount of the occupational pension Derived from the allowance 001 permanent amount If they have a P45 Leaver Statement - the tax code from the P45 on a week 1/month 1 basis else if they do not have a P45 Leaver Statement use the emergency tax code (1000L for 2014/2015) on a week 1/month 1 basis Pensioner gives you a form P45 late If the pension recipient gives you a P45 after you've started paying their pension and HMRC has already provided you with a new tax code then you must destroy the P45. If you have not received a new tax code from HMRC then follow the guidance that applies to employees who provide a P45 late. New pension to deceased employee's dependant If the pension payment is to a dependant of a deceased employee, follow the steps outlined in the earlier section, 'A new pensioner for when they have no form P45'; use the personal details and National Insurance number of the dependant, not those of the deceased. Set the payroll indicator that they are a recently bereaved spouse or civil partner (Data Item E077 with a value of Y to set or # to remove) If a pension recipient dies Complete the leaver process as normal but additionally enter data against the new reason for leaving code E090 with a value of D for died, e.g. E090D. The leaving date should be set to the date of death. As an option RTI lets you report that the payment is made to a non-individual against the RTI data item T170. Do not issue any parts of the P45 either to the estate of the employee or HMRC. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 21

22 If the pension passes to a body other than an individual Payments to Personal Representative, Trustee or Body Corporate - that is, a third party or non-individual? Then: Tax code 'BR' (Data Item T000) National Insurance number or NONE (Data Item N003) Gender as M for male (Data Item E041) Forename as 'RP' Surname as the recipient body name (Data Item E006) Payment to a non-individual indicator as Yes (Data Item T170) Pensions Trivial Commutation & Special Situations Ceridian have introduced the following new codes to assist with RTI reporting where applicable for Trivial Commutation: Trivial Commutation Type (Data Item T171) o A - Trivial Commutation lump sums (TCLS) o B - Small pot lump sum payments from personal pension schemes o C - Small pot lump sum payments from occupational pension schemes Trivial Commutation Amount (Data Item T172) When a pension scheme makes a once-off Trivial Commutation payment then the payroll must indicate to HM Revenue and Customs the Trivial Commutation amount. The value is automatically zeroised each period and is required to be entered for each trivial commutation payment. T171 and T172 are always used in combination. HMRC expect the value to be whole pounds expressed in pence. Therefore Ceridian systems will report any trailing non-zero pence entries as zeroes. ie the final 2 digits will always be treated as zeroes to meet HMRC requirements. HMRC also provide additional guidance on special situations: RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 22

23 Flexibly Accessing Pension Rights From April 2015 those aged 55 and above have been allowed to access their money purchase pension savings as they wish. Also recent announcements have introduced changes to certain lump sum death benefits including: Uncrystallised fund lump sum death benefit Drawdown pension fund lump sum death benefit Annuity protections lump sum death benefit Any death benefit paid as a lump sum where the member was over 75 at the time of death Unused funds from a drawdown account, paid as pension, where the member is under 75 at the time of death From April 2016 onwards where such payments are made then it is mandatory for the following data items are to be reported where relevant: T177 Flexibly accessing pension rights (originally introduced from April 2015) (if used then an entry against T179 and/or T180 is required) T178 Pension Death Benefits Indicator (if used then an entry against T179 and/or T180 is required) T179 Flexible drawdown taxable payment (if used then an entry against T177 or T178 is required) T180 Flexible drawdown non-taxable payment (if used then an entry against T177 and or T178 is required) RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 23

24 Foreign Employees PAYE tax and National Insurance Contributions (NICs) apply to employees who come from abroad to work in the UK. Even if someone working is actually employed by an overseas business, the UK employer may have to pay tax and NICs on earnings, but with some exceptions. Right to Work Eligibility to work in the UK Before any employee works, the employer must check that they are eligible to work in the UK in accordance with Home Office requirements. If the passport is used as a piece of evidence of entitlement to work in the UK, then HMRC do expect that the employer will provide the passport number for the payroll to report using RTI (Data Item E012). The General Rule For employees coming to work in the UK, the UK employer is generally required to operate PAYE tax and NICs in the usual way, whether they are working on either a temporary or permanent basis. Even if they remain employed by an overseas business and the UK employer does not actually pay them, the UK employer is still treated as the employer and has the same responsibility for recording and reporting earnings, calculating, recording, reporting and paying PAYE and NICs as for any other employee. When an employee comes from abroad, the employee would generally follow the standard procedure for an employee without a form P45. But there are exceptions and differences. PAYE tax exceptions (foreign employees) If an employee from abroad is a seconded employee, the UK employer is responsible for PAYE on earnings, but the rules on what tax code to use and Payroll reporting are different. A seconded employee includes: individuals working wholly or partly in the UK for a UK resident employer on assignment whilst remaining employed by an overseas employer individuals assigned to work wholly or partly in the UK at a recognised branch of their own employer's business all individuals within a dedicated expatriate or modified PAYE scheme RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 24

25 Employers must indicate any of the following which will be included in the RTI submission: If they are under an EPM6(Modified) Scheme for tax equalised expatriate employees (Data Item T016) If they pay a student loan If they are from a country in the European Economic Area (EEA) (Data Item T015) Their name (including surname/family name as well as first and second names), date of birth and gender as shown on the documents you used to check the employee's entitlement to work in the UK The address at which the employee will reside when in the UK (not your business address) including a UK postcode National Insurance number if known You must also indicate what their present circumstances are as follows (Data Item T335): Value A - they intend to live in the UK for more than six months (183 days or more) Value B - they intend to live in the UK for less than six months (less than 183 days) Value C - they will be working for you both inside and outside the UK, but will be living abroad If they have a UK student loan, start making repayment deductions from their first payday. This information can be stored in any way the employer prefers but must be kept for at least two years. HMRC has a model Expat Starter Checklist to use (replacing the former P46 EXPAT): RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 25

26 Using the right tax code for a seconded employee Check the table below to see which tax code to use for your employee: Employee present circumstances Tax code to use for (Data Items T000 & T010) (T335 A) I intend to live in the UK for more than six months (183 days or more) 1100L cumulative (T335 B) I intend to live in the UK for less than six months (less than 183 days) 1100L week 1/month 1 (unless employee is a EEA citizen - see below) (T335 C) I will be working for the employer both inside and outside the UK, but will be living abroad 1100L week 1/month 1 (unless employee is a EEA citizen - see below) (T015 Y) EEA citizen 1100L cumulative, even if the employee has confirmed statements 2 or 3 above If your employee does not give you information about their present circumstances before their first payday 0T week 1/month 1 RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 26

27 Shared Parental Pay (ShPP) & RTI Where there any ShPP Birth cases the following data items must be present in order to report the details of the mother or partner to HMRC/DWP. These can be found on the ShPP claim and are: Mother s First Name (M781) Mother s Second Name (M782) Mother s Surname (M780) Mother s NI number (M783) Or Where any ShPP Adoption cases exist, the following data items must be present in order to report details of the mother or partner to HMRC/DWP. These can be found on the ShPP claim and are: Primary Adopter s First Name (M781) Primary Adopter s Second Name (M782) Primary Adopter s Surname (M780) Primary Adopter s NI number (M783) RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 27

28 Leavers Employers no longer report leaver details separately to HMRC. When an employee leaves they must still be given the form P45 Leaver Statement but the employer no longer sends P45 part 1 information to HMRC either electronically or on paper. The leaving date is notified to payroll and this data is included in the next regular submission of RTI data to HMRC. To prevent or suppress the leaver segment being reported, enter data item E110 with a value of #. If an employee who has left then changes their mind, or they were made a leaver by mistake, the employer should continue making payments on the same employment record but do not enter a new start date (remove the leaving date). However, if the employer has already given the employee a P45, then they need to treat them as a new starter with a different employment record (a different Payroll ID). Payments after leaving (PAL) Ceridian payroll offers facilities for payments after a payroll record is closed including share related payments. When a leaver date has previously been notified to HMRC on a prior FPS submission and no P45 has been produced (T010 # has been applied) then use: E001 A For additional payments after leaving (closed record) where a P45 has not been issued to the employee. The on-file tax code and NIC letter is operated. A replacement P45 may be issued to these employees. Where a leaving date has previously been reported: E001 I For Irregular payments after leaving (with no regular wages or salary for item such as an unexpected bonus or accrued holiday pay) do not issue a further P45. The tax code 0T/1 is operated along with a single week of NIC contributions. E001 P For a regular Periodic payment after leaving or where regular and irregular payments are mixed (including wages and salary) do not issue a further P45 Where a prior FPS submission has reported a Leaving Date, the PAL details are reported with a Payment after leaving indicator and the original reported Leaving Date. The employer must not issue a further form P45 leaver statement. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 28

29 The use of E001 A, I or P automatically applies the rules for both Tax and NICs including the checking of the leave date to ensure the correct Tax Code & NIC category letter application is in accordance with HMRC CWG2 requirements. Please note that under RTI, HMRC have a view that an employee should not be treated as a Payment after Leaving if the leaver details have not previously been reported on an FPS submission however, this is contrary to the HMRC guidance contained in CWG2 which stipulates the judgment point as being the issue of the P45 to the employee. The latter is often the application required under compromise or settlement agreements. In either case, the Ceridian payroll has been modified to report the RTI Payment after Leaving indicator only if there has been a prior reported leaving date. Entry of a revised leave date will not change the original leave date reported to HMRC. Death In the event of Death PAYE should be deducted using code 0T (on a week 1/month 1 basis) from any payments of earnings made to the personal representative of the deceased employee. Complete the leaver process as normal but additionally enter data against the new reason for leaving code E090 with a value of D for died, i.e. E090 D. Please note that Death is not reported to HMRC on the FPS as there is no facility provided by HMRC to do so. The leaving date should be set to the date of death. As an option RTI lets you report that the payment is made to a non-individual against the RTI data item T170. Do not issue any parts of the P45 either to the estate of the employee or HMRC. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 29

30 PAYE & One-Off payments (including redundancy) Different types of one-off payments to employees leaving your business are treated differently, and separate rules apply for working out the PAYE tax and NICs due. For NICs purposes, one-off leaving payments are either wholly liable to NICs or not liable at all. Unpaid salary and holiday pay are treated as earnings for the purposes of tax and NICs. Some types of leaving payment are tax-free, some taxable in full, and some taxable only above 30,000. Most redundancy payments are tax-free up to 30,000 and not liable for NICs. For a list of the PAYE tax and NICs rules covering the most common types of one-off leaving payments, read the HMRC publication CWG2, 'Employer Further Guide to PAYE and NICs'. There's more information about redundancy on the GOV.UK website - see the link at the end of this section. For any one-off payments where you have shown the date of leaving on a previous FPS - complete the following steps: Open a new employee record (this ensure that the FPS only reflects the one-off payment without any additional year to date values and that a new Payroll ID is used) by using data item E001 S & E001 Z & E001 I Data item E001 I will ensure that tax code 0T on a week 1/month 1 basis is applied and that one week of NIC bandings are used in any NIC calculation for this one-off payment (if applicable) Do not enter starter information (such as start date and starter declaration) but supress the sending of start information by entering E105#. Equally suppress the leaver information by entry of E110 # Make the payment against correctly set allowance elements You must not give the employee a form P45. Instead, give the employee a letter showing the date of the payment, the gross amount, and the PAYE tax you have deducted. If you make a further one-off payment, follow the steps above - treat it as a totally separate payment and use a different employee record for each subsequent payment. Download CWG2, 'Employer Further Guide to PAYE and NICs (PDF 1.7MB) Making staff redundant on the GOV.UK website (Opens new window) RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 30

31 Errors and Corrections When making corrections where the payment date should be earlier than the date of the FPS submissions, you must include the late reporting reason H (Correction to an earlier submission) against the payment using data item E015 along with the date to be reported. If there has been a mistake in the RTI reporting to HMRC relating to an employee s personal details such as date of birth or name, the employer is required to contact HMRC s Employer Helpline. The employer must use the corrected details. If an employee s personal details have changed (such as their address or surname due to marriage or divorce), employers are advised to request the employee to contact HMRC. HMRC provide an online change of name or address facility to do this. Employee's personal details have changed If an employee's personal details have changed (for example: address or surname) employers should advise employees to contact HMRC to report the change - see The employer must enter the employee's new details on the payroll records so they are reported to HMRC in the next RTI submission. If the employee doesn't report the changes to HMRC, then the new details will not be updated on the employee's record held by HMRC. Employee start date is wrong Update the payroll record to reflect the correct start date. Note - the corrected start date is not notified to HMRC as this would result in duplication. Employee leaving date is wrong Update the payroll record to reflect the correct leaving date. Note - the corrected leaving date is not notified to HMRC as this would result in duplication and all subsequent FPS submission will continue to report the originally reported leaving date. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 31

32 Electronic messages sent by HMRC to employers The Ceridian RTI Electronic Exchange service allows employers to take advantage of automatic Electronic Exchange messaging in relation to Tax Codes (P6, P6B, P9), Student Loan (SL1, SL2), NINO verification responses and a Generic HMRC messaging service. If you receive an exceptions file of messages, then you need to locate, correct and apply to the payroll manually bearing in mind any effective dates notified (for example, do not apply P9 data for a new tax year issued in February earlier than they are meant for i.e. 6 th April). Will the employer still receive paper notifications? No, the employee will still receive their paper posted copy but the employer will now receive these electronically only. New codes will either be applied to the payroll automatically or will be sent to you by for manual application if the Payroll ID notified is not correct. How do I know what messages have been applied to the payroll? All updates via Ceridian Electronic Exchange appear on the standard data audit-trails (amendment report) with a suffix indicator of /ELEX. Also the data is available for view in Pay results. What happens with P6s and P9s where the tax codes may change within a couple of weeks of being issued, they would normally take the latest one but how would this work in the electronic system? Tax codes are sent electronically with an accompanying issue and effective date, so the latest and correct tax code is automatically applied in accordance with the HMRC issued priorities. The NINO is different. What s happened? Ceridian RTI ElEx will apply the tax code to the employee that matches the RTI Payroll ID number else you would receive the tax code via to apply manually. What will also happen is that the audit trail will point out that the NI number is different than that held on the system. RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 32

33 Where HMRC have supplied a valid NINO and Ceridian currently holds a value of NONE, in other words the NINO is not known, then Ceridian will automatically update the employee NINO with the valid value supplied by the HMRC. I would like my bulk annual P9s/P6(b)s to be sent through electronically, what is the latest date by which this can be requested? The HMRC create the annual P9 updates in February each year, so any new tax code orders for the 6 th April tax codes must actually be received by the Ceridian Electronic Exchange coordinator (CEEc) by the previous 1 st February. Users do not need to request these annually, once the P9 flags have been set at HMRC then the messages will continue to be sent electronically unless changed. HMRC notification in relation to National Insurance Numbers (NINO) A National Insurance trace is initiated for any new employee where the NINO is not present on the first RTI submission. HMRC will respond with one of the following types of instruction. If received by Ceridian and there is a valid Payroll ID, the request will be applied automatically (where appropriate). Possible HMRC replies are: National Insurance Number is correct (no action is taken) Stop using the National Insurance number - it's wrong (in which case Ceridian will update data item N003 with the value NONE ) Use the National Insurance number in the notice in future (in which case Ceridian will update data item N003 with the number provided) National Insurance number you have queried is correct (no action is taken) RTI Electronic Exchange (ElEx) User Guide & Data Items V16.0 Page 33