Evolution UK Payroll Year End Supplement April 2019 IMPORTANT DOCUMENT PLEASE READ CAREFULLY BEFORE USING ANY NEW SOFTWARE OR ATTEMPTING TO RUN YOUR YEAR END Page 1
CONTENTS 1. IMPORTANT INFORMATION... 3 1.2 LEGISLATIVE CHANGES... 4 1.3 RTI SPECIFIC CHANGES... 4 2. YEAR END PROCEDURE & CHECKLIST... 5 2.1 BACKGROUND... 5 2.2 CHECK LIST... 5 2.3 PRINTING THE P60S... 6 2.4 FINAL EMPLOYER PAYMENT SUMMARY (EPS)... 7 3. TO START THE NEW TAX YEAR... 8 3.1 ACTIONS TO BE TAKEN... 8 3.2 PAYE: TAX BANDS & CODES... 8 3.2.1 Payroll Maintenance: Tax Bands & Rates... 9 3.2.2 Personnel Details: Alter Tax Codes... 10 3.3 NI CONTRIBUTIONS: RATES AND TABLE CHANGES... 11 3.3.1 NI Table Changes... 11 3.4 PENSION TABLE CHANGES... 16 3.5 STATUTORY SICK PAY (SSP)... 17 4. WELSH RATE OF INCOME TAX (WRIT)... 18 5. POSTGRADUATE LOANS... 19 6. RTI CHANGES FOR 2019-2020... 20 6.1 FULL PAYMENT SUBMISSION (FPS)... 20 6.2 EMPLOYER PAYMENT SUMMARY (EPS)... 20 7. ADDITIONAL PAYSLIP INFORMATION... 21 QUESTIONS & ANSWERS... 22 Page 2
1. IMPORTANT INFORMATION Evolution version 7.7.0 is required for you to run your Payroll from 6 th April 2019. It also contains the VAT MTD (Making Tax Digital) module if you have also purchased this (separate documentation available). Please read this Payroll guide carefully before attempting to run your payroll from 6th April 2019. This document is intended as a guide to assist you with your Payroll year end. You must check the relevant Tax and NI tables against official documentation published by HMRC. Before running the year end you should take a backup copy of your Evolution data which should be verified and not overwritten The P60 forms required for the 2018-2019 year end are called P60(SingleSheet/Shortened) (2018-2019) and should be printed to a laser printer in portrait format. These forms can be ordered from HMRC s employer online order form, which can be found here: http://www.hmrc.gov.uk/payerti/forms-updates/forms-publications/onlineorder.htm The Welsh Rate of Income Tax (WRIT) is being introduced from April 2019 for those employees living in Wales. Further information regarding this can be found here: https://www.hmrc.gov.uk/welsh-income-tax and https://gov.wales/funding/fiscal-reform/welshtaxes/income-tax/?lang=en The minimum pension contributions for automatic enrolment pensions are increasing on 6th April 2019. More information regarding this can be found here: https://www.thepensionsregulator.gov.uk/en/employers/increase-of-automatic-enrolmentcontributions After your final FPS for each payroll frequency, no further employee information for the 2018-2019 tax year is submitted to HMRC. Should you need to change any employee information after clearing into the new tax year then you can use the EYU (Earlier Year Update) functionality in HMRC s Basic PAYE Tools. This can be downloaded here https://www.gov.uk/basic-paye-tools Page 3
1.2 Legislative Changes The legislative changes affecting the Payroll System from April 2019 onwards are as follows: Changes to NIC bandwidths Changes to UK and Scottish PAYE bandwidths Introduction of Welsh Rates of Income Tax (WRIT) Student Loan annual thresholds have been increased to 18,935 for Plan Type 1 and to 25,725 for Plan Type 2 Introduction of Postgraduate loan repayments which can be deducted through the payroll Uplift of tax codes with a suffix L by 65, M by 71 and N by 59. The emergency code is now 1250L. Changes to Auto Enrolment Pension thresholds and minimum contributions Changes to the available fuel types for Company Cars 1.3 RTI Specific Changes The RTI specific changes for the 2019-2020 tax year are: Internal changes for the new tax year 2019-20 on the FPS and EPS submissions Output of Postgraduate Loans onto the FPS for the 2019-20 tax year Output of C tax code for employees on the Welsh Rate of Income Tax Page 4
2. YEAR END PROCEDURE & CHECKLIST 2.1 Background You should be running Evolution version 7.7.0 before attempting to proceed. Ensure you have taken a backup of your data in case you need to re-run the year end. If you wish to delay running the printing of P60s, you may print these from your play/test area. If you do, please ensure that no-one amends the data in your test area. To find out where your live data is held, click your Evolution Setup icon on your desktop and the path will be shown against Live Data Directory. If you wish to take copy of your live data to a folder separate to your standard play/test area, when you want to log into that data to print out your P60s, you will need to set the Play Data Directory on your Evolution Setup icon to the correct location. Please call Support if you need assistance with setting your Play Data Directory or taking a copy of your data. 2.2 Check List The year-end should be performed in the following order: Complete the current Tax Year for 2018-2019, running your final payroll (which may include a week 53) and sending the FPS submission to HMRC. Print off the Payroll Register Reports (normal and NI-only) Ensure that you have paid all of your Subcontractors up to the 5 th April 2019 and then run off the Payroll > Year End > Subcontractor Tax report, entering Year End date of 05/04/19, if required. Print P60s - See section 2.3 (Page 6). These can be printed as many times as necessary until the clear payroll option is selected and also can be run from your test area if you have copied your data there. Submit an EPS for 2018-2019 selecting the Final Submission option. This can be done before or after you clear the Payroll. This needs to be done before you make your payment for period ending 5 th April 2019 or before 19 th April 2019 whichever is the earliest (see section 2.4 Page 7). Run Payroll > Year End > Clear Payroll. If you have the Multi-Group facility then this procedure will need to be repeated for each Payroll group. When asked for the year end date, enter 05/04/19. The year entered (19) will be used for archiving the Payroll for the tax year. Make amendments to the Payroll > Maintenance > Tax Bands and Rates screen as per section 3.2.1 (page 10), which contains the new Postgraduate Loans Threshold and Rate and Welsh Rates of Income Tax - ensure that you key in the values exactly as this screen displays. This includes importing the new pension thresholds and triggers if you are using Evolution for your Automatic Pension duties, as well as changing your Pension Tables for the minimum contributions from 6 th April 2019 (and the Lower and Upper Limits if you are using Qualifying Earnings). Increase Tax Codes. There is a global uplift of 65 on L codes, 71 on M and 59 on N. See section 3.2.2 (page 11) Update the NI Bands and Rates using the Update NI option, See section 3.3, (page 12) checking with HMRC documentation Submit an EPS for the tax year 2018-2019 selecting the Final Submission option, if not already done so. (See section 2.4 page 7). Page 5
2.3 Printing the P60s Please ensure you have ordered the P60 (SingleSheet/Shortened) (2018-19) forms for laser printers. P60s should be printed after all payroll calculations and all FPS returns have been submitted for 2018-2019 but before you have cleared the payroll (unless they are being printed from your Test company). From your menu select Payroll > Year End > P60s. On the screen below, ensure that Print P60s is ticked (note that this option is only available for users with an Access Level of 99): All employees will be included regardless of Payroll Groups. Values can be changed on the screen below (click Update to save the changes): Any values changed will be reflected on the P60 print only - they won t be submitted to HMRC. If you need to change year to date values submitted to HMRC after the final FPS, you will need to use the EYU (End of Year Update) functionality via HMRC s Basic PAYE Tools. Once the P60s have been printed click Yes on the following screen to return to the menu: Page 6
2.4 Final Employer Payment Summary (EPS) When all FPS returns have been made for the 2018-2019 tax year, there is a final EPS to submit which will inform HMRC that you will be making no further RTI submissions for that tax year. This needs to be done even if you haven t submitted an EPS earlier in the year and it can be done after you have cleared your payroll. However, this should be submitted before you make a payment to HMRC for tax period ending 5 th April or before the 19 th April, whichever is the earliest. From your menu select Payroll > RTI Processing > Employer Payment (EPS). The Year selector at the top of the screen will need changing to 2018-2019 and the Final Submission option should be ticked. Both of these fields are shown below: Any year to date recovered values already submitted in 2018-2019 will remain on screen. If further recoveries are to be made in tax period 12 then these should be added to the YTD values as per a standard EPS. If you are informing HMRC of a previous or future period of inactivity then these dates would also need to be entered as per a standard EPS. Page 7
3. TO START THE NEW TAX YEAR Overview For the beginning of each tax year, new Tax and National Insurance rates are issued by HMRC. NB: The NI bands and rates must be imported using the Update NI option this year DO NOT enter the NI figures yourself manually. 3.1 Actions to be taken Update the UK and Scottish Tax bands and rates, the Student Loan Thresholds and ensure the new Welsh Tax Bands and Rates & Postgraduate Loans field are also updated. A copy of these are enclosed, but please ensure that they are checked with those issued by HMRC. Import the pension thresholds for your Automatic Enrolment pension duties Update your Pension Tables for the new minimum Employer and Employee contributions (3% and 5% respectively), and also update the Lower and Upper Limits if you are using Qualifying Earnings There is an Alter Tax Codes option in Personnel Details that will allow a bulk change to selected tax codes whenever a global change applies. L suffix codes have increased by 65, M by 71 and N by 59 for 2019-20. Make any changes to individual tax codes in Personnel Details. This should be done after using the Alter Tax Codes option above. The Emergency Tax Code for use from the 6 th April 2019 is at 1250L (Week 1 or Month 1 basis). Update the National Insurance rates as supplied by HMRC. The Update NI facility in NIC Bands and Rates will automatically update the tables with the values for the 2019-20 tax year (do not enter the figures yourself manually). These still need to be checked against official documentation issued by HMRC. 3.2 PAYE: Tax Bands & Codes Tax Bands The Income Tax bandwidths to use from 6 th April 2019 are as follows: Rate % UK / Welsh Bandwidth Scottish Bandwidth Starter Rate 19 1 to 2,049 Basic Rate 20 1 to 37,500 2,050 to 12,444 Intermediate Rate 21 12,445 to 30,930 Higher Rate 40 37,501 to 150,000 Higher Rate 41 30,931 to 150,000 Additional Rate 45 150,001 and above Top Rate 46 150,001 and above Tax Codes - From 6 th April 2019 Once an amended code notification has been received on form P9(T), employers will need to amend the tax codes for 2019-2020. Page 8
3.2.1 Payroll Maintenance: Tax Bands & Rates The following screen (found in Payroll Maintenance > Tax Bands and Rates) shows the Tax Bands and Rates, as they should appear on, or at the first pay day after, the 6 th April 2019. You need to manually change the UK and Scottish Bands, add in the Welsh Bands, update the Student Loan Threshold 1 and 2, add in the Postgraduate Loans fields and then click Import to ensure the Pension Triggers are also updated for the 2019-20 tax year. The fields you need to update are all clearly marked below. NB: Do not change or update your system to the figures below if you are still calculating pay for the 2018-2019 tax year. This screen is for use for the 2019-2020 tax year only (i.e. from 6 th April 2019 onwards). Update all fields marked with the orange arrow: Please refer to official HMRC documentation for the relevant Rates and Bands. Page 9
Important Notes: All fields marked with the orange arrow must be updated The Import button will import Pension Lower, Upper and Trigger values required for your Automatic Enrolment duties. NB: If you have Pension Tables set up to use Qualifying Earnings i.e. you have figures present in the Lower Limit and Upper Limit fields on a Pension Table then you will also have to update these figures manually (the Import button in Tax Bands & Rates will not do this). The minimum pension contributions for automatic enrolment pensions are increasing on 6th April 2019. The minimum Employer contribution is changing from 2% to 3% and the minimum total contribution is changing from 5% to 8%. You will need to adjust your %age rates on each Pension Table accordingly. More information regarding this can be found here: http://www.thepensionsregulator.gov.uk/doc-library/increases-in-minimum-contributionsautomatic-enrolment.aspx The Company P.A.Y.E. Tax Reference must be entered correctly in this screen. This should be entered without spaces and should not contain a / 3.2.2 Personnel Details: Alter Tax Codes Any global tax code uplifts can be done via the Alter Taxcodes button in Personnel Details as shown below: Enter the uplift and the prefix or suffix. For example, from 2019-2020, L codes have increased by 65 so this would be entered as follows: Click Ok to accept: There is a report displayed which should be checked to see that codes have been updated correctly. Any individual tax code changes can then be entered after the above routine has been completed. Page 10
3.3 NI Contributions: Rates and Table Changes 3.3.1 NI Table Changes Select NIC Bands & Rates from the Payroll Maintenance Menu and then Update NI: Ensure you click the Update NI button this is very important do not enter the NI figures yourself manually. This routine will automatically update the NI tables A, B, C, J, M, Z and H for the new 2018-2019 tax year. Only do this if you have finished your payroll for 2017-2018 and have cleared down and are ready to start calculations for the 2018-2019 tax year. You will have to confirm that you wish to proceed twice by clicking both Continue and then Confirm: Page 11
When you have done this the following NI Bands updated message will appear: You must then go into each table and confirm that the bands match the following screens (pages 13 to 16) and that they are checked against HMRC documentation. NB: Ensure all of the NI screens below are showing as NIC Tables 2019 this ensures you have used the Update NI option to import the tables this year, which is essential. If the screens are not headed NIC Tables 2019 then you must go back and use the Update NI option. NI Table A - Standard Rate Page 12
NI Table B Reduced Rate NI Table C Employer Only Rate Page 13
NI Table H Standard Rate for Apprentices (Under 25) NI Table J Deferred Rate Page 14
NI Table M Standard Rate for Apprentices (Under 21) NI Table Z Deferred Rate (Under 21) Page 15
3.4 Pension Table changes From 6th April 2019 the minimum contributions for automatic enrolment pensions are increasing. The minimum contributions are shown below: Effective date Employer minimum contribution Total (employee plus employer) minimum contribution Current up to 6 th April 2019 2% 5% 6 th April 2019 onwards 3% 8% You will need to make these changes yourself in Maintenance > Pension Tables before calculating any pay from 6th April 2019. Pick your Auto-enrolment Pension schemes and ensure the Company Cont. and Employee Cont. fields at least equal 8% in total - for example: In additional to the above, if your Pension scheme uses Qualifying Earnings you will also need to adjust the figures that are present in both the Lower Limit and Upper Limit fields (if the Lower Limit is blank and the Upper Limit is 999999.99, you don t need to change anything). We recommend that you have a pension table setup for each payroll frequency, if this is the case e.g. one pension table for weekly and another one for monthly. The Lower Limit and Upper Limit fields for 2019-20 are as follows: Weekly Bi-Weekly 4-Weekly Monthly Lower Limit 118 236 472 512 Upper Limit 962 1,924 3,847 4,167 However, Evolution needs the Weekly limits * 52, or the Monthly limits * 12, see examples below. Weekly Pension Table using Qualifying Earnings should look as follows from 6 th April 2019: Monthly Pension Table using Qualifying Earnings should looks as follows from 6 th April 2019: Page 16
3.5 Statutory Sick Pay (SSP) The SSP rate from 6 th April 2019 is: 94.25 The lower earnings limit/band is: 118.00 The Bands and Rates for SSP can be found on the Payroll Maintenance menu, SSP/SMP Rates, as shown on the screen below: Page 17
4. Welsh Rate of Income Tax (WRIT) From 6th April 2019, employees will pay the Welsh Rate of Income Tax if they live in Wales. This means some of their Income Tax will be paid to the Welsh Government. The Personal Allowance, the amount of income you don t pay tax on, stays the same. For employees living in Wales you need to tick on the Welsh Variable Rate Tax in Payroll > Maintenance > Personnel Details > Tax and NI: There is also the option to toggle on the above for all employees if the majority require it on (and then you can turn off the switch for those employees that don t live in Wales). This is done via Supervisor > System Defaults > Payroll and clicking the Welsh Tax Default button as below: Say Yes to the Change all employees to Welsh Tax? question. If you do this by mistake, you can click the button again and the question will change to Change all employees to non-welsh tax? so you can reset them back again (note this will also remove any employees that might have previous been set to the Scottish Variable Rate). The Welsh rate of income tax for 2019-2020 are the same as those in England and NI, so there will be no difference in the amount of tax to pay, but setting the Welsh Tax flag will ensure their Tax Code is prefixed by C on the FPS submission to HMRC and also on the Payslips and P60 prints for the employee. Page 18
5. Postgraduate Loans Postgraduate Loans (PGL) are due for repayment through the PAYE process from April 2019 and is calculated is a similar manner to Student Loans repayments (i.e. the employees NI able pay ). To apply a Postgraduate Loan to an employee go into Payroll > Maintenance > Personnel Details > Tax and NI tick Postgraduate Loan and enter a Start Date: The Loan will then be taken at the point of calculating pay and will be output to HMRC as part of the FPS submission. The Postgraduate Loan value will also show on the Payslip and the Payroll Register report. There will be a future change to the P60 print to include the Postgraduate Loan value for end of the 2019-2020 tax year also. Page 19
6. RTI CHANGES FOR 2019-2020 6.1 Full Payment Submission (FPS) The Year selector allows for an FPS to be submitted on Evolution version 7.7.0 for both the 2018-2019 and 2019-2020 tax years. If you enter the FPS routine before the 1 st April 2019, the Year will default to 2018-2019 and from the 1 st April 2019 the year will default to 2019-2020 : 6.2 Employer Payment Summary (EPS) Like the FPS, a Year allows for an EPS to be submitted for both 2018-2019 and the new 2019-2020 tax year. Again, this will default to 2019-2020 before 1 st April 2019 and 2019-2020 from 1 st April 2019. Any year to date values entered are stored by tax year, so any values entered in 2018-2019 won t be shown when doing a submission for 2019-2020 and vice versa. Page 20
7. ADDITIONAL PAYSLIP INFORMATION New legislation comes into force from April 2019 and requires all employers to: Provide payslips to all workers Show hours on payslips where the pay varies by the amount of time worked The number of hours worked need to be shown if the employees pay can vary based on the hours they have worked. Any other hours do not need to be shown, although of course they can be shown if required. Some examples are given below: If an employee is hourly paid and receives basic pay and overtime, then the payslip needs to show the hours for both basic pay and overtime If an employee receives a fixed salary only and no other pay, then the payslip doesn t need to show any hours as their salary is not variable based on the hours worked If an employee has a fixed salary each month, and works variable overtime with additional pay at an hourly rate, only the hours of overtime need to be shown. Any hours relating to the fixed salary do not need to be shown, as the salary is not variable based on the number of hours. Therefore, any Pay Description that is used for any pay that is variable by the number of hours worked e.g. Basic Hours, or Overtime, needs to have a Rate entered it on the employee record: The hours will be entered in Enter Timesheets or in Calculate Pay: The Payslip will then show the hours accordingly: Page 21
QUESTIONS & ANSWERS Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Is there anything that needs to be submitted to HMRC at the tax year end? Once all FPS returns have been sent for the 2018-2019 tax year, an EPS needs to be sent with the Final Submission option ticked. This informs HMRC that RTI submissions for 2018-2019 have been completed. See section 2.4 (page 8) for information on the final EPS. Can I print directly onto P60 forms? Yes, when selecting Payroll > Year End > P60, ensure this Print P60s box is ticked which will allow you to print the P60 forms in the correct format. See section 2.3 (page 6) for information on printing P60s. P60s forms should be ordered from HMRC and are called P60(SingleSheet/Shortened) (2018-2019) and should be printed onto a laser printer. How do I update the Tax Rates and NI Bands that have changed? Tax Band and Rates must be entered manually and the NI tables need to be imported do not enter them yourself manually. This must only be done at the end of tax year and after you have cleared your payroll down for the current (2018-19) tax year. Please refer to Section 3.2.1 (pages 10-16). An employee is on holiday over the Year End - How do I deal with it? The payroll can only produce payslips including holiday weeks, up to the last period of the year, i.e. week 52. If an employee is on holiday in week 1, pay week 1 holiday pay only when the year-end routine has been completed. Also, if you have a week 53 and an employee is on holiday for week 53, this week will need to be calculated separately due to the tax implications. You cannot advance the tax week ahead of week 52. Do I need to set-up all the Tax and NI changes in every company I have on the system? No, new companies automatically pick up the Tax and NI rates already set in the first payroll implemented. How do I change from a weekly to a monthly payroll, or vice versa? There are two ways of doing this. Either immediately after the year end when the figures have been cleared, or if changing mid-year, setup a new Employee with the new frequency and enter all of the current to-date earnings. HMRC must be informed of the changes to the employee code on the first FPS submitted after the change. This is done be entering the previous employee code in the Previous Emp. Ref field in personnel details on the Previous tab. The code should be prefixed with the Evolution company number. E.g. employee SMITH01 in company 01 will have a previous employee code of 01- SMITH01. When running payslips to include holiday periods, the NI has calculated as though only one week s wages is being paid. From the Payroll Menu, select Maintenance, NIC Bands & Rates, and for table A, tick the box for Average NI when advancing tax weeks for holiday pay. I have changed an employee to tax code NT and no refund is being made If the NT tax code should work cumulatively then tick the cumulative tick box. An employee has retired but the payroll is still deducting NI contributions. When the employer receives a certificate from the employee, the NI table letter may be changed to C. NI will then be deducted for the employer but not the employee. Page 22
Q10 Q11 Q12 An employee has left but is owed 1 week's money. How should he be paid? Pay all monies owing to the employee prior to setting him as a leaver where possible. However, an employee can be paid after they have been set as a leaver, but only within the same tax year. How can I print security payslips onto a laser printer? A4 Laser Pay Mailers can be ordered from Teamwin by calling 0845 4678059. To print onto these payslips, log in as Supervisor and Choose Stationery and set Payslips to Pre-printed. Make sure your default Evolution printer is set to a laser printer and then choose Print Payslips in a normal manner. Ticking the Use Security Mailers option will print one payslip per A4 page. What do I do if an employee becomes a Director during this tax year? The Director will need setting up with a new employee reference in personnel details making sure the type of Director is selected. Tick the Pro-Rata box and enter the number of weeks remaining in the tax year. The NI bands used in the payroll calculations will be adjusted accordingly. See HMRC document CA44 - National Insurance for Company Directors for more information regarding pro-rata periods. If the employee becomes a director at the beginning of the tax year then the Pro-Rata box should not be ticked. However, now RTI is live then HMRC must be informed of the changes to the employee code on the first FPS submitted after the change. This is done be entering the previous employee code in the Previous Emp. Ref field in personnel details on the Previous tab. The code should be prefixed with the Evolution company number. E.g. employee SMITH01 in company 01 will have a previous employee code of 01-SMITH01. If you require any assistance with any of these procedures after reading this document, please telephone our Support hotline on +44 (0)3453 40 30 40 or email support@integrity-software.net Page 23