Hello, as I'm the rookie bookkeeper now [ but still learning] I have the following question. My boss employs 12 people as part-time staff. Their weekly wages are £96. Now, what would happen if he gave them a rise up to £105 a week? I mean, for now the employees don not qualifiy to any contributions and pensions. If we gave them £105 a week would they qualify for pensions? Next, if so will my boss have to record them in HMRC? and, will he have to pay some contributions as well as the ST is not exeeded???
Yes, generally on Table Letter A, at £105 they would be making contributions till next April 5th. Whether there'll be any state pension depends on number of years contributions, which at the moment is 30. They will need to be recorded and submitted.
Your best best is to download software - both 12pay.co.uk
I do apologise. I had a brainstorm when typing my previous answer... This replaces it...
Your boss doesn't have to record anything as long as every single one of the employees (a) earns less than the NI lower earnings limit and (b) doesn't have a job elsewhere (ie you need to check that all 12 employees have this job as their only job. When they started they should have filled in a P46 stating this which the employer keeps on file)
The moment any employee has another job or any employee earns more than the NI Lower Earnings Limit in a week the company becomes liable for PAYE reporting of year-end returns, P35 and P14 (or P38A) for all employees showing their full year earnings.
Note that the LEL is well below the earnings threshold, the point at which any NI actually would become payable is at £138/week. So employees can get full state pension credit while paying no NI at all if they earn between the LEL and the earnings threshold.
-- Edited by Tom McClelland on Wednesday 12th of October 2011 11:56:55 AM
Ok thanks, so basically if we keep on £105 a week with them, they can count on state pension and nobody[ employer and employee] pays NI at all? What records apart from their P46s do we have to maintain for that?
The moment anyone earns above Lower Earnings Limit in any week you have to register as an employer with HMRC and run a payroll system. Filing by internet is compulsory so unless you get a bureau to do your payroll you'll need to register with HMRC for PAYE Online.
You need to record starters, leavers, and year-end returns (P35/P14) by internet for all employees earnings above LEL. You need to file P38A at year end for everyone that you didn't give a P14 for. Administratively it is usually simpler to run a payroll for everyone regardless of earnings level, and file P35/P14 for everyone at year end, then you're not having to watch their earnings level and it is one less thing to worry about.
Leavers should be given a P45, and anyone employed at year end should be given a P60.
I;m sorry for repeating myself but i prefer things even more clear than they seem :) So, to sum up, if we go along with the wages I gave before [ £105] the employees will have their contributions for their pensions but nobody [employee or employer] will have to pay the nics or PAYE, right? If that's right, what to do first as so far all our employees were paid part-time £96 a week and didn't submit any P45/46. Thank you again for help and sorry for my nagging.
I;m sorry for repeating myself but i prefer things even more clear than they seem :) So, to sum up, if we go along with the wages I gave before [ £105] the employees will have their contributions for their pensions but nobody [employee or employer] will have to pay the nics or PAYE, right? If that's right, what to do first as so far all our employees were paid part-time £96 a week and didn't submit any P45/46. Thank you again for help and sorry for my nagging.
Yes, At present the LEL is £102/week so someone earning £105/week gets full credit for state pension. No NI of any kind would be payable until an employee reached £136/week and the PAYE threshold is about £144/week.
You would need to register with HMRC as an employer. All the employees would have to fill in P46 (strictly speaking they should have done that when they started with you and you should have kept the P46's safe) which you need to file online with HMRC (register for PAYE online). If any employee has another job they will pay base rate tax on their income with you (and they should have already been doing that in fact, regardless of earnings level). You will also need to file P35/P14 at year end.
Because you have more than 9 employees you'll probably need some kind of commercial payroll software. 12Pay is a very fine option for about £55+VAT/year but there are other popular alternatives at a similarly low cost.
Have you remembered that all employees regardless of full/part time status must get 5.6 weeks paid holiday per year? (or 12.1% of hours worked, if they work variable hours)
but there are other popular alternatives at a similarly low cost.
