We have put together answers to some Frequently Asked Questions. Please don't hesitate to get in touch if you have any further questions or need assistance.
Statutory changes in 2013/2014 tax year
What is the new annual personal allowance?
The annual personal allowance will go up from to £9,445 from £8,105. This will give most employees a monthly tax-free amount of £786.66.
What about tax bands?
Tax bands for 2012/2013
||£0 - £32,012
||£32,010 - £150,000
- I have employees earning more than £100,000. What happens to their tax bands?
- Those earning £100,000 and above will lose their personal allowance reduced by £1 for every £2 of income.
- Those earning more than £118,900 will have no personal allowance
- What about National Insurance contributions?
- Employee rate
- The employee rate remains at 12% as in previous year.
- The monthly National Insurance free amount for employees will go up to £646 from £634.
- For those earning more than £41,450, the rate is 2%
- Employers rate
- Employers National Insurance remains at 13.8%
- The monthly National Insurance free amount for employers will go up to £641 from £624.
- What Student Loan Deductions must I make for my employees?
- The threshold has increase to £16,365 from £15,795.
- Repayment rate is at 9%. No change from previous year.
- What Statutory Maternity, Paternity and Adoption Pay are my employees entitled to?
- The first 6 weeks remain at 90% of an employee's average weeklyearnings.
- The next 33 weeks are payable at £137.78 (previously 135.45 a week).
- If the employee's average weekly pay is lower than the statutory amount, they will receive the lower amount for 39 weeks.
- Paternity and Adoption pay will increase to £136.78 from £135.45 or 90% of the employee's average weekly earnings if they are earning less.
- Employers can reclaim Statutory Maternity Pay and Statutory Paternity Pay at 92%
- I am a small employer. What can I do?
- You can claim Small Employers Relief at 103%.
- What Statutory Sick Pay are employees entitled to?
- Statutory Sick Pay will increase to £86.70 from £85.85 per week.
- What about Statutory Redundancy Pay?
- The weekly statutory amount has increase to £450 from £430.
- This was effective from 1st February 2013.
Statutory changes in 2013/2014 tax year
How do I claim a tax refund?
This will depend on whether you are claiming in the current tax year or previous tax years. You should have all the relevant information such as P60, P45, employer PAYE reference and employee National Insurance number when you contact your tax office. If you are claiming an overpayment in the current tax year, it will usually be repaid via payroll. If you are claiming an overpayment in previous tax years, your tax office will look this into and any monies owed will be refunded via the post. Please be aware that there is a time limit as to how long you can claim an overpayment. You have 5 years after the end of the tax year in which the overpayment was made to claim.
Relevant link: http://www.hmrc.gov.uk/incometax/overpaid-thro-job.htm#2
- I am confused by the different tax codes. Can you explain?
- HMRC assign a tax code if you receive a salary or pension. Tax is automatically deducted.
- If you have more than one source of income, you will have a different tax code for each of these incomes.
- Your tax code will consist of a number followed by a letter or a letter followed by a number.
- For most individuals, the number you get, when multiplied by 10 will give you your tax-free personal allowance.
- For most individuals, this tax-free personal allowance will be £9,440, so your tax code should be 944.
- This is not the case if you are a higher rate taxpayer, give to charity regularly or receive company benefits. If any of this applies to you, you will need to take note of the letters in
your tax code.
- Tax Code Letters
- LThis is the default letter and means you are entitled to basic personal allowance of £9,440. Your tax code should read 944L. However, if you have additions or deductions, the
number before the L will be different.
- PThis is for those aged 65 to 74 who are entitled to age related personal allowance of £10,550. Your tax code should read 1055P. However, those turning 65 after April 6th this
year will not get this allowance and will remain on L.
- YThis is for those aged 75 or over who are entitled to the higher age-related allowance of £10,600.
- KThis letter appears before the numbers in your tax code. This usually applies to those with generous company benefits, tax owed from previous years or large state pensions.
The number in the tax code (multiplied by 10) refers to how much must be added to the taxable income to take into account tax owed. Note that tax deducted for each pay
period can't be more than half of the gross pay or pension. Some people will find they stay on a K code for more than one tax year.
- TThis letter means HMRC believes there are "other items" that need to be considered as part of their calculation e.g. your income is more than £100,000 meaning your personal
allowance is gradually reduced.
- BRThis is when all your income will be taxed at the basic rate of 20% with no tax-free allowance. This is usually because there is more than one source of income and personal
allowance has been applied elsewhere.
- DOAs above but all income is taxed at 40%.
- D1This is used when all your income is taxed at 45% (previously 50%).
- NTNo tax is to be taken from the income or pension.