Payroll update for small business

Teething problems with RTI


Since April 2013, employers have had to report pay, tax and national insurance contributions to HM Revenue and Customs (HMRC) on or before every pay day under the new Real Time Information (RTI) rules. For many employers this has meant an overhaul of their payroll system, which for some has been a costly and complex task.


However, it seems that it’s not just employers who are struggling to get to grips with RTI.


HMRC are also having problems and underpayment notices are being issued to employers when no fault has arisen. In some circumstances employers are being hounded for payments and threatened with fines and penalties even though employers were assured that in the first year of RTI no penalty situation should arise. If you receive a penalty notice from HMRC which you feel is incorrect please do get in touch with a payroll professional for advice.


National Minimum Wage and accommodation offset increases from October 2013


The National Minimum Wage will increase from 1st October 2013 as follows:

Age 16 – 17 from £3.68 to £3.72 per hour

Age 18 – 20 from £4.98 to £5.03 per hour

Age 21 & over from £6.19 to £6.31 per hour

Apprentices – increase from £2.65 to £2.68 per hour

Accommodation offset increases from £4.82 to £4.91 per hour


National Insurance Employment Allowance


In the 2013 budget the chancellor announced a new £2,000 allowance for all business and charities to offset against their Employer Class 1 National insurance liabilities from April 2014. Although this allowance applies to all businesses it will be particularly useful for small businesses and it may well eliminate Employer contributions for many small employers.


It is not yet clear how, or when the business will go about claiming the allowance but it is most likely to be made as a deduction from your NIC costs as part of your normal RTI submission process.


If you would like any advice about payroll issues then contact Margaret Merrifield, Payroll Services Manager at Moore and Smalley at