PARENTAL CHOICE HMRC UPDATE FOR EMPLOYERS OF NANNIES AND DOMESTIC WORKERS – JANUARY 2014
CHANGES IN RATES FOR 2014-2015
The Department for Work and Pensions have provided us with the Statutory Payment rates that will apply from next tax year (together with a lot of other useful information):
From 6 April 2014:
• Anyone employing a nanny will have to register as an employer if they are paying over £111 a week.
• The personal allowance is going up to £10,000 meaning that if your nanny is on a gross salary she will receive an extra £560 a year with no further cost to you.
• The NIC threshold has increased to £153 meaning an employer will only start paying national insurance if their nanny earns above £153 a week.
CHANGES TO SMP AND SSP
Statutory Maternity Pay is increasing from £136.78 per week to £138.18. The first 6 weeks of statutory maternity leave will be paid at 90% of average weekly earnings for the previous two months, whilst the following 33 weeks will be paid at the lower of 90% of weekly earnings or SMP. Please note that under the Small Employer’s Relief scheme, if your nanny is entitled to SMP according to statutory regulations, then you will be entitled to recover 100% of any SMP paid plus 3% NI compensation. Most domestic employers will fall into this category.
Statutory Sick Pay is increasing from £86.70 to £87.55 per week and will be payable where an employee who earns at least £111 per week is absent for at least 4 consecutive working days. However from April 2014, employers will not be able to reclaim SSP from HMRC. This means that any statutory sick pay is now the employer’s responsibility.
If an employee has another period of sickness absence within 8 weeks of the previous absence, SSP is usually payable from the 1st day of sickness rather than the 4th, provided that the employee has been sick for at least 4 consecutive working days.
EMPLOYER’S NATIONAL INSURANCE
Many of you will have heard that from April 2014, all businesses would be exempt from the first £2,000 of Employer NI contributions each year. Unfortunately this exemption, included within the National Insurance Contributions Bill specifically excludes employers of nannies and other domestic staff from claiming this benefit.
UNUSED PAYROLL SCHEMES
For those of you that have registered as an employer but are not currently employing a nanny, please be aware that from October 2013, if there has been no activity on the scheme after 120 days it will be automatically reviewed to see if it can be cancelled.
A scheme will be considered as having no activity on it where
• you have made no submissions using PAYE in Real Time
• you have not made any payments to HMRC
• you are not an annual payer
• there is no evidence that you want to claim CIS Deductions Suffered
• you have not received an advance from HMRC
• you have not had any periods of Construction Industry liability
• there is no evidence that you have had any employees
• there is no evidence that Class 1A NIC is due.
Where none of these conditions apply your employer scheme will be cancelled and a letter issued to you to advise you of the action taken. Once the scheme has been cancelled you will not be able to submit any PAYE submissions. If your scheme should not have been cancelled the letter covers who you should contact in HMRC to request that your scheme is reopened.
However, our payroll department will continue to send monthly returns to HMRC if you are without a nanny, but want to keep the payroll open because you intend coming back into the employer role.
We hope that this update has helped but should you have any queries, please contact either Sarah-Jane or Marion on 020 8979 6453 or email us on firstname.lastname@example.org and we would be more than happy to help.