Income tax FAQs

How do I implement Tax and NI Changes in April/May?

We will send out a CD with a set of step-by-step instructions, to lead you through the operation. This will arrive in good time for you to make the changes.

A student has joined us. What do I do about tax and NI?

Students would usually be set up on an NI tax code and A Rate NI. However, we cannot advise what any of your employee's tax codes or NI rates should be. If in doubt please contact HMRC.

A new employee has joined us but is also in employment with another company. Do I have to deduct Tax and NI at the full rate?

If an employee has more than one job, both employers have to deduct NI contributions subject to the Gross Pay being above the Lower Earnings Limit.

You need to deduct NI as normal. If the total employee contributions in both employments are likely to exceed the annual maximum contribution payable, a deferment certificate may be obtained.

However, since April 2003 those 'deferred' contributions are no longer zero. This year 1% is due on all earnings above the Earnings Threshold. You should speak to HMRC regarding which NI rate to put them on.

How do I deal with sub-contractors?

Sub-contractors base rate of tax became 18% from 6th April 2000. You can use a Tax Code of F36 to achieve this. (F tax codes are applied on a week 1/month 1 basis)

At year end they will need to be removed from the payroll as you do not submit a P14 for sub-contractors. If you are doing returns using Online Filing, you can add the totals onto the Revenue Details tab card for:

Deductions made from subcontractors
CIS Deductions suffered

However, EARNIE now handles CIS and this is a module that can be purchased as an "add on" to the payroll package.

Key benefits for using EARNIE for CIS:

Sub-contractors are kept in a separate company to PAYE employees. This ensures no mistakes can be made when importing to HMRC
EARNIE stores the UTR (Unique Tax Reference) for each of the company statuses of 'Sole Trader', 'Partnership', 'Limited Companies' and 'Trusts'
At the click of a button EARNIE will contact HMRC's Gateway and verify that tax status for any of the sub-contractors on the system
Material and Labour costs can be split between different jobs.*
Calculates VAT for VAT registered sub-contractors
Prints Invoices and Remittance Advices
Provides electronic monthly tax returns to HMRC
Provides a journal file which can be imported into IRIS Accounts Office and other accounts packages
Can link sub-contractor companies to PAYE company for reporting at the PAYE Year End
Withhold part of the payment until future pay periods
Caters for the CITB Training Levy

* Requires the costing module to be purchased.

I require a P30 report to use to pay HMRC. Where do I find it?

The figures needed for your P30 report can be found on the last page of the Monthly/Month End Summary.

Can I print off the Tax and NI rates for my company as requested by HMRC auditors?

Yes. Go to File, Print Tax, NI rates.

How do I rectify running my company on the wrong Tax / NI Rates?

Firstly, you will need to make sure you are running on the most up to-date version of the software and that the correct tax year is selected in company details. Once this has been amended anyone on a cumulative Tax Code will have their tax automatically rectified during the next payroll run.

If there has been a change in the NI rate, or if you have anyone on a week 1/month 1 Tax Code, please contact Support or call 0844 815 5671.

How can I check my company is running on the current Tax / NI rates?

Go to the Company Menu, Alter Company Details and the Tax Tab Card. Check the 'Use Tax rates Effective from' and set it accordingly.

Will I be able to make my payments electronically to HMRC every month using EARNIE?

No, this is not a payroll function. Making payments to HMRC is an accountancy function.

I am a bureau user. Can I globally change tax codes instead of going in and out of every company?

Yes, you can do this in EARNIE Admin. From the FILE menu choose COMPANIES, then BUDGET AMENDMENTS. At the bottom of the Budget Amendments screen there is a SELECTION button.

Click on the Selection button and then tick the box next to the companies you want to include in the Budget Amendments. You can choose ALL if you want to. Say OK. Then make the budget amendments as normal in the table. (The Default Name and Password into Admin is system and admin.)

Payments & Deductions - Can you explain the Apply Before Tax and NI / After Tax and NI categories to me in simple terms?

Apply Before Tax and NI Calculation

The amount will be subject to both Tax and NI if it is a payment. The amount will be exempt from both Tax and NI if it is a deduction.

Apply After Tax and NI Calculation

The amount will be exempt from both Tax and NI if it is a payment. The amount will be subject to both Tax and NI if it is a deduction.

Apply After Tax but Before NI Calculation

The amount will be exempt from Tax but subject to NI if it is a payment. The amount will subject to Tax but exempt from NI if it is a deduction.

Apply After NI but Before Tax Calculation

The amount will be subject to Tax but exempt from NI if it is a payment. The amount will be exempt from Tax but subject to NI if it is a deduction.

Why would the software not let me enter a K tax code?

This is only a problem if you are trying to enter it as '123K' rather than 'K123'.

Are there any changes to the suffix tax codes in the April 2010 Budget?

Suffix L codes are not changed, the default remains 647L.

Can I print the Income Tax Calendar from the software?

The Income Tax Calendar is supplied by HMRC and never changes. To print it in EARNIE, go to File, Change Payroll Date. Click on the Tax Calendar button. To print, right click and select Print.

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