Payroll intervals

Question asked by Pete 7 years ago

This is in regard to my own director salary. If I don't care about when the salary is actually paid, is there any reason why I shouldn't change the payroll frequency from monthly to Annual? (or quarterly)

It was only monthly in the first place because my bookeeper at the time set it up like that (presumably so shr could charge me monthly!) - I don't actually need monthly salary as it is very small anyway, mostly I just take dividends if I need money.

And if I do change it, do I need to inform HMRC?

EDIT: Looks like I do:

https://www.gov.uk/running-payroll/changing-paydays

Thanks

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5 Replies

Afternoon Pete,

As per the HMRC link that you have produced this would need to be communicated to HMRC.

"Annual payroll scheme for PAYE If you pay your employees only once a year, and all in the same tax month, you can register with HMRC as an ‘annual scheme’.

This means you send reports and make payments to HMRC annually. If you pay your employees on different days in the same tax month, you need to send an FPS on or before each payday. You don’t need to send an Employer Payment Summary (EPS) for the months when you don’t pay your employees.

To register, contact the employer helpline and tell them which month you pay your employees. You’ll need your 13-character Accounts Office reference number - this is on the letter HMRC sent you when you registered as an employer."

Best answer
7 years ago

I am under the impression that at the beginning of the tax year payroll frequency is established explicitly with HMRC if this is less frequent than monthly as to avoid any potential penalties.

Although it is not generally recommended, if payroll frequency mid tax year is desired to be changed then this would again need to be explicitly communicated with HMRC.

(These thoughts are derived from my interpretation of the texts I have read and in no way should be used as advisory or reference)

7 years ago

Yes, I'm actually still waiting from an answer from him (obviously a busy time of the year as we know) but whatrever he says I still feel I need to do what I'm told by HMRC!

Could it be that even though you can register the frequency of submission, once that is done it can't be changed? Seems a bit, maybe I will ring again and see if someone else there gives different advice.

7 years ago

I see.

The advisory that you have received does not correlate very well with the information that is provided on the Gov.uk website.

It may be worth receiving a second opinion from an accountant.

7 years ago

Thanks for answering, and what you say does make sense, except when I contacted HMRC they told me that it is not possible to change thefrequency of submissions once it was set up as every month.

That if I change the period to quarterly, I would have to submit an "inactive" EPS for April and May, then submit an FPS for June.

Or if I change it to annual, I have to submit an inactive EPS for April, may etc. up until March payaday when I submit an FPS for the year.

Seems a bit odd but that is what she said.

7 years ago

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