Question 1

Calculating Mileage Expense for Employees under HMRC Rules

Accepted Answer

FAQ: Calculating Mileage Expense for Employees under HMRC Rules

Q: What are the HMRC rules for calculating mileage expenses for employees?

A: Under HMRC rules, employers can reimburse employees for business travel in their own vehicles using approved Mileage Allowance Payments (MAPs). The MAP rates for the 2024-2025 tax year are:

Cars and vans: 45p per mile for the first 10,000 miles, then 25p per mile thereafter
Motorcycles: 24p per mile
Bicycles: 20p per mile

Q: What constitutes business travel?

A: Business travel includes journeys made:

Between different workplaces for the same job
To a temporary workplace from the main workplace
For work purposes, such as visiting clients or attending meetings

Q: How do I calculate mileage expenses for my employees?

A: To calculate mileage expenses:

Track the Miles: Have employees record the number of miles driven for business purposes.
Apply the MAP Rates: Multiply the business miles by the relevant MAP rate.

For cars and vans: Use 45p per mile for the first 10,000 miles, then 25p per mile thereafter.
For motorcycles: Use 24p per mile.
For bicycles: Use 20p per mile.

Example Calculation for a Car:

An employee drives 12,000 business miles in a tax year.
For the first 10,000 miles: 10,000 miles × 45p = £4,500
For the remaining 2,000 miles: 2,000 miles × 25p = £500
Total reimbursement: £4,500 + £500 = £5,000

**Q: What records should employees keep for mile

Question 2

Paying an employee after giving them a P45 (PAL)

Accepted Answer

Sometimes, payments need to be made to employees after they have officially left your organisation and their final payslip has been processed. This guide details how to handle Payment After Leaving (PAL) in FreePayroll, ensuring compliance with HMRC regulations.

What is Payment After Leaving?

Payment After Leaving refers to any payments made after an employee's departure date, which could include unpaid wages, accrued holiday pay, or bonuses. It's crucial to handle these payments correctly to ensure accurate reporting to HMRC.

When to Use PAL

Use PAL for any post-termination payments, except for tax-exempt payments like certain redundancy payments over £30,000, which have their own rules. Always use tax code 0T on a Week 1/Month 1 basis, ensuring National Insurance and any student loan repayments are deducted correctly.

If you have to pay an employee after they leave :

Go to the employee profile
Update employee tax code 0T on a ‘week 1’ or ‘month 1’ basis (use the code S0T if they’re taxed at the Scottish rate or C0T if they’re taxed at the Welsh rate).
After updating the employee tax code, now click on the three dots, next to the employee name, and select "Payment After Leaving".
Select the payment type:
Regular payment (For example, contractual pay such as salary or notice pay).
Irregular payment (For example, accrued holiday pay, or an unexpected bonus). Note: FreePayroll currently does not support ‘irregular’ payment.
Click on enable.

Question 3

Submissions Common Error Messages

Accepted Answer

Error 1046 - Authentication Failure. The supplied user credentials failed validation for the requested service.

When you make an RTI submission, HMRC verifies your Gateway Sender ID, Password, PAYE Employer Reference, and Accounts Office Reference against their records. An Error 1046 occurs when any of these details do not match the records HMRC has on file, indicating an authentication issue. You can view your credentials by navigating to 'HMRC' on the left side menu.

Incorrect User Credentials in FreePayroll: This is often the most common cause of Error 1046. To verify that the Sender ID and password you've entered are correct, try logging into the HMRC Online services website directly with these credentials copied from FreePayroll.
Password Length Limitation: When inputting your password on the HMRC Online services website, only the first 12 digits are accepted. If your password exceeds this length, ensure only the first 12 digits are used in FreePayroll.
Typos in ID and Password: Common mistakes include confusing the number 1 with a lowercase L or an uppercase I, or mistaking the number 0 for the letter O.
Incorrect PAYE Reference Entries: Double-check your entries for accuracy. For example, ensure you haven’t mistyped '123/AB543' as '123/AB534'.
Delay in Activation of New Credentials: If you have recently set up a new Sender ID and password, be aware it might take up to two weeks for these credentials to be recognized across all HMRC systems.

If none

Question 4

Issues with HRMC credentials

Accepted Answer

Error When Entering Credentials

If it is the first time you are running payroll for a scheme you might need to activate PAYE for your scheme first and also enable FPS submissions, both on your HMRC account. Please follow the steps below, to solve the issue:

Ensure Credentials Accuracy: Verify that the credentials match exactly those you use for HMRC online services. You can check this by logging into the HMRC website.
Enrol for PAYE for Employers: Confirm that you have enrolled for PAYE for Employers online. This should be visible on the Business Tax Summary homepage on HMRC website.
Enable FPS Submissions: Make sure that you have enabled FPS (Full Payment Submission) submissions in your HMRC account.

Enrolling for PAYE for Employers

Q: How do I enrol for PAYE for Employers?
A: To enrol for PAYE for Employers, follow these steps:

If You Already Have an HMRC Account:

Sign in to your HMRC account.
Select "PAYE for Employers" from the list.

If You Don't Have an HMRC Account:

Enrol as a new business account holder.
Select "Add a tax to your account" on the Business Tax Summary page.
Add PAYE for Employers.

Enabling FPS Submissions

Q: How do I enable FPS submissions?
A: To enable FPS submissions, follow these steps:

Login to your HMRC online account.
Click on "Manage account" in the top bar.
Click on "Give a team member access to a tax, duty, scheme."
Click on "Team members.

Question 5

Impact of Starting to Claim Employment Allowance Mid-Year

Accepted Answer

If you begin claiming Employment Allowance part way through the tax year, it affects your PAYE (Pay As You Earn) bill in the following ways:

Proportional Reduction: The allowance applies only from the month you start claiming onwards. For example, if you start in Period 7, the allowance will cover Periods 7-12.
Cumulative Claims: You can still utilize the full £5,000 allowance within the tax year, but only the periods after you start claiming will directly reduce your NI contributions.

Example Scenario

| Period | Employer NI (£) | EA Claimed (£) | Remaining EA (£) | |------------|----------------------|---------------------|-----------------------| | 1-5 | 0 | 0 | 5,000 | | 6 | 1,000 | 0 | 5,000 | | 7-12 | 3,000 | 3,000 | 2,000 | | Total | 4,000 | 3,000 | 2,000 |

In this scenario:

Periods 1-5: No NI contributions and no EA claimed.
Period 6: £1,000 NI contributions but no EA claimed, since claiming was off.
Periods 7-12: £3,000 NI contributions are reduced by £3,000 EA.
Remaining EA: £2,000 at year-end.

Options for Unused Allowance at Year-End

If you have unused Employment Allowance by the end of the tax year, you have two options:

Offset Against Other Taxes:

HMRC can apply the re

Question 6

How can my employees opt out of the pension ?

Accepted Answer

In accordance with UK law, employers are required to enrol all eligible employees in a workplace pension scheme. Employers do not have the option to opt-out employees from this automatic enrolment. However, employees retain the right to opt-out of the scheme if they choose to, but this process must be completed by the employees themselves as stipulated by The Pensions Regulator (TPR).

Upon submitting a pay run, Collegia FreePayroll will automatically enrol all eligible job holders into the Collegia Pension scheme. Each enrolled employee will receive a welcome pack via email, allowing them to either opt-out or complete the registration process. If an employee opts out within 30 days of enrolment, a refund will be processed in the next pay run. You can monitor your employees' pension statuses anytime by navigating to the "People" section and checking the "Pension Status" column.

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