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

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 3

How Automatic Enrolment works in FreePayroll

Accepted Answer

Overview

Every time you run payroll, our software assesses your workforce to identify any employees who are eligible job holders but are not yet enrolled in the pension scheme. Upon submitting payroll, we automatically communicate this data to Collegia Pension, ensuring a seamless enrollment process.

How It Works

Workforce Assessment

Eligibility Check: The system evaluates each employee to determine eligibility based on predefined criteria.
Enrollment Status: Identifies eligible employees who are not currently enrolled in the pension scheme.

Automatic Communication

Data Transmission: Once payroll is submitted, the software sends the relevant data to Collegia Pension automatically.
Enrollment Action: All eligible job holders are automatically enrolled in the pension scheme without manual intervention.

Employee Notification

Welcome Pack: Enrolled employees receive a welcome pack via email.
Registration Process: The welcome pack includes instructions for completing their registration or opting out of the pension scheme.

Opt-Out and Refunds

Employees have the right to opt out of the pension scheme within the first 30 days of enrollment. Here's how the refund process works:

Opt-Out Within 30 Days
Refund Eligibility: Employees who opt out within this period are entitled to receive a full refund of their contributions.
Automatic Refund: If an employee opts ou

Question 4

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 5

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.

Question 6

How to Add, Edit, or Remove a Pay Item from an Employee

Accepted Answer

Add a Pay Item:

From the main page, click the "Run Payroll" button for the desired payroll.
Locate the employee and click on their name. A section will slide in from the left, displaying the payment breakdown for that employee.
Under the employee's name, click "+Add Pay Item." A popup will open with a dropdown list of available pay items. (If no items appear, see the article on how to create a pay item.)
Choose a pay item from the dropdown, input its value, and click "Save." The employee's payment breakdown will be updated immediately.

Edit a Pay Item:

From the main page, click the "Run Payroll" button for the desired payroll.
Locate the employee and click on their name. A section will slide in from the left, displaying the payment breakdown for that employee.
In the payment breakdown section, click on the name of the pay item you want to edit. A popup will open.
Input the new value and click "Save." The employee's payment breakdown will be updated immediately.

Remove a Pay Item:

From the main page, click the "Run Payroll" button for the desired payroll.
Locate the employee and click on their name. A section will slide in from the left, displaying the payment breakdown for that employee.
In the payment breakdown section, click the name of the pay item you want to remove. A popup will open.
Click the "Remove" button in the bottom left. The employee's payment breakdown will be updated, and the pa

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