Annual Payroll Scheme
- Article ID
- Article Name
- Annual Payroll Scheme
- Created Date
- 1st April 2019
How can I process an annual payroll?
Annual Scheme Indicator
The option to process an employee’s payroll annually has been added to IRIS PAYE-Master.
This method of calculation will use the annual thresholds for tax, NI and pension in two different ways, both options will be included on the FPS as required by legislation.
Annual Scheme – Company level – All employees
The Annual Scheme is used when:
• All employees in the company are to be paid once in the tax year, in the same period
• The employer is only required to pay HMRC annually
To use an Annual Scheme, in Company Details | General Information tick the Annual Pay Scheme box.
A message will be displayed asking you to confirm that all employees in this company will be paid annually in a single tax month and that you are only required to make payments to HMRC annually.
• If you are using Annual Pay indicator, you will need to calculate average earnings and enter statutory payments manually
• If employees have already been paid in the current tax year you will not be able to set the Annual Pay Scheme indicator
• You will need to Select the next Pay Date for the annual payment in the Utilities/Pay Calendar Wizard
If the PAYE Scheme has been correctly registered with HMRC as an annual scheme there is no requirement for you to send an EPS marked as no employees paid for the other months of the tax year. You will send a single FPS for the period in which the annual payment is made.
If you send more than one FPS in the tax year HMRC will automatically remove the annual payment status from the PAYE scheme and would then expect EPS submissions to inform them of periods of inactivity like any other PAYE scheme.
Pay Annually – Employee Level – Individual Employee with a PAYE scheme
Pay Annually is used mainly for pension and directors’ payments.
• Payments can be made to employees in different pay periods, for instance some employees in April and some in July
• Payments to HMRC can be made more than once a year
• You can place employees on hold until they require payment
To set an employee as Pay Annually go to Employee Details | Pay Rates and select Pay Employee Annually.
When using either Pay Annually or Annual Scheme, if an employee has a week 1/month 1 tax code, the standard tax code will be used, not the week 1/month 1
When using Pay Annually or Annual Scheme we recommend you enter statutory payments calculations/payments manually