Annual Payroll Scheme

Article ID
11159
Article Name
Annual Payroll Scheme
Created Date
1st April 2019
Product
Problem

How can I process an annual payroll?

Resolution

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.

Please Note:

• 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.

Please note:

• 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.

Please Note:

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