New “KC” NI Code Prefix

Important information regarding the introduction of “KC” as a prefix for National Insurance numbers

This change was not included in the specification HMRC provided to payroll software developers this year. It’s also not catered for by the Government Gateway itself. As a result, Opera 3, Opera II and Capital Gold payroll systems do not accept NI numbers with the KC prefix, and FPS submissions containing these NI numbers are currently being rejected.

Until this issue is resolved, HMRC guidance to employers is not to enter NI numbers with the KC prefix into their payroll systems. We therefore advise users of Opera 3, Opera II and Capital Gold Payroll to leave the National Insurance Number field blank when adding a new employee with a KC NI number, and ensure that the employee’s name and address details are completed in full as HMRC will be using these as employee identifiers.

NOTE: Please contact HMRC for further information

Payroll now or pay a fine later – expert’s alert to businesses over living wage

Businesses across the county have been warned to check and update their payroll systems or risk a severe penalty.

The alert has come from Worcestershire IT and payroll specialist Susan Marlow who says the vast majority of businesses have yet to revise their systems despite the new national living wage sweeping into effect from 1st April.

Mrs Marlow, finance director at Kidderminster-based IT and software provider Minster Micro Computers, says employers will have “nowhere to hide” when the changes come into effect due to stringent minimum wage checks by HM Revenue and Customs.

Under the new rules, every employee aged 25 and over will be entitled to at least £7.20 per hour, a 50p per hour rise on the current rate.

Businesses failing to pay the increased rate could face a fine of £20,000 per worker – a message Mrs Marlow is pushing following a Department for Business, Innovation and Skills study that found 55 per cent of employers had yet to update their payroll accordingly.

She said: “Since the introduction of RTI legislation, there really is nowhere to hide for firms here in Worcestershire and with the new pay rules only a matter of weeks away, it’s vital they take steps to update their systems.

“Some businesses have complained the national living wage will put an additional burden on them but the law is here to stay. All the information that HMRC needs, including wages, dates of birth and National Insurance numbers, it already has.

“Even employers who are fully aware of the change and have budgeted for it have to take extra care to ensure their payroll system is updated and ready to pay the new rate from 1st April.”

Ms Marlow said companies had to make sure their software was capable of adjusting to the change.

She added: “Businesses shouldn’t assume their software or payroll bureau will advise or alert them. It’s an employer’s responsibility to ensure systems are ready otherwise they will face HMRC’s strict crackdown and hard financial penalties.”

Minster Micro Computers has more than 35 years’ experience in ERP and payroll systems and have ran numerous payroll-related seminars, including a focus on auto-enrolment and RTI. These sessions are run prior to the legislations coming in as part of their commitment to outstanding customer service.

Supporting a range of business sectors, the company is an accredited SAP Business One Partner and is a provider of Pegasus business software.

The Worcestershire firm supplies payroll software, training and implementation as well as IT support services.

Businesses looking for advice on updating their payroll systems in preparation for the 1st April changes can email or telephone 01562 68211.

Prompt Payment Discount – HMRC Change the Rules !

HMRC are changing the rules – From 1 April 2015 UK VAT legislation will be brought into line with EU VAT legislation

When processing an invoice, VAT will be calculated on the goods value before any settlement discount is applied. The change will affect any business that either receives or gives settlement discount for prompt payment of an invoice.

When the legislation change becomes effective, HMRC will expect to receive the full value of VAT on an Invoice if the settlement discount is offered but not taken and make an accounting adjustment if discount is taken. These changes will necessitate Pegasus users to consider their working practices before and after 1 April 2015.

If an Invoice is paid within time to receive an early settlement discount, HMRC expect the discounted VAT value and discounted Goods value to be recorded in the relevant tax period, this is also a change in existing accounting rules.

HMRC have confirmed that there will be no transition period at 01/04/2015 therefore any unbilled Sales Orders created before April 2015 will require billing from 01/04/2015 under the new rules.

For details on this legal change, see the official website of the HMRC.

See further information on our Prompt Payment Discount page.


Salary Sacrifice Available For Opera 3 Payroll

With the advent of auto enrolment, salary sacrifice is becoming more and more popular with companies deciding to use it with their new pension schemes.

Payroll Payment Screen-Shot

Payroll Payment Screen-Shot

Under a salary sacrifice arrangement, an employee gives up some of their cash earnings in return for new or increased entitlements to non-cash benefits provided by their employer. Apart from pension contributions, such non-cash benefits include childcare vouchers, cycle schemes, travel, subsistence allowances and others.

Salary sacrifice can be financially beneficial for both employers and employees as it can reduce the amount of tax and National Insurance (NI) an employer deducts and pays to HMRC against the employee’s remuneration package. This happens when part of an employee’s remuneration changes from cash, for which tax and NI contributions are due, to non-cash benefits which are wholly or partially exempt from tax and NI contributions.

Opera 3 Payroll has been enhanced in order to automatically calculate both percentage-based and fixed-value sacrificed pension contributions and include them within the associated pension contribution files and reports.

There are many benefits to salary sacrifice in Opera 3 Payroll:

    • It’s very quick and simple to set up
    • Salary sacrifice can be used for both pension and non-pension sacrifices
    • A pension salary sacrifice can be based either on a defined value or on a percentage
    • Salary sacrifice information is printed on the payslip
    • Sacrificed values are included in pension contribution reports and pension contribution files
    • Pension salary sacrifice values are shown on the Employee History form
    • The employer’s NI saving can be added to the contribution
    • It’s included as standard with Opera 3 Payroll

If you decide to introduce salary sacrifice, Opera 3 Payroll will help you make a smooth transition, and you’ll be able to start benefiting from reduced costs simply and quickly.

Contact us for further information on Opera 3 Payroll & Salary Sacrifice.

Real Time Information (RTI) Seminar

HMRC- RTIRTI is being introduced to improve the operation of PAYE, making it easier for you, the employer, to operate PAYE. Employees will receive the information more quickly and it will help support the introduction of Universal Credits. We are holding an RTI seminar on 29th January 2013 showcasing how Pegasus will be ready for the changes. Click here to reserve a place.

Important information regarding the Payroll Upgrade 2013

The Payroll Upgrade 2013 will incorporate the necessary legislative changes to complete the 2012/2013 Tax Year and process from 6 April 2013 onwards. The advance information also covers those changes that are being introduced in April 2013.

Statutory Changes for April 2013

Real-Time Information (RTI)
Full Payment Submission (FPS) to HMRC (Payroll Upgrade)RTI means that employers and pension providers will now need to inform HMRC about PAYE payments at the time they are made as part of their payroll process. Payroll software will collect the necessary information and send it to HMRC Online. Employers will submit information about PAYE payments throughout the year as part of their payroll process, rather than at the end of the year as it is currently done.

Employers will gradually be phased in to RTI with medium to smaller employers joining RTI from April 2013. Larger employers (5,000 or more employees) will be moved on to RTI at various stages during June to September 2013. By October 2013 it will become mandatory and all employers will be using RTI.

Under RTI, the employer will no longer produce and submit P14s and the P35 summary to HMRC. However, the employer will still have to provide their employees with a P60 at the end of the year. For further details please visit

PAYE Changes PAYE rate and bandwidth changes will apply from 6 April 2013. For example, the ‘50%’ rate is to be reduced to 45%. Also, there will be changes to personal tax allowances from 6 April 2013.

Student Loan Threshold The annual student loan threshold will increase from £15,795 to £16,365 from 6 April 2013.

NI Thresholds There will be changes to the thresholds for NI from 6 April 2013. Contribution % rates remain unchanged.

Statutory Payment Rates All statutory payment rates will be uplifted from 6 April 2013.

Auto Enrolment Thresholds Subject to confirmation from the Department of Work and Pensions, there are expected to be changes to the Auto Enrolment thresholds from 6 April 2013.

Earnings Arrestments Changes Subject to confirmation from the Scottish Courts, the various earnings bands used in the calculation of Earnings Arrestments (a type of Scottish Court Order) are expected to change from 6 April 2013.

Online Filing Manager Changes Online Filing Manager will be updated to permit online EOY submissions for the 2012/2013 tax year, and RTI submissions from 2013/14 onwards.

Non Statutory Changes for April 2013

P60 Stationery Designs Unsupported P60 stationery designs will be removed from the Opera 3 and Opera II Returns user interface.