Latest news with #PAYE
Spectator
a day ago
- Business
- Spectator
Revealed: the dodgy data undermining Universal Credit
As Sir Keir Starmer offers concessions to 126 rebels to water down his welfare reform bill, a scandal that undermines the entire Universal Credit system goes ignored. The Spectator has seen figures revealing that the HMRC data feed which powers Universal Credit payments to low-paid workers may be so error-strewn that as many as one in four claimants has been underpaid, overpaid or not paid at all. When Universal Credit was introduced 11 years ago to modernise benefits, it required a robust data system to drive it. HMRC's answer was the 'Real Time Information' (RTI) system – hailed at the time as the most significant overhaul of the tax system since PAYE's introduction in 1944. Employers were required to report payroll information every time they paid staff, enabling near real-time benefit calculations. The system was later used to support the Covid furlough scheme. But problems surfaced almost immediately. Financial penalties that were triggered automatically to ensure employers reported earnings records accurately and on time were abandoned after just one use in 2014, almost as soon as the data stream was turned on. A senior official at HMRC said at the time: 'We haven't been able to target them [400,000 automated compliance messages to employers] as sharply as we hoped and they went to people who had complied.' In hindsight, some insiders draw comparisons to the Post Office's Horizon scandal. The implications of flawed RTI data are vast. FTSE 100 companies have seen tax liabilities misstated by millions because what they owe in tax is also calculated using RTI. Businesses have lost faith in the integrity of the figures. This same stream underpins tax assessments for 30 million people and Universal Credit payments for 23 million. Yet the data is routinely late, inaccurate, or missing. The fallout? Missed tax receipts, unpaid benefits – and in the most severe cases, people wrongly accused of fraud. In 2023, I reported that, while the government claimed the RTI error rate was under 1 per cent, figures I obtained showed a monthly error rate closer to 5 per cent. One in 20 Universal Credit claims for working households, it turns out, may be wrongly calculated every month – a figure the government strongly disputes. More recent Freedom of Information requests suggest an error rate as high as 8 per cent, or 2.5 million incorrect records monthly. The benefits bill is unsustainably high and reform is clearly needed These reports in The Spectator led to the shop workers union USDAW including questions about Universal Credit payments in its annual survey to thousands of members. I have now obtained the results. Of those surveyed, some 1,265 said they claimed Universal Credit. Some 23 per cent admitted they had had issues with their UC claims because the details of their households' total pay were wrong at DWP or had an incorrect date shown. That suggests that almost one in four in-work UC claimants have been made a victim of this error that stems from the RTI system. Nearly 29 per cent of those who had experienced an error ended up in financial hardship as a result. Some 22 per cent said they'd experienced issues but not been able to get a satisfactory response from the DWP. The USDAW survey, which is the first of its kind to ask in-work UC claimants if they've experienced errors stemming from RTI, reveals that even the error rate of 4-8 per cent I've previously reported on could be a considerable underestimate. The survey responders are all USDAW members so tend to be people working in lower-paid private-sector roles. It's not possible to say for certain that they are all UC claimants, but their membership suggests these are the type of people likely to be in the in-work claimant population governed by RTI. A common issue raised was the misreporting of pay dates for supermarket workers paid every four weeks. The RTI system often logs two payments in a single calendar month, triggering a drop in benefit entitlement. These are not isolated glitches; they point to a systemic failure. A government spokesman said: 'In the vast majority of cases using Real Time Information supplied by employers is an efficient and accurate method of calculating Universal Credit payments – and less than 1 per cent of cases do not match. 'If a claimant wishes to dispute the earnings information we have used, they can submit evidence to us, and we will look into the case and make any necessary changes.' The benefits bill is unsustainably high and reform is clearly needed. But if Starmer is now open to concessions, this is his opportunity to go beyond cash savings. He should instruct Welfare Secretary Liz Kendall to review the reliability of the RTI system underpinning Universal Credit. At its core, the principle that work should pay is absolutely right. But it only holds water if the systems ensuring that promise are accurate, transparent and fair. Because too many claimants are being failed by the very mechanism meant to support them. If Starmer wants to reform welfare, he must start by fixing the machinery behind it before another Horizon-style scandal hits the headlines.
Wales Online
3 days ago
- Business
- Wales Online
Liverpool hero John Barnes racks up £1.5million worth of debt, new court documents show
Liverpool hero John Barnes racks up £1.5million worth of debt, new court documents show John Barnes is said to owe huge sums of money to HMRC and other creditors after fresh paperwork from liquidators was presented John Barnes is in hot water with HMRC (Image: PA ) Former Liverpool star John Barnes has accumulated debts of £1.5m with his media company, according to recent documents from liquidators. The ex-winger owes considerable amounts to HMRC and other creditors, including £776,878 in unpaid VAT, NI, and PAYE, £461,849 to unsecured creditors, a director's loan of £226,000, and liquidator's costs of £56,535. Barnes has repaid £60,000 after agreeing to repay the director's loan in instalments. However, the latest report indicates that only a "small distribution" towards the tax bill will be paid, and "no funds" will be available to pay unsecured creditors. John Barnes Media Limited went into liquidation in 2023 due to unpaid taxes. Barnes, 61, was banned as a company director for three-and-a-half years last year after his media firm failed to pay £190,000 in VAT and corporation tax. An investigation by the Insolvency Service, which started in September 2023, found that the company failed to pay £78,839 in corporation tax between August 2018 and January 2020. Additionally, the company failed to pay £115,272 in VAT between February 2019 and 2020. During this period, the company's turnover was £441,798, and the company's tax returns outlined the required VAT payments, reports the Mirror. A statement from the Insolvency Service read: "The Secretary of State for Business and Trade accepted a disqualification undertaking from Barnes. His ban started on Wednesday 24 April." Article continues below As per the website, Barnes' ban prevents him from "being involved in the promotion, formation or management of a company, without the permission of the court." Barnes was a key part of England's Italia 90 squad (Image: Mirrorpix ) Meanwhile, a statement from Mike Smith, Chief Investigator at the Insolvency Service at the time of the ban, read: "Individuals and businesses not paying the tax they should deprives the government of the funding it needs to provide vital public services and investment in areas such as schools, hospitals and roads. "John Barnes had a legal duty to ensure his company paid the correct amount of corporation tax and VAT. Instead, it paid no tax whatsoever between November 2018 and October 2020, despite receiving earnings of well over £400,00. "This disqualification should serve as a deterrent to other directors that if you do not pay your taxes while directing money elsewhere, you are at risk of being banned." The Liverpool icon has racked up the debt (Image: Getty Images ) Article continues below Barnes, who has represented England 79 times, also had stints with Watford and Newcastle United. He established the company in September 2012, serving as its sole director. When approached by the Mirror at his residence in Heswall on the Wirral, he chose not to comment. He has been the focus of six separate bankruptcy petitions since 2010. In a 2009 interview, he said: "I don't like dealing with taxes, of course. I just hate not having enough money. Apart from that, I don't like dealing with bills and never have done. I let my wife Andrea deal with them. I don't even like opening them."
Daily Mirror
4 days ago
- Business
- Daily Mirror
Liverpool and England hero racks up £1.5m debt & given three-and-a-half-year ban
Former Liverpool and England star John Barnes owes huge sums to HMRC and other creditors according to fresh paperwork from liquidators, with "no funds" available to pay unsecured creditors Former England star John Barnes has racked up debts of £1.5m in his media firm. Fresh paperwork from liquidators has revealed the ex-Liverpool winger's owes huge sums to HMRC and other creditors. Bills include £776,878 to the taxman in unpaid VAT, NI and PAYE, £461,849 to unsecured creditors, a directors loan worth £226,000 and liquidator's costs worth £56,535. The football legend has repaid £60,000 after agreeing to repay the directors loan in instalments. But the latest report warns that only a 'small distribution' towards the tax bill will be paid, while 'no funds' will be available to pay unsecured creditors. The John Barnes Media Limited company went into liquidation in 2023 after failing to pay tax. Barnes, 61, was last year banned as a company director for three-and-a-half years. It came after his media firm failed to pay £190,000 in VAT and corporation tax. An investigation by the Insolvency Service, which began in September 2023, found that the company failed to pay £78839 in corporation tax between August 2018 and January 2020. It also failed to pay £115,272 in VAT between February 2019 and 2020. During that time the company's turnover was £441,798 and the company filing returns outlined what VAT payments should have been made. An Insolvency Service statement read: 'The Secretary of State for Business and Trade accepted a disqualification undertaking from Barnes. His ban started on Wednesday 24 April." Barnes, capped 79 times by England, also played for Watford and Newcastle United. He formed the company in September 2012. Barnes was the company's sole director. He declined to comment when approached by the Mirror at his home in Heswall on the Wirral. He has been the subject of six different bankruptcy petitions dating back to 2010. In 2009, he said in an interview: 'I don't like dealing with taxes, of course. I just hate not having enough money. Apart from that, I don't like dealing with bills and never have done. "I let my wife Andrea deal with them. I don't even like opening them.'
Daily Mirror
6 days ago
- Business
- Daily Mirror
These common payslip errors could cost you £1,000s - how to spot them
MoneyMagpie Editor and financial expert Vicky Parry warns about common errors on PAYE payslips that could cost you hundreds of pounds When something is wrong on your payslip, an innocent mistake could cost you hundreds or even thousands of pounds – even if it's not your fault! From being overpaid by your employer to not being on the right tax code, there are lots of ways an incorrect payslip could impact you and your finances. Check your payslip every month for these common errors. Incorrect tax code Everyone is assigned a tax code based on their income and other factors. For most people with a single job or pension, that code is currently 1257L. That reflects the amount of personal allowance you can earn before tax is owed: £12,570 per tax year. This changes depends on things like company benefits; for example, if you receive £1570 of medical insurance pre-tax, your code will be 1100L instead, as your Personal Allowance is reduced to £11,000 a year. If you have moved jobs part-way through the year, you may be placed on an emergency tax code which has a higher rate. If you see the code C0T, W1, M1, or X on your payslip and you have been at your job for more than 35 days, speak to the person who handles payroll. It usually means they haven't got the right information yet, such as your P45 from a previous job. Incorrect annual leave Make sure you keep track of how many holiday days you take, and that your payslip is correct. This is because you could be told you owe the company for overused annual leave if you stop working there through the tax year, or you could be missing out on holiday you are legally entitled to. Untaxed bonus or commission payments Bonuses and commission payments are taxable. If you see a lump sum payment on your payslip but tax has not been accounted for that extra amount, it's vital to get the payslip (and pay) reissued as soon as you can. This is because you could end up owing tax to HMRC that you weren't aware of, which can risk the payment of late payment fines and more (as well as finding the cash to repay the owed tax). It's particularly important to check your bonus and commission payments on your payslip if you are near a tax bracket threshold. A large payment could push you over this threshold, meaning you pay more tax than you expected to. Missed overtime payments If you work irregular hours or overtime, make sure they are accurate on your payslip. Even if you think something might be incorrect by half an hour, ensure it is updated to the right amount – especially if the error is repeated across several payslips, as you're losing money you're entitled to (or being overpaid). Overpayment Sometimes, employers accidentally pay someone too much. This can happen due to human error or if they believe they owed you extra, such as payment in lieu of holiday time. Your employer can claim this money back from you. Don't spend it. If you think you've been paid too much, tell payroll and check your payslip for details to find out where the error may have happened. Find out how to make the repayment as soon as possible, otherwise you could be in a tricky situation if your employer asks for money back that you've already spent. Classifying you as a contractor In industries where some employees are PAYE and some are contractors, it can be easy to be classed as the wrong type. This significantly impacts how taxes and National Insurance are calculated. PAYE employees have their pay taxed and deducted before they receive their money, while contractors get the full amount and are responsible for making their own tax and National Insurance payments. Late reporting If you claim means-tested state benefits, reporting periods can make a big difference in your payments. This is particularly true if you are unfortunate enough to have a reporting period that comes at the end of the month, when payday is likely to occur. That's because if a payday lands on a weekend, your employer might report your earnings too early or late for the correct period – meaning you don't receive the correct amount of benefit you're entitled to. If you are in receipt of both PAYE pay and means-tested benefits, make sure to speak with your payroll department about your payment date and the date they report it. If things aren't stacking up between your Universal Credit or benefits statements and your entitlement, speak to your employer and also make a note in your online Universal Credit journal. Withholding pay Your employer cannot legally withhold pay from you except in very specific circumstances. For example, they can't decide that you underperformed at work this month so deserve less pay. They also can't deduct for till shortages or missing stock unless your contract says so; they cannot take more than 10% of your pay due in each period. Your wages can be 'garnished' – that means deducted before you get paid – for a few specific reasons: If you have a County Court Judgement to recover debt, a claim can be made to take deductions from your pay (this is called an attachment of earnings). The Department of Work and Pensions can deduct from your pay to reclaim overpaid benefits, while HMRC can claim for underpaid taxes. Your local authority can claim for Housing Benefit overpayments, too. ACAS has a helpful list on what can and cannot be deducted from your payslip. They are also the people who can help you if you believe your employer has wrongfully deducted wages and has refused or been unable to resolve the dispute with you. Underpayment at National Minimum Wage Your employer cannot, except in very specific circumstances, take your pay below the hourly rate of National Minimum Wage. For example, if you earn NMW and they try to deduct the cost of a training course, you must have agreed to the course in writing beforehand. Underpayment also happens when hours have not been accurately tracked, or when you age up into the next NMW bracket. Anyone aged 21 or over is entitled to the National Living Wage of £12.21 per hour, those aged 18 to 20 should receive a minimum of £10 an hour, and under-18s and apprentices cannot be paid less than £7.55 an hour. Check your HMRC record If things don't seem to be stacking up on your payslip but your accounts department is convinced it is correct, you can check the details HMRC hold on you with your online tax account. This may indicate errors that aren't in payroll's remit or mistakes they are unaware they have made. For example, if you received a large bonus in one month, HMRC may believe that is reflective of your annual salary going forward, and as such they might estimate you are earning a lot more than you actually are. Or, HMRC may still have a previous employer listed as a current one (this is particularly likely if you move jobs in the same tax year). Some of the brands and websites we mention may be, or may have been, a partner of However, we only ever mention brands we believe in and trust, so it never influences who we prioritise and link to.
CNBC
20-06-2025
- Business
- CNBC
Here's what your student loan bill could be under new repayment plan in Republicans' 'big beautiful' bill
Republicans' One Big Beautiful Bill Act could result in higher monthly payments for many federal student loan borrowers, a new analysis finds. If the legislation is enacted as drafted, a student loan borrower earning roughly $80,000 a year (the median for a bachelors' degree holder in 2024) would have a monthly payment of $467 under the GOP-proposed "Repayment Assistance Plan," or RAP, according to recent findings by the Student Borrower Protection Center. That compares with a $187 monthly bill on the Biden administration's now-blocked SAVE, or Saving On A Valuable Education plan. No matter their income, borrowers face higher monthly payments under RAP compared to SAVE, the analysis found. For lower incomes, the difference may be just $10 per month; for higher earners, the new repayment plan can be as much as $605 per month pricier. Depending on their income, some federal student loan borrowers also face higher payments on RAP than they would have on the U.S. Department of Education's other income-driven repayment plans, including PAYE, or Pay As You Earn and IBR, or Income-Based Repayment. However, some borrowers on PAYE or IBR plans would have a smaller bill under RAP. For example, a borrower with a roughly $60,000 annual income would pay $250 a month on RAP, and $304 on PAYE, the SBPC found. The House advanced its version of the One Big Beautiful Bill Act in May. The Senate Committee on Health, Education, Labor and Pensions released its budget bill recommendations related to student loans on June 10. Senate lawmakers are preparing to debate the massive tax and spending package. Under the Republican proposals, there would be just two repayment plan choices for borrowers who take out loans after July 1, 2026, compared with roughly a dozen options now. After graduation, those student loan borrowers could either enroll in a standard repayment plan with fixed payments, or a single income-based repayment plan: RAP. Here's a look at other stories affecting the financial advisor business. Under RAP, monthly payments would typically range from 1% to 10% of a borrower's income; the more they earn, the bigger their required payment. There would be a minimum monthly payment of $10 for all borrowers. The new plan would fail to provide many borrowers with an affordable monthly bill — the goal of Congress when it established income-driven repayment plans in the 1990s, Michele Zampini, senior director of college affordability at The Institute for College Access & Success, recently told CNBC. "If Republicans' proposed 'Repayment Assistance Plan' is the only thing standing between borrowers and default, we can expect many to suffer the nightmarish experience of default," Zampini said. Meanwhile, current income-driven repayment plans now conclude in loan forgiveness after 20 years or 25 years. But RAP wouldn't lead to debt erasure until 30 years. "This kind of financial drag could further delay major life milestones like homeownership, starting a family, or saving for retirement," said Doug Boneparth, a certified financial planner and the founder and president of Bone Fide Wealth in New York. He is a member of CNBC's Financial Advisor Council. There's also "an emotional toll" to carrying student debt for so long, said Cathy Curtis, the founder of Curtis Financial Planning in Oakland, California. She is also a member of CNBC's Financial Advisor Council. "It reinforces the feeling of being stuck — especially for those who've already struggled to access opportunity," Curtis said. Sen. Bill Cassidy, R-La., chair of the Senate Health, Education, Labor, and Pensions Committee, has said his party's plans would lift the burden on taxpayers of subsidizing college graduates' loan payments. ″[Former President Joe] Biden and Democrats unfairly attempted to shift student debt onto taxpayers that chose not to go to college," Cassidy said in a statement on June 10. He said his committee's bill would save an estimated $300 billion out of the federal budget.
