IR22

9 March 1999

CASH FLOW SAVING FOR  SMALL EMPLOYERS - INCREASE IN QUARTERLY
PAYMENTS LIMIT

An additional 130,000 small employers will benefit from improved cash
flow savings of up to #100 a year and reduced administrative costs,
announced the Chancellor today.

As part of the Government's proposals to ease the burden on business,
more small employers will be able to move from monthly to quarterly
payments of PAYE and NICs.

The raising of the monthly limit from #600 to #1,000 will give an
additional 130,000 small employers the opportunity to pay quarterly,
improving their cash flow and reducing red tape.  It will benefit
over 60 per cent of all employers, more than 700,000 businesses.

The cash flow saving to employers from the increase is worth up to
#100 a year.

The new limit will apply to deductions made in periods beginning
after 5 April 1999. The Chancellor also proposes to review the limit
on a regular annual basis in future, to keep it broadly in line with
wage inflation.


DETAILS

1.  At present, employers whose average monthly payments to the
    Inland Revenue of PAYE and NIC are less than #600 in total can
    choose to pay quarterly rather than monthly.  This limit will be
    increased to #1,000 for deductions made in periods beginning
    after 5 April 1999.  Payments are required for the quarters ended
    5 July, 5 October, 5 January and 5 April and are due within 14
    days of the end of each quarter (by the 19th of these months).

2.  The option of quarterly payments offers small employers an
    additional cash flow benefit beyond that already provided by the
    normal PAYE payment arrangements, so going some way towards
    offsetting the costs of administering PAYE. In addition to the
    cash flow saving, there is the further benefit in reduced
    administrative costs from only having to make payments to the
    Inland Revenue four times a year instead of twelve.

3.  Contractors in the construction industry can also choose to
    pay quarterly provided that their average monthly payments of
    PAYE, NIC and deductions from payments to subcontractors are less
    than the same limit of #1,000.

4.  The change does not require legislation in the Finance Bill.
    It will be made by way of amendments to the regulations for PAYE,
    NIC and deductions from payments to subcontractors in the
    construction industry.

5.  A Regulatory Impact Assessment is available for this measure
    from Martin Sellar, Room 36, New Wing, Somerset House, Strand,
    London WC2R 1LB. A copy is also available on the Inland Revenue
    web site at http//www.inlandrevenue.gov.uk.

NOTES FOR EDITORS

1.  Quarterly payments for small employers were first introduced
    in 1991. The present limit of #600 a month was set in 1995.

2.  The cost of this measure as published in the Financial
    Statement and Budget Report is zero as the measure does not as
    such affect the amounts of PAYE deducted from wages and salaries.
    There will, however be a small increase, of around #3 million a
    year, in the cost of financing government debt.

3.  The proposed changes will not affect the entitlements of
    employees to National Insurance benefits.

INLAND REVENUE PRESS OFFICE
Media enquiries to:      0171 438 6706/6692/7327
(Out of hours:  0860 359544)
Non-media enquiries to:  0171 438 6420/6425

Inland Revenue information is on the Internet:
www.inlandrevenue.gov.uk

# = pounds sterling