Well as one year ends, financially anyway, another starts. Obviously all the new rates and thresholds should have been checked for the new tax year but there are some other changes that have come into force this year that you may not be aware of.
Expenses and benefits reporting via a P11D is accessible online. HMRC are encouraging all employers to submit their P11D information online if possible rather than paper forms and or lists. Unfortunately their online service will not calculate any Class 1A National Insurance that may be due, however it is for good reason; for those employers who have opted to payroll their benefits in kind (put them through the payroll) they may have the odd employee who didn’t want this and so still need to do a P11D for them. Hence you will need to calculate your Class 1A NI and report via a P11DB. Remember all P11D information must be completed for the tax year ending 5 April 2018 by 6 July 2018. Even if you have payrolled the benefits, you still need to submit a P11DB to HMRC and if no NI is due then please submit a nil return. You can learn more about the rules via the HMRC April 2018 Employers Bulletin.
Staying with supplying benefits to employees, do you provide benefits and pay the tax on the employee’s behalf? If so, you will have been operating a PAYE Settlement Agreement. Last year HMRC consulted on the process of operating PSAs and the burdens it created. For many employers the question was always around why we have to agree each year, HMRC doesn’t loose out and in fact gains in tax and NI when operating a PSA. HMRC listened and has amended the rules from the start of this tax year.
Employers can use a PSA for any minor, irregular or impracticable expenses or benefits for employees. The advantage is you don’t need to put the items through the payroll, or include them on a P11D and whilst you don’t pay Class 1A on any benefits, you do pay Class 1B National Insurance.
HMRC deems minor benefits to be items such as staff entertainment i.e. a concert ticket. Please note benefits that are exempt do you need reporting. You also have the new trivial benefits legislation for items under £50 so may reduce the need for any reporting too.
Irregular benefits might be the use of a holiday let, which aren't received on a regular basis.
Impracticable will be items that it is difficult to place a value on, or where you cannot determine the divisional share between employees.
Any employers already operating an agreed PSA for the 2017/18 tax year will be receiving a revised form P626 by the end of April, which will be viewed as the first enduring agreement and once agreed will remain in place until the criteria changes or there is no longer a need for a PSA. You will still be required to produce an annual calculation of amounts due and pay over the correct monies by 19th if manual or 22nd October if electronic.
Please be aware the rules have changed surrounding PILONs as they are known. This was, according to HMRC, amended due to the confusion caused as to when PAYE and NICs applied to these payments. Previously if there was no mention of paying notice in a contract, and was not custom and practice to pay a PILON, then it wasn’t subject to tax and NICs. However, from 6 April 2018 all payments made under a PILON should be treated as normal earnings and will therefore be subject to PAYE and Class 1 National Insurance, regardless of whether there is a clause in a contract of employment or not.
Childcare vouchers
I feel as if I have been on a merry-go-round with this legislation. One minute they are going, then they are staying, then they are going from April 2018 and now they are staying until 4 October 2018. The main reason for this is the unfortunate debacle with HMRC’s online system where parents can claim help under the Government’s new tax-free childcare scheme. HMRC has stressed that if employers still want to close their scheme to new entrants in April or indeed any month they can, but will not be able to accept any new entrants (normally via salary sacrifice) to their childcare voucher scheme from 4 October 2018.
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