HMRC have issued their Employer Bulletin for February 2016, and we have summarised all of the key content for you, with links to our detailed guidance on the topics covered.
Businesses affected by flooding
HMRC remind employers that HMRC will accept a reasonable excuse claim for late filing of an RTI return where the delay is caused by flooding at their premises or their agent’s premises, and the return is subsequently filed without unreasonable delay.
- Late reporting reason G should be included on the submission.
- If a penalty is or has been issued, an appeal should be made online using the reason “fire/flood/natural disaster”.
- The Tax Helpline number for those affected by floods and severe weather is 0800 904 7900. The line is open from 8 till 8 during the week and from 8 till 4 at the weekends.
Contractor Monthly Returns
From April 2016 HMRC will no longer accept paper CIS Returns.
All contractors will have to file using HMRCs online service which is also available for verifying subcontractors and amending returns.
Contractors and agents who are currently sending paper returns will need to register for the online service using their employer reference number and Accounts Office reference number, or change to a commercial software package.
For information about obligations under the CIS scheme for contractors and subcontractors see CIS: Contractors and Subcontractors.
RTI reporting relaxation for micro-employers is ending
HMRC include a further reminder that the relaxation of the reporting rules allowing micro employers with nine or fewer employees to report monthly rather than each time they pay their employees comes to an end in April 2016.
HMRC have previously announced that they will be writing to employers who are using the reporting relaxation to advise them that it is coming to an end.
See RTI: Real Time Information for PAYE for details of reporting requirements.
Employers’ NIC allowance increases to £3,000
From April 2016 the maximum value of the allowance increases from £2,000 to £3,000. Employers who have already claimed the allowance do not need to do so again; just continue to make appropriate deductions from employers’ national insurance contributions.
From April 2016 if the director of a company is its only employee, the company is no longer eligible for the Employer’s NIC allowance.
Both the above measures are still subject to parliamentary approval.
See Employers’ NIC Allowance for more details.
National Living Wage
HMRC remind employers to make sure that they are ready for the introduction of the NLW for those aged 25 and over, by
- Knowing the correct rate of pay
- Identifying which staff are eligible for the new rate
- Updating the payroll in time
- Communicating changes to staff
The National Minimum Wage continues to apply for those aged under 25.
See National minimum wage for details of applicable rates.
Apprentices under 25
From April 2016 employers no longer have to make employers’ national insurance contributions in respect of apprentices under 25, up to an earnings threshold of £43,000.
- The apprentice must be following a government statutory apprentice framework which vary for the different UK companies.
- Evidence will be needed to apply the relief.
- NIC category H should be used for apprentices under 25, including those under 21.
Links to check whether your employee is on a statutory apprenticeship are included in HMRC Guidance, or in our guide to Employer’s NIC allowance (subscriber version).
Expenses exemption to replace dispensations
The bulletin includes a reminder that from April 2016 tax and national insurance no longer have to be paid when an employee receives a qualifying expense payment and would be entitled to claim a fully matching tax deduction.
Key issues noted by HMRC include:
- Dispensations previously agreed will no longer apply from 5 April 2016.
- Benchmark scale rates continue to be available under the exemption.
- Employers wishing to use bespoke scale rates or industry scale rates must apply to do so.
- Employers who have agreed bespoke scale rates since 6 April 2011 can continue to use these until the fifth anniversary of the agreement.
- Employers will have to have a system in place for checking that employees are incurring and paying the amounts and that a deduction would be allowed.
For details of the exemption for paid and reimbursed expenses including all of the above issues, please see Employers: What's On - from April 2016.
Voluntary Payrolling of Benefits in Kind
HMRC reminds employers that if they want to include certain benefits in kind in their payroll for 2016/17 they need to register with HMRC before 5 April 2016.
This includes employers who already have an agreement with HMRC to payroll benefits.
Employers who register after 5 April 2016 will not be able to payroll benefits until the 2017/18 tax year.
For more information please see Employers: What's On - from April 2016.
Employment Intermediaries and tax relief for travel & subsistence
Proposed changes to legislation will prevent workers that are employed by an intermediary such as an umbrella company or employment agency, will no longer be able to claim relief for "home-to-work" expenses if they are:
- Supplying personal services, i.e. their skills or labour
- Under the supervision, direction or control of another person
Individuals supplying their services through personal service companies will also be prevented from claiming these expenses for contracts falling within IR35.
Paying HMRC
HMRC have begun issuing letters and booklets relating to the 2016/17 tax year.
P30B Paying electronically: this letter will be issued to employers who pay HMRC electronically. It should arrive in time to make the first payment of 2016/17 but if it does not, HMRC advise that the PAYE accounts office reference remains the same and should be used when making the PAYE payment.
P30BC Employer Payment Booklet: this will be issued to those employers whose payment method requires a payslip. This should arrive in time to make the first payment of 2016/17 but if it does not, HMRC suggest the following:
- Contact HMRC on 0300 200 3401 to see if a duplicate can be issued.
- Print off a replacement payment slip.
- See www.gov.uk/pay-paye-tax for details of how to pay electronically.
The electronic payment deadline for PAYE is the 22nd of the month following the end of the tax month or quarter to which it relates:
- Payments sent by Faster Payment and CHAPS are debited from your account and credited to HMRC's account on the same day.
- Payments by Direct Debit and BACS are debited on the 3rd bank working day, where day 1 is the input day and day 2 is the processing day.
The important date for late payment penalties is the date that HMRC receive the payment, not the date that it leaves your bank account.
Paying Employees and the Full Payment Submission (FPS)
Following guidance included in the December 2015 employer bulletin, HMRC have provided additional clarification about payment dates and FPS submission dates.
Note that a payment is made for PAYE purposes on the earlier of the date payment is made and the date the employee is entitled to payment.
What date should be included on the FPS as the payment date?
- The FPS payment date should be the employee's regular payday, i.e. the date that they are contractually entitled to be paid.
- If an employee is paid late, the FPS payment date is still the employee's regular pay date.
- If an employee is paid early because the normal payment day is a non-banking day, the FPS payment date is still the employee's regular pay date.
- If an employee is paid early for any other reason, the FPS payment date is the date of payment.
When should the FPS be sent to HMRC?
- The FPS should be sent to HMRC on or before the payment date shown on the FPS.
- In most cases, the regular payday will be the same as the payment date on the FPS, and the FPS should be submitted on or before that date.
- If an employee is paid early because the normal payment day is a non-banking day, the payment date on the FPS remains the normal payment day, and the FPS should be submitted on or after that day.
- If an employee is paid late due to a non-banking day, the payment date also remains the normal payment date. The FPS can either be sent on the normal payment date, or on the actual payment date using late reporting reason G on the FPS.
SeeRTI: Real Time Information for PAYE for details of reporting requirements.
End of year reporting
The end of year checklist on the Full Payment Submission is no longer mandatory. HMRC will accept a final FPS for 2015/16 with or without a completed checklist.
The final FPS should be submitted on or before the employees' last payment date of the tax year. Put "Yes" in the "Final Submission for year" field.
An Employer Payment Summary (EPS) should only be sent if:
- You didn't put "Yes" in the "Final Submission for year" field of the final FPS.
- You didn't pay anyone in the final pay period of the tax year.
The employer bulletin includes a number of tips and instructions for end of year and in year reporting, including:
- When to send an earlier year update (EYU)
- Use of the NIC refund indicator on an EYU from April 2016
- Reporting benefits
- What to do if an employee leaves
- What to do if you stop being an employer
- Reporting the correct pay frequency
- Reporting irregular pay frequency
- Late reporting reason codes
- Generic notification service (GNS) electronic warning messages
- Appealing against a penalty
Student Loans
From April 2016 there will be two types of student loan: Plan 1 and Plan2.
- The two plans will have different starting thresholds - £17,495 for Plan 1 and £21,000 for Plan 2.
- Employers should continue to make deductions from existing employees using Plan 1. If their plan changes in the year a new form SL1 will be issued to the employer.
- Employers will have to check with new employees which plan they are on. Forms P45 will only indicate whether the employee is repaying a student loan but will not indicate the plan type.
- HMRC's starter declaration checklist from April 2016 will include prompts to establish an new employee's plan type.
- If employees do not know their plan type, employers should use plan 1 by default.
- If an employer receives an SL2 stop notice, they should make no further deductions from the employee. They should not make any repayments to the employee.
Employer Helpbook CA33: Class 1A National Insurance contributions on car and fuel benefits
Employer helpbook CA33 will be withdrawn on 5 April 2016. Instead, HMRC direct users to alternative helpbooks:
- 480 Expenses and Benefits – a tax guide
- CWG5 Class 1A National Insurance Contributions on Benefits in Kind
See company cars and car fuel benefit charges for details of calculating car and fuel benefits. Class 1A National Insurance is calculated as 13.8% of the benefit in kind charge.
Scottish Rate of Income Tax (SRIT)
Although the setting of the SRIT at 10% means that Scottish taxpayers will pay income tax at the same rate as taxpayers in the rest of the UK, employers are still required to apply the S PAYE code if they receive notification to do so from HMRC.
Employers need to make sure that their IT systems will allow them to report the S code as appropriate.
Identifying Scottish taxpayers is the responsibility of HMRC and not employers.
See Scottish Income Tax for details.
National Insurance Numbers
HMRC are asking employers to ask their new employees to look for previous payslips, P60s and other HMRC correspondence to confirm their National Insurance number before the employer contacts HMRC.
Plastic National Insurance cards are no longer issued.
Employee tax codes
HMRC include a reminder that employers taking on a new member of staff can work out their new employee's tax code using a combination of the starter checklist and HMRC's online tool.
Automatic Enrolment Guide
The pensions regulator has launched an interactive step-by-step guide to help small and micro employers with automatic enrolment.
For more information see their website, www.thepensionsregulator.gov.uk, or complete their Duties Checker.
Personal Tax Account
HMRC include another reminder that the Personal Tax Account has now launched, where employees can check income tax estimates and tax codes, notify changes of address, track forms they have submitted online, and more.
Employer Bulletin: February 2016
A link to the published Bulletin can be found here or accessed via HMRC's website www.gov.uk.
