HMRC: Employer Bulletin December 2016

HMRC have published their Employer Bulletin for December 2016. We summarise the key content for you, with links to our detailed guidance on the topics covered.

National Minimum or Living Wage

HMRC have published a list of top-five errors to avoid:

  • Rates: are you paying the right rate?  Make sure annual rate increases are implemented, and don’t miss workers who move from one band to another on their birthday.
  • Deductions: are you making any deductions that take pay below minimum levels? Watch out for deductions for items such as uniforms, meals or transport.
  • Additional pay: are you including top-ups to pay that do not count as pay for the minimum or living wage?  This could be the case if you are including shift allowances or customer tips when calculating pay.
  • Status of the worker: are you engaging people who should be classed as workers?  Make sure nobody who is a volunteer, intern or self-employed should be classed as a worker and entitled to the minimum or living wage.
  • Working time: are you including all of the time that an employee is working?  Don’t miss out time spent shutting up shop at the end of a shift, training periods, down-time waiting or travel between assignments.
  • See National living wage rates / National minimum wage rates.

Autumn Statement 2016

HMRC highlight some announcements made in the Autumn Statement:

  • Tax and NI treatment for termination payments are to be aligned from April 2018.
  • The time limit for ‘making good’ any non-payrolled benefits is to be 6 July following the tax year from 2017/18 onwards.
  • Employees called to give evidence, for example at an enquiry, will be able to receive legal support funded by their employer tax free from April 2017.
  • Employees can receive £500 of pension advice tax free per tax year from April 2017.

Salary Sacrifice

  • The tax and NI advantages of salary sacrifice arrangements are to be withdrawn from April 2017.
  • There will be exemptions for certain benefits such as childcare vouchers and pension contributions.
  • There will be a delay in withdrawing the advantages for some benefits where an agreement is already in place by 6 April 2017.
  • See Limitation of salary sacrifice: consultation response.

Off-payroll working in the public sector

  • Reforms will be implemented from April 2017.
  • Responsibility for determining whether the intermediaries legislation applies will move from the individual worker to the public sector employer, agency or third party that pays the worker’s intermediary.
  • HMRC will introduce clear, objective tests for employers to use.
  • HMRC will also introduce a digital tool to provide employers with a real-time HMRC view on whether intermediaries legislation needs to be applied.
  • See IR35 and the public sector: changes from April 2017.

Trivial benefits

  • From 6 April 2016 benefits worth less than £50 and which meet certain conditions are removed from any liability to income tax.
  • There is an annual cap of £300 which applies to directors and members of their household.
  • See Trivial benefits.

Extension of voluntary payrolling

  • From April 2017 voluntary payrolling will be extended to include non-cash vouchers and credit tokens.
  • From April 2017 all benefits can be payrolled except living accommodation and beneficial loans.
  • Employers wanting to payroll from April 2017 must register using HMRCs PBIK registration service via the government gateway to avoid having to complete P11D returns.
  • Forms P11D(b) returns still need to be made which include all payrolled and non-payrolled benefits.
  • See Voluntary Payrolling of Benefits.

Reporting information about car and car fuel benefits through PAYE

  • From April 2018 employers will be required to report information about car and car fuel benefits in their Full Payment Submission (FPS).
  • Employers can report information through the FPS from April 2017 if their payroll software supports it.

Limited companies: CIS deductions suffered in year

  • Limited companies without gross payment status should claim back their Construction Industry Scheme (CIS) deductions through their monthly payroll.
  • By submitting an Employer Payment Summary (EPS) to claim back CIS deductions companies receive a credit which is used to reduce in-year PAYE due.
  • Sole traders and partnerships should report CIS payments received through their Self Assessment Returns, and Limited companies with gross payment status should report through Corporation Tax Returns.

Tax relief for employees

Employees can claim tax relief on expenses for things they must buy for their job which employers don’t reimburse them for, such as:

  • Repairing or replacing small tools.
  • Cleaning, repairing or replacing specialist clothing such as uniform or safety boots.
  • Business mileage.
  • Travel and overnight expenses.
  • Professional fees and subscriptions.

To claim relief employees should complete form P87 which can be submitted online or through the post.

Apprenticeship levy

  • From 6 April 2017 the apprenticeship levy will be introduced.
  • Employers with annual paybills of over £3million will have to pay the levy at a rate of 0.5% of their paybill, less a £15,000 allowance.
  • Employers with annual paybills of less than £3million might have to pay a levy if there are connected employers.
  • Levy and non-levy paying employers can plan their apprenticeship training through the digital apprenticeship service.
  • See Apprenticeship levy (employers' briefing). 

Change of an employee’s address

  • It is the individual employee’s responsibility to notify HMRC of a change of address.
  • Employees should be encouraged to use their personal tax account to do this.
  • If the employee cannot use their personal tax account, an employer can use the employee address box on the next Full Payment Submission (FPS).

Personal Savings Allowance (PSA)

  • HMRC are changing how the PSA calculations are applied.
  • The PSA will be shown as a zero-rate tax band instead of an allowance on tax codes and liability calculations.
  • Savings income above the PSA limits will be accounted for in the tax code.
  • See Savings income: tax on interest.

Paying HMRC

HMRC remind employers that:

  • Electronic payments for the tax period to 5 December 2016 must reach HMRC by 22 December.
  • Payments made by cheque must reach HMRC by 19 December.
  • January’s electronic payment deadline falls on Sunday 22nd.
  • Funds should clear HMRC’s account by January 20th.unless a Faster Payment can be arranged to clear later but still in time to meet the deadline.
  • Payment should always be made with the correct 13 character accounts reference NOT the employer reference.

Paying HMRC by cheque

From November 2016, employers who pay HMRC by cheque through the post will be contacted by letter or by phone to ask them to consider paying electronically, by

  • Online or telephone banking,
  • Direct Debit, or
  • Debit or Credit card online.

Employee payment booklet or letter

  • During January, February and March 2017 HMRC will send employers or their agents
    • A P30B Paying PAYE electronically letter, or
    • A P30BC Employer Payment Booklet.
  • Employers who pay electronically will receive a letter rather than a booklet.

Tax-free childcare

  • Tax-free childcare launches for parents from early 2017.
  • Eligible parents will be able to open online childcare accounts to make payments direct to registered childcare providers.
  • Childcare providers should have received invitations to sign up to tax-free childcare in September and October.
  • Parents cannot claim both childcare vouchers and tax-free childcare so employers might receive requests from employees to cancel childcare vouchers.
  • See Tax-Free Childcare.

Automatic re-enrolment

  • Every three years you need to put certain members of staff back into a pension scheme.
  • This is the case even if they opted out when they were first automatically enrolled.
  • You also need to complete a re-declaration of compliance to tell HMRC this duty has been met.
  • See Auto-enrolment: workplace pensions. 

Alcohol Wholesaler registration scheme

  • Any business selling alcohol to other businesses prior to 1 April 2016 should have registered with the scheme by 31 March 2016.
  • Retailers buying alcohol from UK suppliers from 1 April 2017 will need to check that the businesses they buy from are registered and have a Unique Reference Number.
  • An online lookup for approved wholesalers will be available for retailers to check by 1 April 2017.
  • HMRC are asking for feedback from affected businesses to assist with the design and delivery of the service.
  • See Alcohol Wholesaler Registration Scheme. 

Employment intermediary reporting

  • If you have registered your business as an employment intermediary you need to file quarterly returns.
  • If you are no longer an employment intermediary you need to let HMRC know.
  • Penalties may be charged where quarterly reports are not submitted, or you do not tell HMRC that you are no longer an employment intermediary.
  • The next quarterly reporting period finishes on 5 January 2017, with a reporting deadline on 5 February 2017.
  • See Agency Workers: employment intermediaries rules.

Employer Bulletin: December 2016

A link to the published Bulletin can be found here or accessed via HMRC's website www.gov.uk.