HMRC: Employer Bulletin February 2017

HMRC have published their Employer Bulletin for February 2017. We summarise the key content for you, with links to our detailed guidance on the topics covered.

End of year reporting

HMRC provide a reminder of upcoming reporting deadlines:

  • The last Full Payment Submission (FPS) of the year needs to be sent no later than the last payday for your employee.
  • Employees have to be given a P60 by 31 May 2017.
  • If you’ve made a mistake on an FPS you can correct this by sending in another one up to 19 April, after that you will have to use an Earlier Year Update.
  • If you’ve paid any benefits or expenses forms P11D / P11D(b) have to be filed by 6 July 2017.
  • If you’ve payrolled any benefits you need to:
    • Submit a P11D for any non-payrolled benefits.
    • Submit a P11D(b) for Class 1A NICs due on all benefits (including any payrolled ones).
    • Give your employees a letter telling them what you have payrolled.

Exemption for paid and reimbursed expenses

From 6 April 2016 the dispensation regime was replaced by a new exemption for benefits and expenses paid to employees that would be deductible for the employee:

  • Employers need to operate a system to check employees are actually incurring the expenses and that they are not taxable.
  • If the exemption applies there is no need to report amounts paid on form P11D.
  • If a payment has a mix of private and business use the business amount will be tax free.
  • If the business amount of a mixed payment can’t be identified the whole amount must be taxed.  It’s then up to the employee to claim for relief on form P87 or through self assessment.
  • See Exemption for paid and reimbursed expenses

Tax codes

  • From May HMRC will start to use real time information to make automatic adjustments to PAYE tax codes as they happen, rather than waiting until the end of the tax year.
  • HMRC will start to send out email notifications that P9 notices for 2017/18 are ready to view online from 18 February to 5 March.
  • Paper P9 notices have started to be sent out, but could be received as late as 20 March.

Reporting information about car and car fuel benefits through PAYE

  • If you payroll car and fuel benefits you won’t need to report them on forms P46(Car) and P11D,
  • 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.
  • See Voluntary Payrolling of Benefits.

Apprenticeship Levy

A reminder that this comes in on 6 April 2017:

  • Only employers with a pay bill over £3m will have to report and pay.
  • Where it applies reports have to be made through the EPS by 14 days after the end of each tax month: the first report is due by 19 May 2017.
  • See Apprenticeship Levy (employers' briefing)

Salary Sacrifice

The tax and NI advantages of salary sacrifice arrangements are to be withdrawn from April 2017:

  • There will be exemptions for childcare vouchers, workplace nurseries and directly contracted childcare, ultra low emissions vehicles, cycle to work and pension contributions.
  • There will be a delay in withdrawing the advantages where an agreement is already in place by 6 April 2017.
  • Extending grandfathering applies for cars, school fees and living accommodation.
  • See Salary sacrifice schemes

Other changes coming in from 6 April 2017

A reminder of some other previously announced changes come in from April this year:

  • New rules on assets made available to employees without transfer: these clarify that employees will only pay tax for days when the asset is available for private use.
  • A new £500 exemption for pension advice provided to employees.
  • A new exemption for employer provided legal support.
  • New rules on sporting testimonials for employed sportspersons.
  • Alignment of the dates for making good BIKs: the deadline for all non-payrolled benefits from 2017/18 onwards will be 6 July after the end of the tax year.
  • New rates apply for company car and van taxation.
  • See Tax-free benefits and perks

Construction Industry Scheme (CIS)

  • From April 2017 HMRC will no longer accept phone calls to verify subcontractors: you will have to use the HMRC online service or commercial CIS software.
  • See CIS: Contractors and Subcontractors

Direct Recovery of Debts (DRD)

  • The DRD power allows HMRC to recover cash directly from banks and building society accounts of debtors owing more than £1,000 (subject to safeguards).
  • From early 2017 this will be extended to include PAYE debts.

Paying HMRC

  • During January, February and March 2017 HMRC will send employers or their agents a new
    • P30B Paying PAYE electronically letter, or
    • P30BC Employer Payment Booklet.
  •   Employers who pay electronically will receive a letter rather than a booklet.  
  • HMRC remind employers to only use current HMRC payslips: following their change of bank last year old payslips will soon start to be rejected.
  • The 22nd April electronic payment deadline falls on a Saturday: funds should clear HMRC’s account by the 21st unless a Faster Payment can be arranged to clear on the deadline.

Off-payroll working in the public sector

  • 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.
  • Consultation on draft legislation closes on 17 February 2017.
  • HMRC continue to work on a new online employment status tool, which should be available in March.
  • See IR35 and the public sector: changes from April 2017.

National Minimum Wage / National Living Wage

Rates increase on 1 April 2017:

  • The National Living Wage for those aged 25 and over increases from £7.20 to £7.50.
  • The National Minimum Wage will also increase for other employees.

Updated guidance

HMRC have updated their Employment Income Manual to include new guidance on:

  • The concept and definition of negative earnings following the Upper Tribunal decision in Julian Martin v HMRC.
  • The treatment of notional payments to employees and the charge that can arise under s222 ITEPA 2003.
  • See Termination, redundancy and leaving payments

Student Loan thresholds

  • From 6 April 2017 the plan 1 threshold will change to £17,775.
  • The plan 2 threshold will stay at £21,000.

Employer Bulletin: February 2017

The published Bulletin can be found here or accessed via HMRC's website www.gov.uk.

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