HMRC have published their Employer Bulletin for February 2018. We summarise the key content for you, with links to our detailed guidance on the topics covered.
End of year reporting
- Final Full Payment Submissions (FPS) and Employer Payment Summaries (EPS) for the tax year ending 5 April 2018 will soon be due under Real Time Information.
- FPS are due on or before the payday and EPS are due by 19th of the month following the payroll month.
- FPS can be corrected by 19 April by sending another FPS and ticking reason code H. If the error is noticed after 19 April, an Earlier Year Update should be used.
- P60s will need to be given to employees, who were in your employment on 5 April 2018, by 31 May 2018 at the latest.
- If you registered online on or before 5 April 2017 for Payrolling of benefits:
- P11Ds are required for benefits not payrolled and
- A P11(b) is required for all benefits including payrolled.
- If you registered after 5 April 2017 (or have not registered) for payrolling of benefits
- P11Ds are required for all benefits
- P11D(b) is required for all benefits
- If you want to payroll benefits for 2018/19, you need to register online by 5 April 2018.
- If you have had a reminder for P11Ds or P11D(b) but have no benefits to declare:
- Submit a P11D(b) showing nothing is due, or
- Submit the 2017-18 Employer – No return of Class 1A form
- P11D and P11D(b) forms must be submitted by 6 July 2018.
Basic PAYE tools
- The latest version of Basic PAYE Tools was released in December 2017.
- The old versions will cease to submit information this month.
- CD ROM versions of the Basic PAYE Tools will not be issued next year.
- Email notifications regarding the 2018/19 tax year P9 coding notices will be sent out between now and 23 March 2018. The coding notices can then be accessed online.
- Paper P9s will be sent out on or around 23 March 2018.
- Duplicates can be requested from the Employer Helpline 0300 200 3200.
- Improvements to the new real time Dynamic Coding is ongoing.
- See What is the 2018/19 PAYE tax code?
- If you have overpayments you should offset this against the future PAYE liabilities during the tax year.
- Alternatively you can request a repayment from HMRC.
- For limited companies CIS credits can be offset against PAYE liabilities in the same year.
- Overpayments of CIS credits from an earlier year cannot be offset against the current year PAYE liabilities. The CIS Repayment iForm should be used to claim a refund.
Off-payroll workers in the Public Sector: Fee payer responsibilities
- New rules in April 2017 moved responsibility for deciding if the Off-payroll rules apply from the workers or intermediaries to the public authority.
- The public authority is responsible for deciding if PAYE and NIC should be deducted from gross payments to the Personal Service Company (PSC) or intermediary.
- The tax will be deducted by the fee payer. This will normally be the public authority, but may be another intermediary in some cases.
- The fee payer must be registered as an employer and submit FPS.
Simplifying PAYE Settlement Agreements (PSA)
- HMRC proposed to digitise PSAs from 6 April 2018. They have effectively postponed this and instead looked for other ways to simplify PSAs.
- A Consultation is underway about changes in legislation which would simplify the PSA process.
- PSAs will not need to be renewed annually. They will remain in place unless varied or cancelled by the employer or HMRC.
- The regulations would be ‘future proofed’ to enable digitisation if and when this can be introduced.
New rules affect Termination payments made on, or after 6 April 2018.
- Payment in lieu of notice (PILONs) will be taxable in all cases.
- If not specifically split, the payment will be separated into:
- Post-employment notice pay (PENP), based on basic pay that would have been received had proper notice been given, which is subject to PAYE. This is calculated by applying a formula specified in legislation.
- The remaining balance, is taxable to the extent it exceeds £30,000. None of this balance is subject to employee’s NIC. The balance is subject to employer’s NIC.
- Foreign Service Relief is removed for termination payments on or after 6 April 2018.
Scottish Income Tax
The Scottish Budget announced changes to Income tax for 2018/19:
- New starter rate of 19% on first £2,000 over the personal allowance.
- The Scottish basic rate threshold will be from £13,851 to £24,000 and the rate will be 20%.
- A new intermediate tax band of £24,001 to £43,430, will be introduced and the rate will be 21%.
- The Scottish higher and top rates will be 41% and 46% respectively.
- The new Tax-Free Childcare scheme is now open to parents whose children are under 12.
- Parents can save up to £2,000 per child per year (£4,000 for disabled children), of childcare costs, where the scheme is used.
- The Childcare voucher scheme is closing to new entrants from 6 April 2018. If the first voucher is received prior to this date, then it can continue to be used whilst the employer offers it.
- From April 2018, the Department of Education plans to allow Apprenticeship Levy paying employers to pass the funds to any other employer.
- Up to 10% of the annual value of the levy paying employer’s funds will be able to be transferred.
- The funds will have to be used for apprentices.
National Minimum and National Living Wage
- The NMW and NLW rates are changing with effect from 1 April 2018.
- See the New rates.
- From 6 April 2018, the FPS will include a new box for specifying the student loan plan type. This will ensure the correct amount is taxed.
- Where the wrong plan type is used, a Generic Notification message (GNS) will be issued going forward.
- The plan type will be included on the SL1 form.
Workplace charging of electric and hybrid cars
- This does not apply to company cars or vans.
- From 6 April 2018, electricity provided for the charging of electric cars and plug in hybrids will be a tax free benefit.
- See Car fuel benefit charges.
Soft Drinks Industry Levy
- From 6 April 2018, you may need to register for this levy if you are a produced, importer of packager of soft drinks.
Repayments by BACS
- Where claiming a repayment, ensure that bank details are included on the EPS so that the BACS payment can be made direct to the bank account.
Reporting car data where payrolling applies
- From April 2018, employers who are registered to payroll Company car benefits and fuel benefits will need to include the information on FPS.
Managed Service Companies
- HMRC have updated Tax avoidance - Spotlight 32
- Where a business mainly exists to supply labour and someone else manages the arrangements, they should check whether they are an MSC.
- If an MSC, the business may be required to treat some payments such as dividends and loans as earnings and deduct PAYE and NIC.
- See Spotlight 32 and Managed Service Companies.
Employer Bulletin: February 2018
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