Employer Bulletin: April 2018

HMRC have published their Employer Bulletin for April 2018. We summarise the key content for you, with links to our detailed guidance on the topics covered.

Reporting expenses and benefits

  • The deadline for reporting Expenses and Benefits in Kind for 2017-18 is 6 July 2018.A P11D(b) form is required if:
    • One or more P11D is submitted.
    • Employees have received expenses or benefits which have been ‘Payrolled’.
    • HMRC have requested one be filed.
  • If you have had a reminder for P11Ds or P11D(b) but have no benefits to declare:
  • If sending P11Ds as a list rather than online or by postal forms:
    • Arial font, size 11 or larger, must be used.
    • Must be sorted by employee.
    • Employer reference must be included.
    • NI numbers must be included and where not available the date of birth and gender must be provided.
    • The P11D ‘letter codes’ that correspond to the boxes on the forms must be indicated on the list.
  • If you send a paper P11D(b) it must be signed in ink or it will be returned and treated as if it has not been received.
  • Amendments to P11Ds or P11(b)s should be submitted on a new form. The new form must include all correct figures, not just the amendment.
  • When paying Class 1A NICs, use the normal Accounts Office number with the numerals 1813 at the end as your payment reference. There should be no spaces between numbers.
  • For any expenses that are not exempt from reporting under the new rules that replaced Dispensations, you can still attach a section 336 claim to the P11Ds. These must be the employees claim, they cannot be made on behalf of the employer.
  • See P11D: reporting benefits and expenses.

Simplifying PAYE Settlement Agreements (PSA)

  • From 6 April 2018 PSA’s will be agreed between the employer HMRC and will remain in place for subsequent tax years unless varied or cancelled.
  • HMRC have started issuing P626s which will form the basis of the agreement. This will invite employees to renew on the same basis as was in place for them in 2017-18. These should be received by the end of April.

Net of Foreign Tax Credit Relief Scheme

  • In some cases, where employees are sent to work abroad and have to pay foreign tax on the salary as well as UK PAYE, the Net of Foreign Tax Credit Relief Scheme can be used:
    • The Foreign Tax is taken into account when calculating the amount of UK PAYE due.
    • Foreign Tax Credit, if due can be deducted from the UK PAYE.
    • The Net UK PAYE is included in the Full Payment Submissions (FPS) completed by the employer under RTI.
  • At the end of the tax year, a statement must be provided to HMRC showing:
    • The name and NI number of each employer included in the arrangement.
    • The amount of income subject to both PAYE and foreign tax.
    • The total foreign tax deducted.
    • The amount of foreign tax deducted and remitted to the overseas tax authority which was set off against the employee’s UK PAYE deductions due.
    • Evidence that the foreign tax is paid should also be included.

Earlier Year Updates (EYU)

  • EYUs should be used to correct employee payroll data for earlier tax years, including pay, tax, NIC, start dates etc.
  • If a missed FPS or incorrect FPS is spotted before 19 April following the end of the tax year, an additional FPS should be submitted showing the corrected year to date figures at 5 April 2018.
  • If spotted after 19 April, an EYU must be submitted showing the difference between the last reported final figure and the correct final figure.
  • See RTI: Real Time Information for PAYE.

Diesel supplement

  • From 6 April 2018, the diesel supplement for Company car benefits is increased from 3% to 4%.
  • The supplement will apply to:
    • Diesel cars registered on or after 1 January 1998 with no registered NOx emissions value.
    • Diesel cars registered on or after 1 January 1998 registered with a NOx emissions value exceeding the Real Driving Emissions 2 (RDE2) standard.
  • No supplement will apply to diesels that meet the RDE2 standard.
  • It is not expected that any cars on the market will meet the RDE2 standard prior to 2019/10. If there is one that requires reporting on a 2018/19 P11D or through payroll, then ‘Fuel Type A – All other cars’ should be used for the calculation.

CIS

Contractors must:

  • Verify subcontractors are CIS registered before paying them.
    • Abbreviations should be avoided, including the word Limited for company subcontractors. You may have to check whether it is registered as ‘Ltd’ or ‘Limited’.
    • If you receive ‘unknown’ results, you should double check that you have the correct name and details received from the subcontractor.
  • If you make a payment to a subcontractor which is subject to a CIS deduction, you must provide the subcontractors with a Payment and Deduction Statement (PDS).
    • This must be provided by 19th of the month following the payment.
    • If the subcontractor has lost or mislaid a copy, you must provide a copy clearly marked ‘duplicate’.
    • A PDS does not need to be provided to subcontractors paid gross.
  • Monthly CIS returns must be submitted by 19th of the month following the month end.
    • If you didn’t pay any subcontractors in the month, a nil return must be submitted. This can be submitted online.
    • You can make an ‘Inactivity Request’ online under the declaration section of the monthly returns. This will tell HMRC you will not pay any subcontractor for up to six months.
  • See CIS: Contractors and Subcontractors.

Termination payments

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. From 6 April 2019, the balance is subject to employer’s NIC.
  • Foreign Service Relief is removed for terminations on or after 6 April 2018.

Pension contribution increase

Student Loans

  • From 6 April 2018, the student loan thresholds are:
    • Plan 1 £18,330
    • Plan 2 £25,000.
  • FPS submissions now include a new mandatory box for specifying the student loan plan type. This will ensure the correct amount is taxed.
  • Generic Notification message (GNS) will be issued regarding student loans in the following circumstances:
    • To confirm that student loan deductions should commence for a particular employee on the next FPS.
    • To advise that the incorrect student loan plan type has been selected in the FPS.

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.
  • Quarterly returns will need to be submitted to HMRC for those subject to the levy.
  • If you become aware of potential fraud involving the levy, it should be reported to HMRC.

Welsh Taxes

  • From 1 April 2018, Welsh Land Transaction Tax (LTT) will be payable for land and property transactions in Wales.
  • HMRC will not accept SDLT returns for these transactions from 1 April 2018.
  • Conveyancers and solicitors will need to register on the Welsh Revenue Authority (WRA) website to be able to file a Welsh LTT return online.
  • Welsh Landfill Disposals Tax replaces Landfill Tax in Wales from 1 April 2018. Registrations are now open.

Scottish Income Tax

  • The Scottish Budget announced changes to Income Tax for 2018/19. This was passed by Scottish Parliament on 21 February 2018.

Childcare vouchers

  • The Childcare voucher scheme was due to close to new entrants from 6 April 2018 but this has been extended until 4 October 2018:
    • A parent can stay within the scheme for as long as they remain with the same employer and the employer continues to operate the scheme.
    • They must not take a break in receiving vouchers of more than a year.
  • 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.

Flexible benefits

  • The rules for flexible benefits, salary sacrifices, and Optional remuneration schemes changed on 6 April 2017:
    • All benefits in kind, with the exception of cars with emission of 75g CO2/km or less, are taxed based on the higher of the cash given up or the normal benefit in kind rules.
    • All previous exempt benefits in kind which are taken up in exchange for cash given up are now taxable based on the cash given up.
  • Pre 6 April 2017 company cars and accommodation benefits do not move into the new regime until April 2021 and special rules apply for pre 6 April 2017 school fees.
  • P11Ds for 17/18 are affected by these changes and the correct taxable amount must be used.
  • Care should be taken to report the correct car details for company cars.

Employer Bulletin: April 2018

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

 

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