Employer Bulletin: August 2018

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

Payroll reporting

  • HMRC have confirmed PAYE late filing penalties will continue to be reviewed on a risk-assessed basis for the 2018/19 tax year rather than be issued automatically:
    • this will include continuing to not charge penalties automatically if a FPS is filed late but within 3 days of the payment date and there is no pattern of persistent late-filing.
    • The first penalties for the tax year beginning 6 April 2018 will be issued in September 2018.
    • HMRC will continue to review this approach after 5 April 2019.
  • Generic Notification Service (GNS) electronic warning messages should not be ignored as they give you a chance to review your submission process to ensure that things are correct in the future bearing in mind the risk based approach to penalties. You can check your messages by:
    • logging into PAYE Online and selecting the generic notifications from within the “Notice summary” section.
    • using the PAYE Desktop Viewer.
    • using your commercial software; check your software is compatible with accessing GNS messages.
    • accessing your Business Tax Account and using the ‘messages’ link.
  • Where an employee works intermittently and is not paid on a regular basis but their contract continues, the Irregular Employment Payment Pattern indicator should be selected on each Full Payment Submission (FPS) completed for that individual.
    • If you have to make a one off payment to an employee you should enter ‘IO’ in the ‘Pay Frequency’ field.
    • If your employees are normally paid on a regular payment pattern eg. weekly, monthly, annually you should treat these as regular payment patterns and the appropriate code (see the HMRC bulletin for the codes) should be recorded in the ‘Pay Frequency’ field.
    • You should only enter irregular (IR) in the ‘Pay Frequency’ field if your normal payment pattern is not one which fits into a regular payment pattern.
  • When completing the new starter  declaration on your payroll it is important that if you enter your employee’s post code, you ensure that it is correct. An incorrect post code could result in correspondence being issued to the wrong address and may also affect the DWPs ability to issue any Universal Credits due and any correspondence to claimants.
  • The PSA1 form that employers complete to submit PAYE Settlement Agreements (PSAs) will be changing for the 2018 to 2019 tax year to incorporate the rates and threshold changes for Scottish Income Tax. When completing a PSA1 form for the 2018 to 2019 tax year you will be asked whether the Expense or Benefit is for a Rest of the UK (rUK) taxpayer or a Scottish taxpayer.

See RTI: Real Time Information for PAYE

National Living Wage and National Minimum wage

  • The National Living Wage (NLW) and National Minimum Wage (NMW) rates have increased from April 2018.
  • If you are not paying the correct rate you may receive a Notice of Underpayment from HMRC, setting out the arrears to be paid to your workers together with a penalty. Employers may also be publicly named.
  • HMRC have created the ‘How to check you are paying correctly’ series of webinars spelling out the step-by-step approach to take when carrying out the necessary checks for NMW which can be accessed here. 

Advisory Electricity Rate for fully electric company cars

  • HMRC now accept that if you pay up to 4 pence per mile when reimbursing your employees for business travel in a fully electric company car there is no profit.
  • You can use your own rate which better reflects your circumstances if, for example, your cars are more efficient, or if the cost of business travel is higher than the guideline rate.  If you pay a rate that is higher than the advisory rate and can’t demonstrate the electricity cost per mile is higher, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.

Welsh rates of income tax

  • A taxpayer who is resident in the UK for tax purposes and has their sole or main place of residence in Wales for more of the tax year than in any other part of the UK will pay Welsh rates of Income Tax (WRIT) .
  • Employers and pension providers will not decide an individual’s Welsh taxpayer status (WTS), instead HMRC will identify Welsh taxpayers based on information held within its systems. Employers are asked to encourage employees to make sure their address is correct on their personal tax account.
  • WTS applies for a whole tax year and cannot be applied for part of a year.
  • From April 2019, Welsh resident taxpayers employed or in receipt of a pension will have a tax code beginning with C. Those completing a Self Assessment tax return online will be asked about country of residence on their return.

Construction Industry Scheme (CIS) webinars

  • HMRC are hosting a webinar “CIS for contractors “ on Thursday, 27 September. For further support and advice about working as a contractor, you can register online to join a live broadcast of webinar here.
  • Sub-contractors under CIS can register for a webinar “CIS for sub-contractors “ which will take place Friday, 28 September here.

See CIS: Contractors and Subcontractors

Postgraduate loans

The government have launched a new Student Loan product known as Postgraduate Loans (PGL).

  • The earliest customers can start repayment of PGL is April 2019.
  • If your employee has a PGL:
    • HMRC will send you a new Postgraduate start notice (PGL1) to ask you to start taking PGL deductions and you will collect this through the normal Pay as You Earn (PAYE) process.
    • HMRC will send you a new Postgraduate stop notice (PGL2) to ask you to stop taking PGL deductions
  • Your employee may also be liable to repay a Student Loan Plan Type 1 or 2 at the same time as the PGL. HMRC will continue to send the normal Student Loan start (SL1) and Student Loan stop (SL2) notices as well as PGL1s and PGL2s.
  • HMRC is working with software developers to finalise the technical specifications and more information on this product will be included in the October edition of the Employer Bulletin.

Benefits and Expenses: Company cars

  • You need to send a P46 (Car) form to HMRC (online, via payroll software) or printed to the address on the form) if you:
    • provide company cars to your employees.
    • stop providing a company car
    • provide someone with an additional car.
  • If your employee changes their company car, you can no longer report this online or by paper; you must tell your employee to contact HMRC to tell them of the change by logging onto their Personal Tax Account or by calling the taxes helpline.
  • You will still report this change with your end-of-year forms.

See Company cars

Tax Avoidance Loan schemes

  • If you have used a tax avoidance scheme that paid your employees or directors in loans to avoid paying tax and National Insurance then there is still time to settle with HMRC before the loan charge applies on 5 April 2019.
  • People who don’t come forward could end up paying more when the loan charge arises.
  • You can still register for the disguised remuneration settlement opportunity but will need to provide all of the information required by HMRC by 30 September 2018.
  • If you don’t already have an HMRC contact you can get in touch by emailing This email address is being protected from spambots. You need JavaScript enabled to view it..
  • If your business uses contractors or freelancers who might have used a scheme then HMRC asks you to help alert them by putting information in your newsletters or on staff notices boards.

Completing an Earlier Year Update (EYU) in respect of Employee’s National Insurance Contributions

  • HMRC have recently amended the www.gov.uk/payroll-errors/correcting-pay-or-deductions guidance on GOV.UK to make it easier to understand when completing an Earlier Year Update (EYU)  which includes a negative amount of Employee National Insurance.
  • If the difference is negative (because you deducted or reported too much National Insurance), you also need to set the ‘NIC refund indicator’ to:
    • ‘Yes’ if you’ve refunded your employee or no refund was due
    • ‘No’ if you still owe your employee a refund (for example because they have left your employment).

Employment Income: Draft Legislation

The government published draft legislation on 6th of July for a number of measures relating to the tax treatment of employment income including:

  • Income Tax: Clarifying effect of the Optional Remuneration Arrangements (OpRA) legislation in respect of taxable cars and vans. This is intended to address two anomalies by:
    • ensuring when a taxable car or van is provided through OpRA, the amount foregone, which is taken into account in working out the amount reportable for tax and NICs purposes, includes costs connected with the car or van (such as insurance), which are regarded as part of the benefit in kind under normal rules.
    • adjusting the value of any capital contribution towards a taxable car when the car is made available for only part of the tax year.
  • Changes to the income tax and NICs treatment of emergency vehicles. The draft legislation applies retrospectively from 6 April 2017 and introduces provisions to:
    • extend the scope of the current exemption for emergency vehicles to cover all commuting journeys.
    • allow the cost of fuel to be excluded from the calculation of additional expenses when the employer has not provided any fuel for private use, the cost of fuel for any private mileage has been made good in full, or any reimbursement by the employer is only for fuel used for business mileage.
  • Income Tax: Workplace charging for all-electric and plug-in hybrid vehicles.
    • Exemption from income tax and NICs any liability arising from the provision of charging facilities  to employees recharging all-electric or plug-in hybrid vehicles at or near the workplace where facilities are made available generally to the employer’s employees with effect from 6 April 2018.
    • Does not cover reimbursements for charging elsewhere.
    • Does not apply to taxable cars and vans which are taxable as benefits in kind; the provision of charging facilities and electricity are treated as connected costs already subject to a separate exemption.
  • Abolishing receipt checking requirement for benchmark scale rates.
    • Employers will no longer be required by HMRC to check receipts when paying or reimbursing expenses using the benchmark scale rates for allowable travel expenses with effect from 6 April 2019.
  • Legislating overseas scale rates: HMRC’s overseas scale rates provide employers with maximum guideline amounts for reimbursing or paying employees allowable travel costs when they travel abroad on business.
    • Concessionary accommodation and subsistence overseas scale rates (OSR) to be put onto a statutory basis with effect from 6 April 2019.
    • OSR will be subject to the same reduced checking requirement as benchmark scale rates and employers will only be required to ensure that employees are undertaking qualifying business travel.

Deadline for post-16  Child Benefit

  • Employees who receive Child Benefit and have a child who is 16 years old but staying in education or training, need to let HMRC know so their payments for that child don’t stop.
  • HMRC have sent a Child Benefit form to all parents who are in this situation, they simply need to complete the form and post it back or they can let HMRC know via the Child Benefit form in their Personal Tax Account or call the Child Benefit office on 0300 200 3100.
  • All forms need to be received and processed by us by 30th August 2018.
  • Further information can be found here 

Employer Bulletin: June 2018

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