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

Payroll reporting

  • Where a payroll payment day falls on a non-banking day, such that payment takes place the last working day before or first working day after that date, for PAYE purposes, it can be treated as made on the normal payday. Use the normal payday for RTI purposes.
  • The PAYE Settlement Agreements form, PSA1, has been updated for 2018/19, to allow employers to identify expenses and benefits made to Scottish taxpayers and pay the Scottish tax rates.
  • The PAYE Desktop Viewer which enables employers to view and sort tax codes, has been updated to enable new Student Loans Generic Notification Service (GNS) electronic warning messages to flag when the wrong Student Loan plan type has been selected or where Student Loan deductions have been missed.

Construction Industry Scheme (CIS)

  • Contractors are reminded that a CIS return must be submitted to HMRC each month regardless of whether the subcontractors are net of standard deduction, net of higher deduction, or have gross payment status.
  • The return is due within 14 days of the end of the tax month it is for.
  • Contractors who know they will not be paying any subcontractors for several months can let HMRC know by selecting ‘Inactivity Request’ under the declaration of the monthly return. This will make the record inactive for 6 months with no need to submit nil returns. If the situation changes, and you become active again, you have to tell HMRC.
  • If you cease to use subcontractors but continue to have employees, tell HMRC who will update your records.

Welsh rates of income tax

  • Taxpayers identified as Welsh taxpayers will receive a notification letter in November advising them of their status.
  • Individual's must keep HMRC notified of any change of address to ensure they receive their notification letter. The address HMRC hold can be checked on the Personal Tax Account.

EU workers

With Brexit nearing, employers need to understand their roles and responsibilities in relation to EU workers and the EU Settlement Scheme:

  • The EU Settlement Scheme enables EU citizens to remain permanently in the UK once they have been resident here for 5 consecutive years or more and where that starts before 31 December 2020. Close family members can also use the scheme if they have a family member who meets the requirements.
  • Employers have a duty not to discriminate against EU citizens as both a prospective and current employer.
  • Current right to work checks (EU passport or National ID card) continue until the end of 2020. Those who are successful in applying through the Settlement Scheme will be able to digitally provide evidence of their right to work.
  • A communications toolkit is available with briefing pack, leaflets, posters, and videos, that provides information for employers.

National Minimum Wage (NMW) and National Living Wage (NLW)

Webinars are available to deal with the following employer errors relating to NMW and NLW:

  • Interns and work placements, which confirms that even where an individual agrees to be unpaid or voluntary, this does not prevent them qualifying for minimum wage if they are entitled.
  • Apprentices, with details of the correct approach to take and to ensure they qualify as apprentices.
  • Payments and deductions, relating to deductions from a worker’s pay or payments from a worker to an employer and how these affect NMW and NLW.

HMRC are also reminding employers to check they are paying apprentices the right NMW or NLW, advising that nearly one-fifth of Level two and Level three apprentices are not paid the correct NMW or NLW rate.

Extending security deposit

  • HMRC can require high-risk businesses to provide upfront security deposits in relation to VAT, PAYE, NI, and some other indirect taxes where necessary for the protection of the revenue.
  • From 6 April 2019, this can also be applied to CIS and Corporation Tax.
  • See CIS and Corporation tax: Security against non-payment.

Advance statutory payments

  • Where a business cannot afford to pay SMP, SPP, SAP, or ShPP, it can apply to HMRC for payment in advance.
  • The bank account name must match the details HMRC hold on record.
    • If trading under a business name, the bank account must be in the same name and must match the business name HMRC holds.
    • HMRC will only make a payment to a director if they are a sole director and the business name matches what HMRC hold on record.

Spotlight on Umbrella Companies

HMRC recently published Spotlight 45 warning people about umbrella companies that offer to reduce tax bills and increase take home pay.

Employer compliance settlements: withdrawal of Corporation Tax concession

  • Corporation Tax deductions for employer compliance settlements usually follows the accounts, where prepared under GAAP, subject to any specific override.
  • HMRC do give concessionary treatment in some settlement cases, accepting an earlier Corporation Tax deduction for employer liabilities than would be the case when following GAAP.
  • This concession will be removed for compliance settlements entered into after 30 September 2019.

New incorrect PAYE code notification

  • HMRC will introduce a facility to notify employers when they are operating a different tax code to the one held by HMRC.
  • Where a taxpayer’s circumstances change between 6 January 2018 and 5 April 2019, the new tax code will only take effect from the 2019/20 tax year.
  • Employers are warned they could receive more tax codes than normal over the next few months until the correct codes are being operated.

Closure of childcare vouchers and directly contracted childcare

  • The Childcare voucher and directly contracted childcare scheme is now closed to new entrants, closing on 4 October 2018.
  • In order to be eligible for the scheme, the necessary changes to the employee’s salary needed to have been made by 4 October 2018. It was not sufficient to apply for the scheme by the deadline but not have made any changes to salary by that date.
  • Any ineligible individuals that receive childcare vouchers or directly contracted childcare will be subject to tax and NIC.
  • Where an employee starts to claim Tax-Free Childcare instead, they must notify the employer within 90 days if they are currently on a voucher or direct contracted childcare scheme.
  • Once an employer has left a scheme, they cannot re-join it.

Disguised Remuneration Loan Charge

  • 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 settle the disguised remuneration scheme before the loan charge arises, the outstanding loan will be treated as employment income arising on 5 April 2019.
  • Employees and ex-employees must give details of the outstanding loan amounts at 5 April 2019 to their employer by 15 April 2019.

Employer Bulletin: October 2018

The published Bulletin can be found here or accessed via HMRC’s website