HMRC have published their Employer Bulletin for April 2019. We summarise the key content for you, with links to our detailed guidance on the topics covered.
Some of the items included in this update were also included the April/May 2019 Agent update, rather than duplicate these we have linked to that update accordingly where appropriate.
Cash Allowances, Flexible Benefit Packages and Salary Sacrifice – a reminder
If during 2018/2019 you offered your employees any Benefit in Kind (BiK) with the option of a cash allowance, a flexible benefit package with a cash option or a salary sacrifice arrangement the rules changed in April 2017.
- The value of all BiK is the higher of the original value, or the amount foregone in the year. You need to report the higher value on the P11D and P11D(b).
- Some cars, accommodation and school fees are still subject to the old rules, if the arrangement:
- was entered into on or before 5 April 2017, and
- has not been renewed, or renewed automatically, and
- has not been varied.
Those remaining move into the current rules on 6 April 2021.
Childcare vouchers and directly-contracted childcare
All childcare voucher and directly-contracted childcare schemes, whether part of an OpRA or provided in addition to salary, closed to new entrants in early October 2018.
Employees who are already in schemes can continue to receive tax and NICs relief as long as:
- They have not changed employer and
- They have received a childcare voucher or directly-contracted childcare in the previous 52 weeks, and
- They have not provided you with a Childcare Account Notice (to enter the Tax-Free Childcare scheme).
HMRC’s criminal offences for failing to prevent the facilitation of tax evasion – what they are and what to do
The Official Rate of Interest remains at 2.50%
The Official Rate of Interest used to calculate the tax charge on beneficial loans and the taxable benefit of some employer-provided living accommodation remains at 2.5% for 2018/ 2019.
Apprenticeship levy funds transfer limit to increase in April 2019
Changes to the Earlier Year Update (EYU)
From April 2019 HMRC are running a trial aimed at simplifying the process for reporting corrections by extending the use of the Real Time Information (RTI) Full Payment Submission (FPS).
- Employers can continue to report revised Year to Date payroll data after the current deadline of 19 April, making sure HMRC systems with employer payroll records are aligned.
- If you or your clients’ payroll software does not support the change you should continue to make corrections using the EYU process.
- HMRC’s Basic PAYE Tools software will be amended in April 2020 to support the change to an FPS.
- If the trial is successful the EYU will no longer be a valid submission type for 2019/20 and later tax years. All amendments to payroll data for the year 2019/20 onwards, identified after the year end, will need to be made on a FPS.
- You need to make sure you use the same submission type for all corrections you submit.
Unpaid work trials and the National Minimum Wage
Are your clients using unpaid work trials as part of their recruitment process? If so, you must consider whether the minimum wage should be paid for these trials:
- Is the work trial genuinely for the recruitment purpose?
- Do the tasks carried out have a value to the employer beyond just testing the individual?
- Does the length of the trial exceed the time that an employer would reasonably need to test the individual’s ability to carry out the job?
Reporting payroll when your normal payday falls on a non-banking day
It is essential that you report when you pay your employees on time and use the right payment date when doing so.
- When you pay your employees at a different time and not on the agreed day or date such as when the regular payment date falls on a non-banking day the date you enter on your Full Payment Submission (FPS) depends on when you actually pay your employees.
- When a regular payday falls on a non-banking day, whether you pay early or late, you should report the regular payday date.
- Where you are making payment after the regular payday date HMRC recommend you send your payroll submission early, If you do send your FPS on a later date than the regular payment dates you must select “Late reporting reason code G”.
Taking on new employees and confirming National Insurance numbers
- Individuals can view and print proof, and share an image of their NI number via their online Personal Tax Account (PTA) or via the HMRC app.
- It can take up to 15 working days to get confirmation of a NI Number if you request by phone or by submitting a form.
- If a new employee cannot provide a NI number, leave the relevant field on the FPS submission form blank and HMRC will trace it.
Welsh rate of Income Tax and Scottish Income Tax
Reporting Expenses and Benefits in Kind for the tax year ending 5 April 2019
- The online service will not pre-populate the total amount liable to Class 1A NICs field from the P11D figures. You might need to calculate the figure manually if your other software doesn’t do this for you.
- The deadline for reporting Expenses and Benefits in Kind for 2018/19 is 6 July 2019.
You need to submit a P11D(b) form if:
- You’ve submitted any P11D forms.
- You’ve paid any employees’ expenses or benefits through your payroll.
- HMRC has asked you to file a P11D(b)
- If HMRC has asked you to submit a P11D(b) and you have nothing to declare, you can tell them you don’t owe any employers Class 1A NICs by completing a declaration ‘No return of Class 1A National Insurance contributions’.
- Send one P11D(b) for each PAYE reference. If you’ve batched your P11Ds you must still total the benefits from each batch and show the overall total on one P11D(b).
- If you send a paper P11D(b) you must sign it in ink. HMRC won’t accept a copy, fax, photocopy or a stamped signature and HMRC will send it back and treat it as not having been received. If you then return it late you’ll get a penalty.
If you send your P11D as a list you must use the following format:
- Use Arial font size 11 or larger (when printed)
- Sort it by employee, not benefit type
- Include your employer reference
- Include the employee’s correct name and National Insurance Number (NINO). If you can’t find the NINO give their correct date of birth and gender
- Put each employee’s expenses and benefits on the same line
- Include the letter codes from the P11D next to each benefit, these are shown in the dark blue boxes to the left of each section on the P11D.
Amending a P11D or P11D(b)
- If you make a mistake, send a new form and fill in all the boxes, not just the ones you want to correct.
- If you payroll benefits you may still have a Class 1A NIC liability and you’ll still need to send a P11D(b) plus a P11D to show any benefits you paid that you didn’t payroll.
- Instead of giving your employees a P11D, you need to give them a letter explaining what you’ve payrolled.
- If you missed the deadline to register to payroll benefits, you must register with HMRC for 2020/2021 on or before April 2020. If you are still informally payrolling, you must complete form P11D for these benefits, marking each form ‘PAYROLLED’.
Adjusting the figure of Class 1A NICs due
- If you’ve entered your Class 1A NICs liability in box A on question 1 on form P11D(b) but you need to adjust this figure, do not complete box C. Use question 4 to tell HMRC about the adjustments, and put the total you need to pay in box F.
Paying Class 1A NICs
- There’s a special reference for Class 1A payments; your normal Accounts Office reference plus the numerals 1913 at the end with no spaces.
- If you are paying at a bank or sending a cheque, you must use the correct pre-printed payment slip including the correct reference (as above).
P11Ds and ‘Section 336’ claims
- Most business expenses can be paid without the need to report them on form P11D and must not be reported on the P11D.
- If you are still required to put non-taxable expenses onto the P11D, your employee might ask you to include a Section 336 claim with the P11D. If you’re sending a paper P11D you can attach your employee’s claim with it so that they don’t end up with an incorrect tax code.
- Send to: P11D Support Team, BP1102, HM Revenue and Customs, Newcastle Upon Tyne, NE98 1ZZ.
Disguised Remuneration Loan Charge and reporting requirements
Thresholds and rates:
From 6 April 2019 student loan thresholds and rates are:
- Student Loan Plan 1 - £18,935
- Student Loan Plan 2 - £25,725.
- Postgraduate Loan (PGL) - £21,000
- Plan 1 and Plan 2 repayments are calculated at 9% of the income above the threshold.
- PGL repayments are calculated at 6% of the income above the threshold.
Mandatory box for Student loan Plan 1, Plan 2 and PGL:
- The payroll software should now be updated to include a new box for PGL on the Full Payment Submission (FPS) and these boxes are mandatory for all employees who are in repayment of Plan 1, Plan 2 and PGL.
Employers: stay in the PAYE picture
You can check your liabilities and track your payment using the “PAYE for employers” section of the Business Tax Account On your payments history page you can see each individual payment recorded so you know we’ve received it.
Increase transparency, drive cultural change and improve employee engagement and retention in your workforce
On 22 November 2018, Government published a voluntary reporting framework to support employers with over 250 employees, to report information and data on disability, mental health and wellbeing in the workplace.
Diesel Supplement Company Car Tax Changes to meet Euro standard 6d
- Diesel cars which meet the levels of Nitrogen Oxide (NOx) emissions permitted by Euro standard 6d are exempt from the entire diesel supplement.
- From 6 April 2019 a new fuel type will be shown on form P46 (car) called ‘Fuel Type F - Diesel cars meeting Euro standard 6d’ which should be used for reporting diesel company cars which are Euro standard 6d compliant and for calculating the cash equivalent of these cars from the 2019-20 tax year onwards.
- If you have registered to payroll the car and car fuel benefit charge in the 2019-20 tax year for a Euro standard 6d compliant diesel car, you will need to:
- calculate the cash equivalent using the appropriate percentage for ‘Fuel Type F’.
- enter this amount in ‘Box 182’ of the Full Payment Submission (FPS)
- enter ‘F’ in ‘Box 177’ of the FPS.
See Company cars
Construction Industry Scheme: Helpful reminders for Contractors and sub-contractors
Applying for Gross Payment Status; sub-contractors
- Gross payment status allows sub-contractors to be paid in full without making any deductions with any tax and National Insurance being paid when they submit their tax return at the end of the year.
To qualify for Gross Payment you must show HMRC that your business passes some tests.
- You’ve paid your tax and National Insurance on time in the past
- Your business does construction work (or provides labour for it) in the UK
- Your business is run through a bank account
- Your turnover for the last 12 months excluding VAT and materials is at least:
- £30,000 if you’re a sole trader
- £30,000 for each partner in a partnership, or at least £100,000 for the whole partnership
- £30,000 for each director of a company, or at least £100,000 for the whole company and if your company’s controlled by five people or fewer, you must have an annual turnover of £30,000 for each of them.
You can apply for gross payment status when you first register for CIS or if you’re already registered you can apply online signing in to Government Gateway.
Appealing against a Penalty for a Late Return – Contractors
- CIS contractors must file a monthly return telling HMRC about payments made to sub-contractors and any deductions made from those payments by the 19th of every month following the last tax month.
- If the return is late there will be a penalty which can be appealed within 30 days of the date on the penalty notice. The quickest and easiest way is to use HMRC’s Online Service.
Using the online appeals service:
- Select the reason for your appeal from the drop down menu and avoid using ‘Other’ if there is a more suitable option
- If you did not pay any sub-contractors for that month use the reason ‘I did not pay any sub-contractors this month’ and HMRC will note that a nil return is due
- If you do need to make a return as you did pay sub-contractors HMRC will not consider your appeal until the late return has been sent
- If you have stopped operating as a contractor put the date you finished in the additional information so HMRC can update your records.
Claim a refund of Construction Industry Scheme deductions if you’re a limited company
Off-payroll working rules from April 2020:
The government are reforming the operation of the off-payroll working rules from April 2020 by extending the reforms introduced into the public sector in 2017 to all sectors, making organisations and agencies who take on contractors working through their own company responsible for ensuring they pay the right tax and National Insurance contributions.
HMRC are seeking views on the detailed operation of how the off-payroll working rules will work from April 2020, in a consultation opened on 5 March 2019.
Throwing a party for your employees but not sure of tax or HMRC reporting implications?
- Expenses incurred by employers on the cost of providing a social function for employees are taxable except when the Annual Party Exemption applies.
- If you provide one annual function for employees, this is not taxable if the cost of the event per head does not exceed £150.
- The exemption applies to an annual party i.e.one that happens once a year on a recurring basis and a one-off event cannot be an annual party.
- Where there are separate sections/departments, an annual party may be provided for each; the party must be available to all staff in the section with other conditions for exemption met.
- The cost includes VAT, and the cost of transport and overnight accommodation.
- To get the cost per head divide the total cost of by the total number of people including non-employees. If the party costs more than £150 a head, it is taxable in full, not just the excess over £150.
- Where functions are taxable, directors and employees have to pay tax on the full cost per head for themselves and any members of their family and household who attend as guests.
- A party can be included in a PAYE Settlement Agreement (PSA) as it would be impracticable to operate PAYE.
If an employer provides a benefit to its employees, it is not taxable if all the following conditions are satisfied:
- the cost of providing the benefit does not exceed £50 per head;
- the benefit is not cash or a cash voucher;
- there is no contractual obligation, including salary sacrifice;
- the benefit is not provided in recognition of particular services performed by the employee
Otherwise the benefit is taxed in the normal way.
See Trivial benefits
High Income Child Benefit Charge
Employees with a total income of over £50,000 may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’ if they or their partner get Child Benefit.
Employees earning over £50,000 should:
- check their annual income either on their P60 or their personal tax account
- include any taxable benefits in their income
- use the child benefit tax calculator
- notify HMRC and register for Self-Assessment by 5 October
- complete a Self Assessment tax return by 31 January and pay what they owe
Do your employees know how to apply for Tax-Free Childcare?
- There’s a simple step by step guide at www.gov.uk/get-tax-free-childcare.
- If their application is successful they will get an online childcare account where they can select a childcare provider, pay money into their account and receive the government ‘top-up’, pay their childcare provider
- They will need to reconfirm (every 3 months) to check they’re still eligible. See Agent update: April/May 2019 for more details.