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Which P11D software uses 'Strict' interest method

Which P11D software can use the 'Strict' interest method

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Can anyone recommend a low cost P11D software package that uses the 'Strict' interest method on overdrawn D/L accounts.  I currently use Moneysoft which only calculates on the Averaging method.

Thanks in advance.

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By Wanderer
26th Jun 2018 13:16

None.
Fairly sure the P11Ds are always done using averaging method.
Look at ITEPA 2003 S183
https://www.legislation.gov.uk/ukpga/2003/1/section/183
Alternative method is an election by HMRC or employee, not an employer's option.

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By lionofludesch
26th Jun 2018 13:19

Is there a lot involved ?

I don't have a lot of clients with interest free (or cheap) loans but one I did on Moneysoft last month was £30 less than my calculation. Or £12 in tax.

Even if it had been £12 more, I wouldn't have been too fussed.

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By SteLacca
26th Jun 2018 15:03

If I need the strict calculation, I usually pump the numbers through Digita and use those for P11D purposes.

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By Carolynne
26th Jun 2018 15:29

Thanks for your replies. Its actually quite a lot (thousands). But the strict method works out best, I have found out I can process the P11D(b) on a manual on-line form covering them all including this one (as it won't reflect the D/L form so I can't process using this method), and send this P11D in the post.

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Replying to Carolynne:
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By lionofludesch
26th Jun 2018 15:37

But, as Wanderer says, that option is not available to the employer.

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By northernmonkey
26th Jun 2018 15:56

If it's on a DLA, surely it is the employee (director) who is electing to use it? Or certainly could be if given the option.

We use IRIS and you can overwrite the figure to use the actual interest calculated.

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By lionofludesch
26th Jun 2018 16:04

northernmonkey wrote:

If it's on a DLA, surely it is the employee (director) who is electing to use it? Or certainly could be if given the option.

We use IRIS and you can overwrite the figure to use the actual interest calculated.

Depends whether you're filling in a P11d or an SA return, does it not ?

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Replying to lionofludesch:
By northernmonkey
27th Jun 2018 08:24

Not sure what you mean, it goes on both. I'm generally talking about OMBs so the director is instructing me as employer to complete the P11D and as individual to complete the SATR. Whilst completing the former, I would clearly give them the option to use strict basis, which they can elect to do so (as employee/director).

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By lionofludesch
27th Jun 2018 09:24

northernmonkey wrote:

Not sure what you mean, it goes on both.

Not sure the employer, qua employer, has the same options as he does qua employee, notwithstanding that he's the same person.

See Wanderer's link earlier in the thread.

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Replying to lionofludesch:
By northernmonkey
27th Jun 2018 10:04

See Wanderer's link earlier in the thread.

[/quote]

I'd already read it, my point still stands. Employee elects to have strict basis (after I tell them it's an option), I complete P11D on strict basis - not sure what problem is with this. I've been doing it this way for DLAs in OMB companies for donkeys years.

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By lionofludesch
27th Jun 2018 10:28

northernmonkey wrote:
I've been doing it this way for DLAs in OMB companies for donkeys years.

And have HMRC endorsed it ? Or are they just unaware of how you've calculated it ?

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By SteLacca
27th Jun 2018 11:02

P11D working sheet 4 contains the note "Employees may elect for a more complex but accurate method of calculating the benefit from interest-free or low
interest loans. Employers aren’t responsible for providing such a calculation." which kinda confirms that the employer has no option but to use the averaging method.

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By lionofludesch
27th Jun 2018 11:14

Don't worry, monkey.

They'll never notice.

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Replying to SteLacca:
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By adam.arca
27th Jun 2018 12:55

SteLacca wrote:

P11D working sheet 4 contains the note "Employees may elect for a more complex but accurate method of calculating the benefit from interest-free or low
interest loans. Employers aren’t responsible for providing such a calculation." which kinda confirms that the employer has no option but to use the averaging method.

Not really.

I've always read that to mean employers aren't obliged to go to the faff of providing a strict calculation but that they can if they so wish.

And, as northernmonkey has pointed out, the average OMB client will want a strict calculation where it favours them.

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Replying to adam.arca:
By SteLacca
27th Jun 2018 13:18

I take it in context. The working sheet does not provide any mechanism for the strict calculation, either. One would assume that, if it were an option, the WS would encompass that option, too.

The strict calculation appears to only be relevant for income tax purposes, whilst averaging can be used for IT and is used for Class 1A NI.

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By lionofludesch
27th Jun 2018 13:33

I agree with SteLacca.

Adam's interpretation would imply that employers aren't bothered about how accurate their interest calculations are as it's just a number on a form but the reality is that there's 13.8% NIC at stake.

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By adam.arca
27th Jun 2018 14:26

Yep, fair points both.

I don't know what the legislation says and I can't be bothered looking right now (but probably will the next time I have to do this, thankfully not for a year now).

But, whilst context is important, the actual phraseology used on the form and nothing but the phraseology is as well. Nowhere in that phraseology does it say that employers can't provide a calculation and in fact it implies they can by omission.

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By lionofludesch
27th Jun 2018 14:36

It'd be a tough PAYE control officer who took the point.

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