Owner Kate Upcraft Consultancy Ltd
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Payroll: Key points from HMRC’s latest Employer Bulletin

25th Apr 2017
Owner Kate Upcraft Consultancy Ltd
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Kate Upcraft goes behind the headlines in the Employer Bulletin issue 65, to explain the issues that HMRC are failing to get across.

The Employer Bulletin is the main conduit of information from HMRC to employers, although it’s only published six times a year. It is also vital reading for payroll practitioners and tax agents. If you don’t normally receive the bulletin direct to your inbox, sign up here.

Since Employer Bulletin number 64 was issued in February 2017, we’ve had a Budget, and the start of a new tax year, so there was plenty for HMRC to cover. However, now HMRC and the rest of the civil service are in pre-election purdah, and all will go quiet until 9 June.

Payrolling benefits  

Employers who registered for payrolling before the 2016/17 tax year started don’t need to complete a P11D for any benefits that have already been taxed through the payroll.

If all benefits have been payrolled the employee will not receive a P11D at all. If only some benefits have been payrolled, then the remainder of the benefits are reported on the P11D and will be coded out.

Note, this sentence in the Employer Bulletin is incorrect: “Instead of giving your employees a P11D, you need to give them a letter explaining what you’ve payrolled”. The legislative requirement is to inform employees by 31 May annually of the value and type of benefits that have been payrolled. This can be done by a letter, but many employers (for ease) print this on every payslip, so negating the need for a “benefits only additional P60”.

With the introduction of dynamic PAYE coding (which I will write about in detail shortly), employees will see more significant and earlier tax code changes in response to a P11D, or other reported changes. This is to recover as much tax as possible as quickly as possible, subject to the 50% regulatory limit on deductions from net pay.

As the P11D(b) now needs to be a return combining Class 1A from benefits that have been payrolled, as well as from any remaining P11Ds, employers need to ensure that the total reported is a combination of the two sources. The P11D(b) will not necessarily balance just to the Class 1A on the forms submitted. For this reason, HMRC no longer pre-populate the form with the total if the P11Ds have been compiled via the online P11D service.

Apprenticeship levy

It’s a pity that HMRC are not able to display the apprenticeship levy paid on the Liabilities and Payments Viewer. I must confess I thought everyone had now been migrated to the Business Tax Account (BTA), but what is the EPAYE viewer referenced in the Bulletin? Is this something new or just an updated page within the BTA?

If there are still employers who only have the Liabilities and Payments Viewer available to them, then surely it’s beholden on HMRC to update it to show this new tax liability? It seems to be pointless for an employer to check their business tax account if they pay the apprentice levy payer, as the BTA can’t possibly balance to the remittance paid to HMRC.

Basic Earnings Assessment

At last we have a public announcement that employers/agents are to ignore the Scottish tax thresholds when undertaking the Basic Earnings Assessment (BEA) for childcare vouchers. This applies for Scottish employees, whose employers should use the rest of UK tax thresholds for the BEA, so that no parents are disadvantaged.

This announcement was made way too late, as many employers will have completed the BEA for employees before the Employer Bulletin was published. Some employers have even unnecessarily compensated employees for the lost relief on childcare vouchers.

Student loans

There is a mysterious paragraph about variable interest rates for ex-students who are repaying plan two loans. This stems from: The Education (Student Loans) (Repayment) (Amendment) (No.2) Regulations 2012 (SI 2012/1309). These regulations allow the government to start charging variable rates of interest dependent on income; with income over £41,000 p.a. attracting higher rates of interest.

Data on income will of course be obtained from the FPS. I’ve no idea why HMRC think “some employees may ask you to check and confirm the information you have sent to HMRC”. The data we send to HMRC is as on the employee’s payslip, of course it may well not be the same data that HMRC is holding – need I say more.

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