HMRC: Employer bulletin August 2017

HMRC have published their Employer Bulletin for August 2017. We summarise the key content for you, with links to our detailed guidance on the topics covered.

Real time information (RTI)

• The date you report on your Full Payment Submission (FPS) should be the earlier of:
  • Date of payment
  • Date employee was entitled to that payment
• An electronic message confirming receipt of the FPS does not necessarily mean it is correct and on time.
• If your FPS is late use the appropriate ‘late reasoning code’ if you have a reasonable excuse.
• You may receive a Generic Notification Service (GNS) warning message if you have not filed on time:
  • These should not be ignored.
  • You can check them online, through PAYE online, your payroll software, or through your Business Tax Account.
• Do not forget to update your email address using PAYE Online if it changes, so that you continue to receive email alerts when you receive a tax code or GNS.
• See Real Time Information (RTI) index.

Optional remuneration arrangements (OpRAs)

• New rules for OpRAs were introduced from 6 April 2017 affecting salary sacrifice and other optional remuneration schemes.
• Any new arrangements or arrangements varied after 5 April 2017 are under the new rules.
• Existing arrangements will be brought under the new rules:
  • From 6 April 2021, in respect of cars with CO2 emissions over 75g/km, school fees and accommodation.
  • From 6 April 2018 for all other arrangements that are not excluded.
• Where the new rules apply, the higher of the cash foregone (salary sacrificed) or taxable value under benefit in kind rules is taxable.
• This applies to all arrangements apart from those relating to:
  • Pensions
  • Childcare vouchers and directly contracted childcare
  • Workplace nurseries
  • Cycle to work schemes
  • Low emission cars
• If you registered for voluntary payrolling of the benefit now caught under the new OpRA rules, you will not have to complete a P11D for 17/18 as long as the tax is calculated, paid and returned through RTI.
• See Salary sacrifice schemes.

Tax codes

• A starter declaration should be completed by every new employee in time for the first FPS.
• Incorrect starter declarations can lead to incorrect tax codes.
• HMRC will tell you by email if one of your employees’ tax codes changes and you will be able to access this code online.
• Some tax codes include previous pay and tax details. It they are included these should be added to the payroll record before the next FPS.
• See PAYE Codes: starters/leavers & 0T code.

PAYE penalties

• HMRC have reviewed the effectiveness of the risk-based approach to late filing and late payment PAYE penalties.
• This approach will continue for 2017/18.
• The first penalties for the 2017/18 year will be issued in September 2017.
• No penalties will be charged for late FPSs where filed within 3 days of the payment date and there is no pattern of persistent late-filing.
• See the following:
  • Penalties: PAYE Annual Returns P35 & P14
  • Penalties: PATE failure to file online
  • Penalties: PAYE: late payment
  • Penalties: RTI (Real Time Information) for PAYE.

PAYE Settlement Agreements (PSA) and Scottish Income Tax

• Employers are reminded that Scottish tax bands are different to the rest of the UK for 2017/18.
• PSAs require the employer to calculate the tax and Class 1B NIC payable to HMRC so an understanding of the different bands will be essential.
• Individual who are residents of Scotland, they should ensure their home address details are up to date with HMRC.
• Electronic payments for 2016/17 PSAs must clear HMRC bank account by 22 October 2017, a Sunday. If paying by check, it must reach HMRC by 19 October 2017.
• Your payment reference number will be shown on the PSA payslip you were sent by HMRC.
• You should not use your PAYE Accounts Office reference for PSA payments. Contact HMRC if you have misplaced your PSA payment reference.
• HMRC plans to provide an online PSA submission and payment service from 6 April 2018.
• See PAYE & Settlement Agreements.

Expenses exemption

• From 6 April 2016, a general expenses exemption was introduced for amounts that would be deductible.
• This meant most employers would not have to apply for a dispensation from HMRC.
• All existing dispensations effectively ceased from 5 April 2016.
• Employers should be operating a system:
  • For checking that employees are incurring and paying the expenses claimed
  • That they would be tax deductible and therefore covered by the exemption.
• Where the exemption applies, the expenses do not need to be reported on form P11D or payrolled.
• See Exemption for paid and reimbursed expenses.

Apprenticeship Levy

As exam results will be coming out in August HMRC are urging employers to consider how they might maximise the apprenticeship funding available to them. 

• 0.5% levy is payable for those with a paybill of more than £3million.
• Where it applies reports must be made through the EPS by 14 days after the end of each tax month.
• On time payments are required to avoid compliance action from HMRC and to ensure the levy funds and 10% government top-up are available to pay for apprenticeship training.
• Groups of connected companies or charities share one annual levy allowance between them.
• The Apprenticeship Levy charge is shown in the Business Tax Account.
• See Apprenticeship Levy (employers' briefing).

Paying HMRC

• The electronic payment deadline for PAYE is 22^nd of the month following the end of the tax month / quarter.
• 22 October 2017 falls on a Sundary: funds should clear HMRC’s account by the 20th unless a Faster Payment can be arranged to clear on the deadline.
• See PAYE: paying HMRC.

Construction Industry Scheme

• If you are a limited company and have not been able to offset CIS deductions against PAYE liabilities, you can make a separate claim for a refund after the tax year.
• HMRC have a new Repayment iForm which will make the repayment claim process more efficient.
• Where claims are to go to an agent or nominee, the claim still needs to be made by post on form R38.
• Some contractors using commercial software have been unable to submit amended CIS returns. If the problem persists after updating to the latest version of the software, you should contact the provider.
• See CIS repayments: top 10 tips.

Business Tax Account

• In August a selected group of businesses will be testing an enhanced version of the Business Tax Account:
  • Outstanding charges and credits will be itemised on the homepage.
  • A new annual statement page showing charges, credits and payments for the tax year will be shown.
  • From September a monthly breakdown will be available.
  • It is expected that all businesses will have access to the new Business Tax Account from September.

Contacting HMRC

• There has been an increase in the number of employees using the wrong address when contacting HMRC about their own PAYE and NI contributions.
• Employers are asked to direct employees to the HMRC contacts page, a list of over 100 different contact links!

Automatic enrolment

• Employers must:
  • Assess staff
  • Put them into a workplace pension scheme if they meet the criteria
  • Write to the employee to tell them what you have done
  • Complete and submit a declaration of compliance with The Pensions Regulator
• You must continue to monitor the age and earnings of staff and process any requests for employees to join or leave the scheme.
• See Auto-enrolment: workplace pensions (subscriber guide).

GCSEs new grading

• For employers assessing applicants for jobs, they should note that a new 9 to 1 grading scale is being introduced for GCSEs.
• Grade 4 is broadly equivalent to an ‘old’ C grade and is the minimum grade that must be achieved in English and Maths, otherwise they will have to continue to study these subjects post-16.
• Not all GCSEs are changing at once.

Employer Bulletin: August 2017

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

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