From April 2016 the government is introducing a voluntary framework to allow employers to payroll most employee benefits in kind (benefits) rather than report them at the end of the tax year on a form P11D.

In order to payroll benefits an employer will need to include a notional value for employee benefits as taxable pay in the regular payroll cycle. By doing this the income tax due on the benefits can be collected in real time.

Currently the tax due on employee benefits is collected through an adjustment to the employee’s tax code. The way that tax codes work means that HMRC try to collect the right amount of tax at the right time. However, when benefits start/stop or are changed there can be a delay in changing the tax code which may result in an employee under or over paying tax.

One of the advantages to employers is that if employees’ benefits are payrolled then forms P11D will not need to be completed. Payrolling is not possible for some benefits such as living accommodation, beneficial loans and credit vouchers and tokens.

HMRC have confirmed that there will be no change to the process for reporting and collecting Class 1A NICs. Employers will still need to complete a form P11D(b) after the end of the tax year and calculate and pay the 13.8% employer only liability.

Employers need to register for the new service by 5 April 2016 as HMRC cannot process changes in year. HMRC are advising that employers should ideally register before 21 December to avoid being sent multiple tax codes for employees.

Please contact us if this is of interest to you.

Internet links: GOV.UK payrolling benefits Employer Bulletin

The government has published guidance for employers on the use of zero hours contracts. The guidance sets out where zero hours contracts may be appropriate and also sets out alternatives and best practice.

The guidance gives examples of where zero hours contracts might be appropriate:

• new businesses, where demand might be fluctuating and unpredictable
• seasonal work, for example around Christmas
• employers needing cover for unexpected sickness in critical roles
• catering businesses using additional experienced staff when a special event is booked and
• a business testing a new service that they are thinking about providing, needing employees on an ad hoc basis.

Internet link: GOV.UK zero-hours-contracts-guidance

The ‘IR35’ rules are designed to prevent the avoidance of tax and national insurance contributions (NIC) through the use of personal service companies and partnerships.

The rules do not stop individuals selling their services through either their own personal companies or a partnership. However, they do seek to remove any possible tax advantages from doing so.

Intermediaries who have operated the IR35 concession to delay making a final return and payment for the tax year ending 5 April 2015, have until 31 January 2016 to submit accurate figures and pay any outstanding amounts of PAYE and NIC due.

The concession operates where a provisional return and payment have been submitted but cannot be confirmed because final figures of income, including the calculation of the ‘deemed payment’, were not known at the end 2015 tax year.

HMRC advise that adjustments to the provisional RTI return should be reported using ‘an Earlier Year Update (EYU)’ and must be submitted electronically to HMRC by 31 January 2016. Interest will be charged on any balancing payment.

Please advise us if you would like help with this issue.

Internet links: GOV.UK IR35 guidance Employer Bulletin

With the season for workplace parties fast approaching we thought it would be a good idea to remind you of the tax implications of these types of events. The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.

But what about the tax consequences for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?

Generally, as long as the total costs of all employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) there will be no tax implications for the employees themselves. In considering this limit make sure you have included all the costs, which may include not only the meal itself but also any drinks, entertainment, transport and accommodation that you provide.

If the costs are above the £150 limit then the full cost will be taxable on the employee. In that case do get in touch so we can advise you how best to deal with them.

Internet link: HMRC guidance

Over 100 employers who have failed to pay their workers the National Minimum Wage (NMW) have been named and shamed.

Between them, the 113 employers owed workers over £387,000 in arrears, and span sectors including hairdressing, retail, education, catering and social care. The cases named were thoroughly investigated by HMRC.

Since the scheme was introduced in October 2013, 398 employers have been named and shamed, with total arrears of over £1,179,000 and total penalties of over £511,000.

Business Minister, Nick Boles said:

‘Employers that fail to pay the minimum wage hurt the living standards of the lowest paid and their families.

As a one nation government on the side of working people we are determined that everyone who is entitled to the National Minimum Wage receives it.

Next April we will introduce a new National Living Wage which will mean a £900-a-year pay rise for someone working full time on the minimum wage and we will enforce this equally robustly.’

On 1 October 2015, the main rate of the NMW rose to £6.70 per hour.

Acas online offers advice to both businesses and employees that have any questions about the NMW.

For help with payroll issues contact us.

Internet links: GOV.UK news NMW rates