6 July deadline has passed, so what's next for your employment taxes?
Now that the 6 July P11D filing deadline has “been and gone”, what do we need to think about next?
PAYE Settlement Agreements (“PSA”).
You should be thinking about finalising the tax and National Insurance calculations which need to be submitted to HM Revenue & Customs (“HMRC”) before 31 July or 31 August (depending upon the date on your form P626). A few points you need to bear in mind whilst preparing the PSA calculation:
- You will need to include VAT together with any other costs associated with the provision of the benefit;
- Consider the tax rate to be applied within the calculation it must fairly reflect those to whom the benefit was provided;
- Where there has been an annual social event, such as the office Christmas Party, no benefit will need to be included within the PSA where the costs per head is less than £150 (including VAT and all associated costs); and
- Consider whether there are any new areas of expenditure which you are going to incur during the current tax year which should be included within the 2015/16 PSA. All variations to the PSA contract need to be agreed with HMRC before 6 July 2016.
Business Expense Allowance (“BEA”).
In our last update we mentioned that P11D Dispensation agreements will be replaced by the BEA from 6 April 2016. Whilst this change is a sensible one, it will place greater emphasis on employers who will need to consider whether an expense has been incurred “wholly, exclusively and necessarily” in the performance of the employee’s work.
Consequently, employers will need to ensure that they have a rigorous expenses policy in place and that there is no self-authorising of expenses. We recommend that your existing arrangements are reviewed not only to ensure they can withstand closer scrutiny from HMRC but to also help ensure that your policy is being used correctly by your employees.
Personal Service Companies (“PSC”).
HMRC have published a discussion document regarding proposed changes to the “IR35” legislation.
The Government has been concerned for some time about the amount of tax and National Insurance which is being paid to the Exchequer by individuals who provide their services via a PSC. The outline suggestions provided by HMRC include:
- Engagers taking on a role in deciding whether the IR35 legislation should be applied on payments made to a PSC; or
- Whether income tax and National Insurance should be withheld at the time of payment; or
- The legislation considering whether the worker (the employee of the PSC) is subject to the “supervision, direction and control” of another person. This test now applies for temporary workers within the agency rules.
The consultation is due to close on 30 September 2015.
If you are likely to be affected by the changes, or you have any Employment Tax issues you wish to discuss then please contact Nick Bustin, Director of Employment Tax, or your usual haysmacintyre contact.
Director of Employment Tax
T: +44 20 7969 5578