Are your tax year end processes as streamlined as you’d like them to be?
The end of the tax year is fast approaching bringing with it a large amount of employment related tax compliance requirements including payroll, benefits and expenses and employment-related securities reporting.
P11Ds are required to be submitted to HMRC by 6 July to report expenses paid and benefits provided to Directors and employees during the tax year. Dispensations and PAYE Settlement Agreements (PSAs) can be used to reduce the burden of P11Ds. Examples of items to be reported on P11Ds include:
– Company car and/or car fuel for private use
– Travel season tickets
– Private health scheme subscriptions
– Clothing (except uniforms)
– Low interest or interest free loans
– Living accommodation and associated costs
– Personal bills paid by the employer
Dispensations remove the requirement to report certain business expenses and benefits on forms P11D and can reduce the administrative burden upon companies. Items covered by a dispensation are not subject to tax or NICs. For a dispensation to be effective for 2012-13 it needs to be agreed with HMRC by 5 April 2013.
PAYE Settlement Agreements (PSAs)
Employers’ often prefer to settle the tax and NIC liability arising on certain taxable “benefits” on behalf of the employees. This agreement between the employer and HMRC allows the employer to settle the tax and NICs in a single payment so the items covered do not need to be included on P11Ds or processed through the payroll.
Items that can be included in a PSA include:
– Minor items such as staff entertaining (including working lunches), staff gifts and gym subscriptions
– Irregular items such as the occasional use of a company holiday flat
– Items where it is impractical to operate PAYE on, or to value for P11D purposes such as shared benefits (e.g. shared cars, taxi journeys or office pizza deliveries) that are difficult to attribute to individual employees
It is also possible in certain circumstances to agree with HMRC that certain benefits provided to employees through the tax year can avoid any tax and NIC charges altogether.
How Moore and Smalley can help
Would you like to reduce the administration burden on your business and help reduce your risk of lengthy and potentially expensive compliance visits from HMRC?
We can assist a company in preparing these documents for submission to HMRC, reviewing whether a company is required to make submissions and preparing any calculations due. Please get in touch with me if you would like to discuss any of these items or indeed any other employment tax related issues.