Employer Pitfalls and how to avoid them…..
Optional remuneration arrangements (OpRA)
From 6 April 2017, any scheme being renewed should consider what it includes and other than the “Flexible Five”, [cycle to work, childcare, pensions, pensions advice and ultra low emission cars (ULECs)], employers will be required to tax and apply NIC to other items included in their schemes.
The liability is calculated on the higher of the value of the benefit in kind as usually calculated, and the cash foregone.
There are transitional rules for those employees who are in contractual arrangements in place before 6 April 2017, although any variations or renewals of the contracts will trigger an early withdrawal of the scheme.
Employers who don’t think they have an optional remuneration arrangement should check they are not caught by:-
- Agreeing to increase employer contributions and reduce employee payments at auto enrolment, but not reflected that in the employment contracts?
- Offering staff a cash or car option, or allow staff to pay for a better company car choice?
As of April 2016, employers’ NIC is not liable on wages paid to apprentices.
Where the apprentice is employed immediately under a training contract, then employers NIC can be avoided immediately, but when an existing employee is offered an apprenticeship, the employers NIC should only cease to be paid once the training contract has commenced.
Please don’t forget that, once qualified, Employers NIC becomes due again.
There has been increased interest from HMRC in respect of the vans used by employees for incidental private use which are then, quite correctly, not being included on forms P11D as a benefit in kind.
HMRC compliance officers have begun to ask for further proof that the private use has not increased, so bringing the van into charge for tax and Class 1A NIC.
Trackers are useful as long as they are being reviewed.
The direct tax position allows certain private mileage to be ignored for benefits purposes, however there might still be an input VAT restriction where private use is more than incidental.