Payroll insight
Company cars and payrolling
Neil Tonks, of MHR’s legislation team, provides insight and advice about significant changes to FPS returns from next tax year
B y the time you read this, our development of the software enhancements needed to support the end of the current tax year and the move into 2017–18 will be well underway. The major changes this time around are the introduction of the apprenticeship levy and the next incarnation of Scottish income tax. However, that doesn’t mean other things are unchanged. In particular, a little-publicised addition to the full payment submission (FPS) might cause some payroll departments extra work around year-end. As you know, HM Revenue & Customs (HMRC) introduced the concept of voluntary payrolling of benefits-in-kind at the beginning of the current tax year. Amongst the benefits which can be payrolled are those related to company cars and any fuel provided for private journeys. At the time, HMRC guidance said that employers who payroll car benefits should no longer submit P46(Car) returns to notify changes of car benefits. For 2017–18, car and fuel information has been added to the FPS. HMRC tell us this information is to be provided via this route only by employers who payroll car and fuel benefits for company cars. Those who still use the P11D return for this should continue with the existing P46(Car) process and have no additional details to report in the FPS. Employers who pay a car allowance and/or pay mileage for use of private cars are likewise unaffected. The precise detail of some aspects remain unclear at the moment and we’re awaiting the detailed HMRC guidance. However, most of it is self-explanatory. There are nine pieces of information which may need to be supplied. These are the car’s make and model, the CO2
emissions, the fuel type, the registration number, the calculated price, the date it’s made available, the date it cases to be available, the cash equivalent and a flag to indicate when a change is made to the details for an existing car. Additionally, if fuel is provided for private mileage you also need to supply the dates between which it is available and its cash equivalent. If the person has multiple cars details need to be provided for each up to a maximum of fifteen per person in a single FPS. Those of you who are familiar with the P46(Car) return will have realised that the details here are very similar to those which are to be added to the FPS. The main exception is the ‘calculated price’ field. This is a single value in the FPS whereas the P46(Car) asks for several values in addition to the list price of the car, such as any capital contribution paid by the employee and the value of any accessories. We believe the value in the FPS is the overall ‘price’ of the car calculated from these other figures (list price plus accessory value minus any contributions made by the employee), though this remains subject to HMRC guidance. The information needs to be provided in the FPS only when something changes, so it won’t be present every time for every employee with a company car. You may already have these company departments extra work around year- end ...might cause some payroll
car details available to your payroll system. In this case there should be little problem completing the FPS correctly as your software provider will probably enhance the system to populate it with car details automatically. As always, of course, you do need to find out how your particular supplier intends to provide this facility, and whether there are any actions you need to take. There will be more problems if some or all of the necessary details aren’t currently available to your payroll system. If this is the case, you may have details to enter for affected employees in time for the first FPS of 2017–18. As before, check with your supplier in order to understand the actions you need to take, as these will vary from system to system. Another possibility is that you use a bureau or other outsourcing solution to provide your payroll services. In this case, you may have to start supplying the car details to them for the first time because – unless they previously produced P11D or P46(Car) returns for you – they’ve probably had no use for car details until now. All this is, of course, only required if you payroll car benefits, which is voluntary (for the time being, at least). One factor you need to take into consideration if you’re thinking of payrolling car benefits next tax year is the degree of difficulty and the amount of work involved in getting these values into the FPS. We do wonder whether this factor will serve to dissuade some employers from payrolling this particular benefit at all. n
Industry Monitor is sponsored by MHR
Issue 25 | November 2016 | Professional in Payroll, Pensions and Reward | 15
Made with FlippingBook flipbook maker