tax year. Adapting to a new tax year, including building a solution to manage the transition year will be a complex process for developers. Standard tax tables built into solutions will need to be redesigned, whilst ensuring it is possible to retain the legacy data. Those tables will often link through to other modules and pay elements and be used as the basis for many calculations. These links will need to be unpicked and reassigned to accommodate these changes. This development will come at a cost, and it is inevitable that consumers will need to foot the bill – either as a one-off payment or in the form of an overall price increase. Benefits in kind The calculations for benefits in kind are well established, but a change to the UK tax year would result in a year that is less than 365 days. Consequently, the calculations will need to be adjusted to reflect this reduction, and software will need to be capable of supporting these calculations during the transition year.
change to the tax year end date, but also to the tax month end date. The potential consequences here are significant. Currently, PAYE (pay as you earn) payments are due by the 22nd proceeding the end of the tax month (or 19 April, if paying by cheque). Will the seventeen-day gap be maintained, bringing the payment date forward to the 17th of the month, or will government maintain existing deadlines and increase the time available to payroll teams to reconcile and pay amounts due? Other well established payroll deadlines would also need to be reviewed – P60 certificates distribution, P11D and P11D(b) returns deadlines, and PAYE settlement ...government must ensure they are adequately prepared to facilitate the smoothest possible transition...
agreements too. A move to 31 March would make it viable to retain existing dates, but a move to 31 December would lead to an inevitable change in approach for all these key payroll documents, returns and payments.
All the above will have an impact on cash flow and payroll schedules.
Schedules are often well established, and where vast numbers of payrolls and pay frequencies are involved can be incredibly complex. Recreating payroll schedules in the simplest of environments will be a challenge, recreating them in these complex environments will feel almost impossible for many payroll teams already tackling difficult business demands. So, what next? Payroll professionals constantly adapt and manage change in their roles, and a change in tax year would not be an impossible task. Before any change is made, however, the government must ensure that the benefit outweighs the cost of implementation. There are many items to consider in planning this change and government must ensure they are adequately prepared to facilitate the smoothest possible transition. n
Dates and schedules The proposed changes will result both in a
A change to the tax year-end date would have significant impact on the work that payroll professionals carry out, and around some of the documentation that needs to be provided to employees by those teams. We want to hear from you
The CIPP’s policy team wants to hear from you – our members – as this is something that will impact you directly. We want your voice to be heard.
Some questions for consideration are suggested below: Should the tax year-end be changed? If tax year-end is changed, then should it be moved to 31 March or 31 December, as proposed? What are the key areas that need to be considered before any changes are made?
Get in touch with us, at email@example.com to share your views on the OTS’s proposals.
Please submit your comments by no later than 30 September 2021 .
We know payroll professionals are extremely busy people, so we thank you for your feedback in advance. Don’t miss the opportunity to have your say!
| Professional in Payroll, Pensions and Reward |
Issue 73 | September 2021
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