Payroll insight
help ensure that employees have the correct tax code and end the year balanced with neither an underpayment nor overpayment. ●● Tax code comparison trigger – This compares the tax code shown in HMRC records for that particular employment against the one shown in the individual’s latest submission from that employer. The rules attached to this are as follows: ❍ ❍ It has got to be the same employer. ❍ ❍ The code held in HMRC’s records should have not been issued in the last sixty days. ❍ ❍ When comparing tax codes, attention is not given to the suffix letter (L, T, M etc) or to the basis of operation (cumulative or week-/month-1 basis). ❍ ❍ Where the tax codes match no further action is taken. Where the tax codes do not match a new tax code calculation takes place. If the tax code to be issued is the same as the one held in HMRC records, a P6 coding notice will go out to that employer. If the new calculated tax code does not match – for example, after an IYA or new expenses etc – then a P6 notice will be sent to the employer and a P2 notice will be issued to
the employee. HMRC does acknowledge that some employers and pension providers could receive more tax codes over the first few months, but suggests that if the codes are operated, the volumes should return to normal. ● ● Significant pay difference trigger – Whilst HMRC hasn’t yet found a comprehensive solution to address bonus payments, it is hoped that the significant pay difference trigger will go some way to resolving the issue for most. Whenever a submission is received for an employee a comparison takes place with the previous submission for the same employer. The comparison is looking for a significant increase (which currently is set at 50%) in the ‘Pay in period’. The rules attached to this are as follows. ❍ ❍ It has to be the same employer. ❍ ❍ HMRC need to have at least one other submission to make the comparison. ❍ ❍ Where there is a significant difference in the pay in period, a flag is set to review the case when the next FPS for that employment is received. ❍ ❍ On receipt of the next submission for
that employment a review takes place to ascertain whether the significant increase has been maintained. ❍ ❍ If the difference has not been maintained, then no further action is necessary. HMRC would not look to update estimated pay. ❍ ❍ If the difference has continued, HMRC will recalculate the estimated pay and trigger a coding calculation. ❍ ❍ If the coding calculation indicates that the customer’s tax rate bands have changed and a code change is necessary, a P2 notice will be sent to the employee and a P6 notice sent to the employer. Whilst HMRC announced these triggers in the December issue of the Employer Bulletin , there is no confirmed date for when the triggers will be implemented, though we are led to believe that it won’t be before May 2019. HMRC have agreed to monitor live running with some trusted employers to ensure the triggers are operating correctly. n The CIPP’s policy team will keep you informed once the implementation date is announced.
Employment status and modern employment practices
One day
This course explains how to assess employment status, the financial risk of getting it wrong, the right to work in the UK and a variety of modern employment practices. It covers recent developments such as the IR35 process changes (‘off-payroll working’) and possible future developments following various Government consultations.
This course covers: ● Importance of determining employment status ● Determining employment status ● Types of worker
● Employment intermediaries ● Right to work in the UK ● Future developments
Book online at cipp.org.uk/training , email info@cipp.org.uk or call 0121 712 1000 for more information.
cipp.org.uk CIPP_UK cip .org.uk @CI P_UK
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Issue 48 | March 2019
| Professional in Payroll, Pensions and Reward |
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