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Q: I am seeking guidance regarding employees who have earned over the income limit for the personal allowance. For example, if an employee commences employment on a salary of £110,000 and completes a new starter declaration with box B ticked, should we automatically put them on a 0T code or the emergency code? A: You would use the normal emergency/ personal allowance on a month-one basis. You cannot change this to ‘0T’ even though you know they will earn over the £100,000 income limit for the personal allowance. If the employee gives you a form P45 and this states a different code than the standard personal allowance this can be operated, otherwise you will have to await a P6 notice of tax code change direct from HMRC. Q: Early in 2017, we acquired two new businesses into our group and successfully merged the employees from these businesses into our main PAYE scheme. Some employees from the new business were and still are in receipt of benefits in kind and we currently report our benefits in kind via a P11D return. Do I need to complete a single P11D return for the whole tax year on the new PAYE scheme or will there be two P11D returns: one under the old PAYE scheme and one under the new PAYE scheme? A: The number of P11D returns you produce will depend on the type of change your business has experienced. If your business has undergone a PAYE submit two P11D returns for each relevant employee: one under the original PAYE reference for the period up to the merger date and one for the new PAYE reference from that date. If you contact HMRC and are told your business has undergone a succession, you must submit one P11D return under the new PAYE reference for each employee in receipt of company benefits. This must contain the total information to be reported for both PAYE scheme references. If you have not contacted HMRC to advise them of business succession and your employees continue to receive company benefits, you must submit two P11D returns for each employee: one under the original PAYE reference for the period up to the succession date and one under the new PAYE reference from that date. n scheme merger and your employees receive company benefits, you must
so. You can find information on what HMRC would consider as not reasonably practical at this link https://goo.gl/2UDnJE. If HMRC accept that you should work out NICs for each employment separately, the employer will be able to continue as normal. In the second scenario, it will depend on whether the companies are deemed to be businesses working in association or not. If the companies are not deemed to be working in association then you would calculate NICs separately. It is only if the companies are deemed by HMRC to be working in association that you would aggregate the earnings for NICs purposes. HMRC explain the definition of working in association in this link https://goo.gl/ Q6R55s. Q: Until recently we had a group of companies that had a total wage bill of less than £3,000,000, so we did not report for the apprenticeship levy. We have recently employed a senior employee whose salary has taken us over the threshold, so I have applied the levy to the payroll from this month (December 2017). Will this incur a charge backdated to April 2017? A: The apprenticeship levy is an annual charge, applicable for the whole tax year. This means it will backdate to April 2017 through to December 2017. Below is a direct link to HMRC’s Apprenticeship Levy Manual on GOV.UK website, which provides examples of how to calculate the levy. Please refer to example 5 as this gives guidance relevant to your situation (https:// goo.gl/pcLHXc). Q: We have a new client who only has casual employees on the payroll. They only work a few hours a week, including weekends, and all employees are earning below the LEL. Will the client need to set up and run a payroll scheme or is it the employee’s responsibility to inform HMRC of any extra income? A: A PAYE scheme must be requested if any of the following applies to one or more employees: l you’re paying them at or above the PAYE threshold l you’re paying them at or above the LEL l the employee already has another job l they are receiving a state, company or occupational pension l you’re providing them with employee benefits.
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Issue 40 | May 2018
| Professional in Payroll, Pensions and Reward |
*correct at time of publication
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