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ISSUE 2
UK Payroll: Tax Planning and Avoidance Measures Becoming Prevalent
Author: P Simon Parsons
As with most of the world, the United Kingdom has been going through its own Cost of Living crisis. Inflation has fallen to a three- year low of 2% from its recent peak of over 11%. Food remains 25% higher than in 2022. Interest rates are high at 5.25% with an expectation of reduction starting in August 2022. Millions face increasing mortgage costs as their current (and unusually very low) fixed rate deals come to an end. The reality is that the current rates being experienced are favourable when compared to mortgage rates over past decades.
So what has this got to do with payroll? Increasingly employers and their
collected as an advance recovery in the next pay cycle.
employees have been looking at means to save money or access their hard-won earnings early. Over the past two to three years, it has become more common to see US model wage advance schemes being heavily promoted. A method utilising a loophole of PAYE by giving unregulated credit to employees loaned from money businesses (often for a fee) to be
HM Revenue and Customs (HMRC) has relaxed the RTI on or before reporting requirements for such advances to prevent some of the taxation and National Insurance difficulties with advancing so-called wages. Some of the noise around them appears to have died down. There are still unanswered questions about the impact of the associated advance fee and how payments out of the pay reference
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