COMPLIANCE
H ere at PSTAX, we work very closely with payroll professionals across the UK, many of whom have taken very different pathways into payroll. We understand a career in payroll may be different to how others perceive it and there’s certainly more to being a payroll professional than pressing a big red button on pay day. As well as ensuring people are paid accurately and on time, a career in payroll requires an understanding of many different employment tax areas, such as: l termination payments l salary sacrifice l employee expenses. At PSTAX, we support payroll professionals with queries relating to these areas on a daily basis. In this article, I thought it would be helpful to look at some other important areas we have supported our payroll clients in. Payroll professionals can be the first to see an opportunity to lessen the end of year tax reporting burden, as well as spot where a potential error may have been made. "Payroll professionals can be the first to see an opportunity to lessen the end of year tax reporting burden, as well as spot where a potential error may have been made" Payrolling benefits HM Revenue and Customs (HMRC) has confirmed its intention to move away from allowing employers to report benefits in kind on Individual forms P11D or P11D lists on paper form. Although forms P11D may be around for some time yet and HMRC hasn’t given a clear indication of when they may eventually be phased out, many of our clients have asked us for advice and requested training on the use of ‘payrolling.’ Payrolling benefits is the process that allows an employee to pay tax on a benefit through the salary they earn, across the
whole tax year in which they receive it. This not only saves the manual and often time-consuming P11D process, but also means an employee doesn’t have to wait until the end of the tax year to settle any tax liabilities due. An example where this is particularly helpful is with company cars. We have often seen the impact of a surprise tax bill where the P46 (Car) hasn’t been submitted to HMRC in a timely manner. Although often an innocent error, it can mean the employee is playing ‘catch-up’ at the tax year end, but this can be avoided by payrolling the benefit. Another advantage worth noting here is that when payrolling benefits, an employer can adjust the monthly benefits figure to take account of any changes in the employee’s circumstance. This will mean the amount of tax paid by the end of the year will be more accurate and this may be something payroll managers wish to raise and discuss with their tax colleagues. Off payroll working In November 2022, HMRC wrote to all local authorities in the UK requesting they each undertake a review of engagements at that time, where the individual providing the service was treated as self-employed or outside the off payroll working rules. PSTAX has supported many of our clients with this review but what we did see was that there were some payroll managers who were less confident in handling off payroll working and, in some cases, were unsure on how the rules are applied. Although it’s often the hiring managers that engage with the workers and agree status, it’s important payroll professionals recognise the impact of off payroll working and what they should look out for. The payroll professional will often see where an engagement has already been assessed for status, where the HMRC check employment status for tax (CEST) tool has already been used. However, it’s likely payroll will be the first department the worker contacts when they see for the first time that deductions have been made. Most businesses and employers will have robust procedures and processes in place regarding off payroll working but it’s always a good idea to refresh training and ensure hiring managers and payroll teams understand the rules and know what to look out for, e.g., continuing payments to
Payroll: there’s more than meets the eye
Mae Kennedy, consultant – employment taxes, PSTAX, uncovers the wide array of work payroll professionals are responsible for, and why payroll is such an important industry
| Professional in Payroll, Pensions and Reward | March 2023 | Issue 88 22
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