If an employee enters into a new arrangement on or after 6 April 2017 then the new rules apply straight away.
What changes do I need to make to my payroll / HR software? To make the first year easier we have not updated the P46 Car for in year reporting and you should continue to use the existing form. Employees who need to pay more tax can either contact HMRC, or wait for the normal P11D process to pick up any corrections after the end of the year.
The software specifications for the 2017-18 P11D and P46 (Car) reporting from April 2018 are now available.
I am voluntarily payrolling what do I need to do? The voluntary payrolling of BIKs is governed by the PAYE Regulations 2003. These regulations will be amended later in the year. In the interim period, if you registered for voluntary payrolling: by the start of, or prior to the 2017-18 tax year. and you are deducting tax for a BiK that is subject to the new OpRA rules then you do not need to complete a P11D for the period as long as you deduct the tax due on the revised taxable value of the BiK for the full year and returned the information through your RTI submission. This concession only applies for 2017/18. For example: In tax year 2017/18, an employee gives up the right to a car allowance of £4,000 in return for a company car with CO2 emissions above 75g/km, through a salary sacrifice arrangement (OpRA). In June the employee upgrades the car to a higher model and forgoes an additional £2,000. The taxable benefit is the higher of the modified cash equivalent of the car benefit (which in this case is £3,500) or the amount foregone (£4,000 + £2,000). In this case, the higher amount is the amount foregone of £6000, though the employer only payrolls £4,000 (the amount originally foregone) from the start of the tax year. At the end of the tax year, the employer realises that the additional £2000 has not been included. On or before the final payment of wages for the tax year ending 5 April 2018. The employer may include the £2,000 as a taxable amount and submit through Real Time Information, in the final pay period. The employer should ensure the employee knows that additional £2000 of the amount foregone is to be taxed so that there are no surprises for the employee. (Please note, employers still need to work out the Class 1A NICs on the taxable value of the BiK and complete form P11D(b) .) I am registered for voluntary payrolling and using an intermediary / payroll bureau / agent to do my payroll, what do I need to do? You need to make sure they are aware that you are providing your employees with BiKs in conjunction with OpRA and that they deduct the tax due from the correct taxable value as described above. PAYE Regulations The PAYE Regulations will be amended to ensure that the correct value is used. We will publish draft regulations for stakeholder consultation as soon as we are able to after the summer, and these will be formally brought into effect in time for start of the 2018-19 tax year.
For ease of printing you can download this text from a PDF version - Guidance on Optional Remuneration Arrangements and Voluntary Payrolling
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Salary sacrifice guidance updated 4 September 2017
HMRC’s guidance ‘ Salary sacrifice for employers ’ has been updated on GOV.UK to reflect the changes under Optional Remuneration Arrangements which came into effect April 2017.
From 6 April 2017, income tax and National Insurance contributions (NICs) advantages associated with OpRA (Optional Remuneration Arrangements) have been largely withdrawn. OpRA includes, salary sacrifice, cash allowance and flexible benefit packages with a cash allowance.
The Chartered Institute of Payroll Professionals
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