PAYROLL INSIGHT
through OpRA (including salary sacrifice arrangements) were largely withdrawn. What these changes mean is that where a benefit is provided through an OpRA, it is now subject to income tax and class 1A NICs even if it is normally exempt from these charges. Any arrangements which were entered into on or before 5 April 2017 retain their previous tax treatment until the earlier of a renewal or variation of the arrangement, with all pre-6 April 2017 benefits in kinds (BiKs) being caught by the new rules from 6 April 2018. However, the following benefits (which have an excluded or special case exemption) will continue to have full tax and NICs advantages when provided through an OpRA: ● employer provided pension contributions and employer provided pensions advice ● employer supported childcare (childcare vouchers) and the provision of workplace nurseries ● cycle to work schemes (cycles and cyclists’ equipment) ● ultra-low emission vehicles, which are defined as vehicles that have a CO2 emissions rating at or below 75g/km ● special case exemptions, e.g. buying annual leave via salary sacrifice, as this is considered to be an intangible benefit. Cars and accommodation that were in place pre-6 April 2017, move into the new rules on the earlier of renewal or variation or April 2021. Pre-6 April 2017 school fees have special rules, but all move into the new rules from April 2021, which will mean that all BiKs will now be valued at the higher of the cash given up or the value under the traditional rules. Employers also need to be aware that the ‘amount foregone’ is only the part of the salary sacrificed amount that relates specifically to the taxable car. It does not include the amount sacrificed for payments and benefits associated with taxable cars, such as a servicing. So, the full amount of the salary sacrifice (or cash allowance) should be apportioned between the taxable car and the tax- exempt benefits. Payrolled benefits Many employers have now opted to payroll certain taxable benefits provided to employees, with the result there is no longer a requirement to complete and
mileage payments made in excess of the exemption. Up to and including 2016–17, these were reported in the P11D return in Box E, which was used for mileage allowance payments and passenger mileage payments. However, the 2017–18 return and guide advise that Box E is now for reporting mileage allowance payments, with passenger payments no longer mentioned. Therefore, passenger mileage payments should be entered in Box M, in the second line that is not marked for class 1A NICs. P11D(b) The P11D(b) is the return of class 1A NICs due which also includes the employer’s declaration that all expenses and benefits (if any) have been accounted for, with one P11D(b) required for each pay as you earn (PAYE) reference. You may wonder in the circumstance where there are no P11D returns or class 1A NICs to report for the tax year whether a nil P11D and P11D(b) is required. The simple answer is no, there is no requirement to complete the P11D return if there are not any expenses and benefits and no class 1A NICs to report and pay. However, if you have been asked by HMRC to submit a P11D(b) return and you have nothing to declare, you can confirm that there are no class 1A NICs due by completing the online declaration ‘No return of class 1A National Insurance contributions’, which can be located via this link: https://bit.ly/2ge4VJR. If you do choose to submit a paper copy of the P11D(b) it must be signed in ink. A copy, fax, photocopy or a stamped signature will not be acceptable. If the paper form does not include a wet signature, then it will be returned and if not re-submitted by the due date may result in a late-filing penalty being issued. In addition to the P11D(b) return being the employer’s declaration, it also provides the employer with a means of calculating and making any necessary adjustments to the amount of class 1A NICs due for the year. If a revised P11D is submitted you must complete all the boxes, not only those you want to correct. For example, if the employee had £660 medical benefit and a car benefit figure of £3,000 but only the cash equivalent of the medical benefit was reported, the corrected form would
need to show both the medical and car benefit figure. In addition to this you are also required to recalculate the previously reported class 1A NICs liability and submit a revised P11D(b) return. ...copy, fax, photocopy or a stamped signature will not be acceptable... Class 1A NICs Depending on the nature of the expenses and benefits and how they have been provided to the employee, will determine whether class 1A or class 1 NICs are due on the benefit. To help employers determine the correct treatment, HMRC have provided a useful table at appendix 1 of booklet CWG5, and there is also further guidance in booklet CWG2 – see ‘Further information’ below for links. To help employers identify which benefits are to be considered in the class 1A calculation, the P11D return is colour- coded. Those items which are included in the brown boxes must be included in the class 1A calculation. Those included in the blue boxes can be ignored as the benefits in question are either totally exempt from NICs or class 1A NICs or liable to class 1 NICs via the payroll. When paying over the class 1A NICs to HMRC your normal accounts office reference must be quoted plus the numerals ‘1813’ at the end: ‘18’ relates to the tax year and ‘13’ to ensure that the payment is assigned correctly. You must also ensure there are no spaces included between any of the numbers e.g. 123PA001234561813. If an error is made when quoting the reference, HMRC may not be aware the class 1A NICs payment has been submitted and may continue to issue reminders along with default notices until such time that the payment is allocated to the correct reference. So it is imperative that any references included in your submissions are correct. Optional remuneration arrangements (OpRA) From April 2017, the tax and NICs advantages of benefits that are provided
| Professional in Payroll, Pensions and Reward | June 2018 | Issue 41 16
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