Employer Bulletin – changes to forms P11D and P46(Car) for BiK provided under OpRA

HMRC’s Employer Bulletin for October 2017 has now been published.

Forms P11D and P46(car) for BiK provided under OpRA

Where there is an optional remuneration arrangement (OpRA), the taxable value is now usually the higher of the cash foregone or the taxable value under the normal benefit in kind (BiK) rules. This applies to all BiKs, including those which are currently exempt. HMRC’s Employment Income Manual provides further information. Arrangements entered into before 6 April 2017 retain their old treatment, but arrangements entered into since 6 April 2017, or arrangements which have been varied or renewed are taxed under the new rules.

To accommodate the new rules, HMRC is making some changes to the data that employers must submit, which means that payroll software needs to be updated before 6 April 2018.

Some of the descriptions on the form P11D data that employers submit will change:

  • ‘cost to you’ (or similar) descriptors will read ‘cost to you or amount foregone’. Employers using an OpRA where the amount of cash foregone is higher than the cost should enter the cash foregone
  • ‘cash equivalent’ descriptors will read ‘cash equivalent or relevant amount’. Employers using an OpRA where the amount of cash foregone is greater than the cost to you (as above) should enter the taxable amount (known as the relevant amount).

The making good field title will not change.

For example, employers providing a BiK which costs £280 to provide where there is a salary sacrifice of £300 previously entered ‘£280’ in the cost to you and ‘£280’ in the cash equivalent fields. This will now be ‘£300’ and £300’. A new version of the P11D will be available to view shortly. There are no additional boxes. The online version will be available from 6 April 2018.

The P46 (Car) will have a new field ‘cash forgone’. This is the cash foregone for the car only (excluding fuel, maintenance or any other attributable service). This should be completed whenever there is an OpRA. A new version of the P46 (Car) will be available to view shortly.

As to reporting PAYE data in real time, HMRC will not be asking for any cash foregone figures for OpRA cases in the RTI submission.

On car data reporting, HMRC intends to publish a short technical consultation paper containing draft amendments to the PAYE Regulations soon. The amendments will explain what information employers who have registered for voluntary payrolling of car benefits are required to report and how it should be submitted to HMRC. The amendments will also clarify the taxable amounts that need to be reported under OpRA. The consultation will remain open for a period of 4 weeks. ICAEW Tax Faculty will be responding to this so do please send your comments to peter.bickley@icaew.com once the consultation document is available.

Changes to Business Tax Account for employers

HMRC is rolling out changes to the Business Tax Account (BTA) to improve the accuracy and design of employer PAYE liabilities and payments information. Changes in September and October included new monthly and annual statement pages and the apprenticeship levy now being viewable within the BTA monthly breakdown.

 

HMRC has received a range of feedback and made changes based on comments received. These include the addition of payments information and looking into how interest is displayed. HMRC would welcome continuing feedback through the links on the BTA pages so the department can ensure that future changes work for users.

Data matters – payroll submissions

The RTI payroll data that employers submit plays a critical role in keeping their employees’ tax and NIC records up to date. Accurate information, sent on time, helps HMRC match payroll submissions to the correct record.

Data should always be submitted to HMRC on or before payday. Submissions filed after payday for employees receiving Universal Credit may result in those employees not receiving the right amount of universal credit, potentially causing cash-flow difficulties for them.

Payroll errors and late payroll can lead to increased and unnecessary contact with employers from government departments and employees. Employers can help avoid this issues by taking the following steps:

  • Submit payroll on or before employees’ paydays
  • Record on the payroll submission all employees including those who earn less than the NIC lower earnings limit
  • Submit accurate and up to date employee information. This includes full name, date of birth, national insurance number and address
  • Provide leaving dates for employees who leave employment
  • Check for success or rejection messages following submission and re-send if necessary
  • Employers who make internal changes such as updating payroll IDs following a change to payroll software, should make sure all relevant fields are completed. (It is recommended to confirm with the old payroll software provider that there were no payroll IDs built into their software).

Other articles

This month’s bulletin also contains articles on:

  • The facility for paying HMRC at the Post Office is being withdrawn from 15 December 2017, see last week’s news item Changes to methods of paying HMRC
  • Construction industry scheme – some key tips and tricks including that only limited company subcontractors who do not have gross payment status should declare an entry for CIS deductions on their RTI employer payment summary (EPS)
  • Student loan thresholds increases from April 2018 (NB employers should check whether the amounts will be the same throughout the UK)
  • Apprenticeships – register on the apprenticeship service to obtain funding
  • HMRC launches a new support service for mid-size businesses
  • A reminder about auto-enrolment duties which since 1 October apply to all employers.

Finally, it is now possible to sign up on the government alert service to be informed that the latest edition of Employer Bulletin is available without having to cite a PAYE scheme reference number. 

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