How to Stay Safe from HMRC
13 February 15 | By: Jas Jhooty
This week HMRC have published a raft of new and revised guidance that will affect both employers and employees in various ways. We have collated this new guidance in this week’s article.
Tax codes to use from 6th April 2015
The 2015 P9X has been published and is available online here. This guidance explains which tax codes employers must change and how to change them and which codes to carry forward ready for the new tax year on 6 April.
2015/16 Official Interest Rate announced
The official interest rate that is required for the calculation of the beneficial loan (and for the expensive living accommodation) benefit-in-kind has been set at 3% with effect from 6th April 2015. This is a reduction from the 3.25% rate currently in force for 2014/15. Confirmation of this announcement and a table of historic rates can be found here.
New guidance for Employment Intermediaries
An intermediary is any person who makes arrangements for an individual to work for a third party or be paid for work done for a third party. An employment intermediary is also commonly referred to as an agency.
As previously announced from 6 April 2015, intermediaries must return details of all workers they place with clients where they don’t operate PAYE on the workers’ payments. The return will be a report (or reports) that must be sent to HMRC once every 3 months.
You don’t have to send HMRC reports if you are a UK employer and you:
The new guidance including how it will affect workers and clients can be found here.
The format of the required report has also been announced, along with a report template that employment intermediaries can use. All of this useful information can be found here.
Company car drivers can report changes to HMRC online
An online trial has been launched by HMRC, allowing company car drivers to make changes to car and fuel benefits that will affect their tax codes.
HMRC receives about 4.3 million calls a year from customers about their tax codes.
HMRC has recently completed a public consultation on voluntary pay-rolling of benefits-in-kind, including company car benefits. Where employers adopt payrolling of benefits, customers will not need to use the new digital service as they will be paying the right amount of tax in real time.
The new reporting requirements affecting employment intermediaries is not just for self-employed individuals. They will affect all other trading entities e.g. Personal Service Companies (PSCs) who are paid gross and who happen to obtain work through an agency. These workers should be worried as it will be easier than ever for HMRC to identify those PSCs who they suspect of falling foul of IR35 . Affected PSCs should either be taking steps now to bolster up their defenses against increased HMRC activity in this area, or just bite the bullet and apply PAYE on their earnings.
The ability for employees to change their own tax codes is to be welcomed. The majority of failures of PAYE to collect the correct amount of tax by the end of the tax year, are due to benefits-in-kind not being reported and coded in real time. By introducing this facility employees can become proactive to prevent underpayments of tax from arising. In the absence of an employer payrolling benefits, the P46 car form reporting requirements will remain to verify that the information of the vehicle that the employee is claiming they are currently driving, is accurate.