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Highlights from HMRC’s February 2017 Employer Bulletin
24 February 17 | By: Jas Jhooty
HMRC have recently published their February 2017 Employer Bulletin. This week we summarise some of the more important information it contains.
Employers should be operating a system for checking that employees are, in fact, incurring and paying expenses of the same amount claimed by employees and, at the point of reimbursement, be satisfying themselves that the expenses are not taxable.
If the employer is satisfied the exemption applies in full, the expenses and BiKs should not be reported on form P11D.
Employers will need to report taxable expenses and taxable Benefits-in-kind (BiKs), or expenses and BiKs that are provided under a relevant salary sacrifice arrangement
Section N on form P11D should be used to report:
- mixed-use expenses where the business use is not clearly identifiable;
- where employers have been unable to correctly deduct tax through payroll;
- to continue to report expenses that are fully taxable where the employer has not registered for on-line payrolling.
Call to employers to opt-in for payrolling benefits
HMRC are reminding interested employers that they can volunteer to payroll the taxable values of Benefits-in-kind to employees for the 2017-18 tax year by using their payrolling benefits and expenses online service before 6 April 2017
Changes to the valuation of Benefits-in-Kind
The way many Benefits in Kind (BiKs) are valued is changing when an employee has a choice between cash and a BiK. This includes cash allowances (such as a car allowance), flexible benefit packages with a cash alternative, and salary sacrifice and salary exchange schemes (known as Optional Remuneration Arrangements – OpRAs).
From 6 April 2017, where an employee has a choice, the BiK will be valued at the higher of the cash foregone or the current taxable value, for both income tax and employer NICs (and employee NICs where a charge already exists). This applies to all BiKs, including currently exempt BiKs.
However, there are no changes to pensions, pension advice, childcare vouchers, workplace nurseries, directly contracted childcare, Cycle to Work, or cars with emissions of 75g CO2/km or less.
Arrangements between an employee and employer, which are binding on both parties and entered into on or before 5 April 2017, are protected until the earlier of:
- a variation in the terms of the BiK, or renewal of the contract, or
- the employee changes employer, or
- 6 April 2018, or
- 6 April 2021 for cars (with emissions of more than 75g CO2/km) and accommodation.
Personal Service Companys working for the Public Sector
Changes from April 2017, mean that individuals working through their intermediary in the public sector will no longer be responsible for deciding whether the intermediaries’ legislation applies and then paying the appropriate tax and National Insurance contributions (NICs). This responsibility will instead move to the public authority client, agency, or third party that pays the worker’s intermediary, and they will also now become responsible for making sure that, where the rules apply, the relevant income tax and NICs are deducted and reported through PAYE in real time. The public authority client is required to tell any agency or third party its view as to whether the rules apply.
HMRC have also launched an off-payroll working in the public sector page where you can find guidance for fee-payers, PSCs and public authorities to use, and links to material such as the technical note.
National Minimum Wage and National Living Wage increases
The National Living Wage for those aged 25 and over will increase from £7.20 to £7.50 per hour.
The National Minimum Wage rates will also increase:
- for 21 to 24 year olds – from £6.95 per hour to £7.05
- for 18 to 20 year olds – from £5.55 per hour to £5.60
- for 16 to 17 year olds – from £4.00 per hour to £4.05
- for apprentices aged 16 to 18 and those aged 19 or over if they are in their first year – from £3.40 per hour to £3.50.
Student loan thresholds
These are being increased to £17,775 for employees who are on Plan 1 from 6 April 2017. The Plan 2 threshold remains at £21,000