In this month’s enews we report on some issues pertinent to employers and employees.
Please contact us if you would like any further information.
|P11D deadline looming||Rising employment statistics|
|Employer end of year forms||Outstanding self assessment tax returns|
|HMRC issue guidance on RTI to employers||VAT on hot food|
|Charitable giving – cap on tax relief|
P11D deadline looming
The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2012, are due for submission to HMRC by 6 July 2012. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.
HMRC have issued some guidance as to common errors on the forms in the latest Employer Bulletin. These include the following:
- Not ticking the director box if the employee is a director
- Not including a description or abbreviation where amounts are included in box A, B, L, M or N of the form
- Leaving the cash equivalent box empty
- Failing to report the full gross value of the benefit where it is provided for mixed business and private use
- Not reporting a fuel benefit where one is due.
Correct completion of forms P11D can be a complex issue. If you would like any help with the forms P11D or the calculation of the associated Class 1A National Insurance liability please get in touch.
Rising employment statistics
According to the latest statistics issued by the Office of National Statistics:
‘The unemployment rate was 8.3% of the economically active population, down 0.1 on the quarter. There were 2.65 million unemployed people, down 35,000 on the quarter. This is the first quarterly fall in unemployment since the three months to May 2011.’
Dr Neil Bentley, CBI Deputy Director-General, said:
‘It’s good news that 53,000 more people are in work now than three months ago, which shows that the private sector is gradually regaining confidence to hire.’
‘While this is the best jobs news we’ve had in a year, the Government must step up its welfare reform programme. Worryingly, over a third of those unemployed have been out of work for more than 12 months.’
‘With youth jobless numbers still stubbornly high, helping young people find jobs must remain a joint priority for businesses and government.’
Employer end of year forms
HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time. The vast majority of employers must file electronically and the deadline for submission of the forms is 19 May 2012, which this year falls on a Saturday.
Where employers do not file their annual return by 19 May they incur a penalty of £100 per 50 (or fewer) employees for every month (or part month) that their return is late.
HMRC have been criticised for failing to make employers aware that they were incurring penalties on a timely basis. In a change to procedure HMRC will now issue employers, who they believe have yet to make a return, with an ‘Employer Annual Return Reminder’ from the end of April.
From the end of May HMRC will issue ‘P35 Interim Penalty Letters’ to relevant employers.
If you are unsure whether you need to complete a return this year please do get in touch.
Outstanding self assessment tax returns
HMRC are urging anyone who has still not completed their 2010/11 self assessment tax return to send it online before the end of April, or be charged daily penalties from 1 May.
Anyone whose return is more than three months late will be charged a further £10 penalty for each day it remains outstanding, up to a maximum of 90 days. This penalty is in addition to the £100 late filing penalty they have already received.
HMRC are advising that if an individual receives a late filing penalty but does not think that they need to complete a return, they should call HMRC on 0845 900 0444. Alternatively contact us so that we can help, as it may be possible to cancel the penalty if HMRC agree that the return is not due.
HMRC’s Stephen Banyard said:
‘We want the returns and not penalties. So, if you haven’t sent us your 2010/11 return, you need to do one of two things urgently – either send it online by 30 April, or call us if you think you shouldn’t have to complete one.’
Internet link: Press release
HMRC issue guidance on RTI to employers
HMRC have updated their guidance on Real Time Information (RTI). This new system of monthly PAYE returns is to be piloted from April 2012 and is expected to be compulsory for all employers from October 2013.
If you would like to read more about the new system please follow the link below. If you would like help with payroll matters please do get in touch.
Internet link: HMRC FAQs
VAT on hot food
HMRC are consulting on changing the rules on hot takeaway food to ensure that all food (with the exception of freshly baked bread) that is above ambient air temperature when provided to the customer is standard rated.
Currently the rules are complex as if food is hot because it has just been cooked, such as freshly baked pies or roasted chicken, these items may in certain circumstances be zero rated for VAT purposes.
We will let you know the outcome of the consultation.
Internet link: HMRC consultation
Charitable giving – cap on tax relief
The government is proposing to restrict tax reliefs available to individuals such as charitable giving.
Currently individuals can offset their entire income against income tax reliefs, and as a result may pay no income tax at all. It was announced in the Budget 2012 that from 6 April 2013 there will be limits to the amount of income tax relief individuals can claim.
This cap will apply only to reliefs which are currently unlimited. This cap will be set at 25% of income (or £50,000, whichever is greater).
HMRC propose to issue a consultation document on the detail of the policy, including the implications for philanthropic giving, in the summer. We will keep you informed of developments.
Internet link: HMRC press release