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HMRC consult on PAYE reporting requirements

HMRC have launched a technical consultation seeking comments on draft legislation which will amend the PAYE requirements (provided for in the PAYE Regulations) for employers in respect of car data reporting and optional remuneration arrangements. If enacted, the changes will apply from 6 April 2018.

Car data reporting requirements

Legislation was introduced at April 2016 that provided for employers to choose to tax most benefits-in-kind (BiKs) through their payroll rather than at the end of the year. These BiKs are reported to HMRC though Real Time Information (RTI), and remove the need for employers to submit forms P11D at the end of the year.

However, for company cars, HMRC still need employers to provide data regarding the cars and when draft legislation for voluntary payrolling was published for consultation in July 2015, HMRC advised that additional reporting requirements relating to car and car fuel benefit would be introduced for employers choosing to payroll car and car fuel benefit.

The changes to the PAYE Regulations being examined during the consultation period, set out what information employers will be required to report and how it will be submitted to HMRC.

Optional remuneration arrangements

Finance Act 2017 introduced legislation to remove the tax and employer NICs advantages of ‘optional remuneration arrangements’ (ORA) (commonly referred to as ‘salary sacrifice arrangements’). Broadly, An ORA is where an employee gives up cash pay in return for a benefit-in-kind (BiK), which was usually taxed on an amount lower than the pay given up, or left untaxed. The new legislation specifies that now, where a BiK is provided in conjunction with salary sacrifice, the taxable amount will be the greater of the BiK calculated under normal rules or the amount of salary sacrificed.

As the amount of the calculation will be different under ORA, the changes to the PAYE Regulations will clarify the taxable amounts that need to be reported either via Real Time Information, where employers are payrolling BiKs, or at the end of the year for non-payrolling employers.

Further details can be found online at https://www.gov.uk/government/consultations/draft-legislation-the-income-tax-pay-as-you-earn-regulations-2017. Comments on the draft legislation are invited by 28 November 2017.

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