The new tax year has begun and the Global Payroll Association has provided information in previous newsletters about the rates and guidance that payroll professionals will need to process payrolls in 2019/20.
It is easy to forget that, for many employers, the 2018/19 tax year is not finished as there is still the process of P11D completion to go through. So we would like to comment on the latest Employer Bulletin from HMRC is respect of two points:
The Official Rate of Interest
Page 3 says that the official rate of interest for the tax year 2018/19 is confirmed at 2.5%. This is the rate that is used to calculate the value for beneficial loans or where living accommodation is provided.
There are two ways in which the value can be calculated:
- Using the actual official rate (already known as 2.5%), or
- The average official rate (confirmed now as 2.5%)
The Bulletin says that HMRC reviews the actual official rate of interest quarterly and it is subject to change. So if you provide beneficial loans or living accommodation to your employees and calculate via the actual official rate, look out for changes. The average official rate is always publicised at the end of the tax year.
Payrolling Benefits
Page 7 talks about benefits and expenses for 2018/19 and is worth looking at as it contains some links to guidance.
One of our members spotted something that requires explanation. Where an employer has payrolled benefits, the Bulletin says:
“Instead of giving your employees a P11D, you need to give them a letter explaining what you’ve payrolled”
This is true and detailed at “Tell your employees” on gov.uk. This says that employer must give payrolled benefits information to employees before the 1st of June after the end of the tax year. But this will only apply if the employer has not provided the information to the employee in another way, for example on the payslip.
In our experience, employers that are payrolling benefits are doing this to avoid producing the P11D or a substitute and are showing the amount on the payslip on a per pay period basis. Where this happens, the employee has already been provided with the necessary information by the 1st of June and there is no need for a separate statement.
The new tax year has begun and the Global Payroll Association has provided information in previous newsletters about the rates and guidance that payroll professionals will need to process payrolls in 2019/20.
It is easy to forget that, for many employers, the 2018/19 tax year is not finished as there is still the process of P11D completion to go through. So we would like to comment on the latest Employer Bulletin from HMRC is respect of two points:
The Official Rate of Interest
Page 3 says that the official rate of interest for the tax year 2018/19 is confirmed at 2.5%. This is the rate that is used to calculate the value for beneficial loans or where living accommodation is provided.
There are two ways in which the value can be calculated:
- Using the actual official rate (already known as 2.5%), or
- The average official rate (confirmed now as 2.5%)
The Bulletin says that HMRC reviews the actual official rate of interest quarterly and it is subject to change. So if you provide beneficial loans or living accommodation to your employees and calculate via the actual official rate, look out for changes. The average official rate is always publicised at the end of the tax year.
Payrolling Benefits
Page 7 talks about benefits and expenses for 2018/19 and is worth looking at as it contains some links to guidance.
One of our members spotted something that requires explanation. Where an employer has payrolled benefits, the Bulletin says:
“Instead of giving your employees a P11D, you need to give them a letter explaining what you’ve payrolled”
This is true and detailed at “Tell your employees” on gov.uk. This says that employer must give payrolled benefits information to employees before the 1st of June after the end of the tax year. But this will only apply if the employer has not provided the information to the employee in another way, for example on the payslip.
In our experience, employers that are payrolling benefits are doing this to avoid producing the P11D or a substitute and are showing the amount on the payslip on a per pay period basis. Where this happens, the employee has already been provided with the necessary information by the 1st of June and there is no need for a separate statement.