Posts Tagged ‘employees’

Expenses and benefits for employees

Tuesday, May 2nd, 2017

Until 2015-16, it was possible to apply for a dispensation to exclude certain expenses and benefits provided to employees from the year end returns to HMRC: primarily the submission of forms P11D. These dispensations ceased to be effective from 6 April 2016. From this date many of the expenses covered by dispensations were exempted from the benefits legislation. The sorts of expenses covered include:

  • business travel
  • business phone bills
  • business entertainment expenses
  • uniform and tools for work

To qualify for an exemption, employers must either be:

  • paying a flat rate to your employee as part of their earnings ­ this must be either a benchmark rate or a special (‘bespoke’) rate approved by HMRC, or
  • paying back the employee’s actual costs

Employers do not have to formally apply for exemption if they reimburse using HMRC’s benchmark rates for allowable expenses. You only need apply if you want to use your own rates as these rates will need to be agreed with HMRC. There must be systems in place to check the payments are as agreed with HMRC.

Filing deadlines:

The filing deadlines for P11D forms and associated returns are:

  • 6 July 2017 – file forms P11D
  • 6 July 2017 – give employees a copy of their P11D
  • 6 July 2017 – submit return of Class 1A NIC due on form P11D(b)
  • On or before 22 July 2017 (19 July 2017 if paying by cheque) – pay any Class 1A NICs due

There is a fixed penalty of £100 per 50 employees for each month or part of a month the P11D(b) return is late. There are also penalties and interest if your payments of Class 1A NICs are paid late.

Don’t forget that the earnings rate of £8,500 pa for a P11D to be required was abandoned from 6 April 2016 so that employees who previously needed a form PD9 will now need a P11D.

Beneficial loans to employees

Tuesday, May 2nd, 2017

In many cases, making loans to your employees or their relatives can create an obligation to report a beneficial loan to HMRC. The deemed benefit would be a taxable benefit in kind for the relevant employee, and would increase the employer’s Class 1A NIC bill at the end of the tax year.

However, certain loans are exempt from this reporting obligation. These may include loans employers provide:

  • in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee),
  • with a combined outstanding value to an employee of less than £10,000 throughout the whole tax year,
  • to an employee for a fixed and never changing period, and at a fixed and constant rate that was equal to or higher than HMRC’s official interest rate when the loan was taken out – the official rate for 2016-17 was 3%,
  • under identical terms and conditions to the general public as well (this mostly applies to commercial lenders),
  • that are ‘qualifying loans’, meaning all of the interest qualifies for tax relief,
  • using a director’s loan account as long as it’s not overdrawn at any time during the tax year.

Loans written off also create a National Insurance Class 1 charge. They must be reported on a P11D and the employer has an obligation to deduct and pay Class 1 NIC on the deemed value of the benefit.

Calculating the taxable benefits for chargeable loans can be somewhat complex and readers are advised to take advice if they are unsure of their tax and NIC responsibilities.

Non competition clauses under the microscope

Thursday, May 5th, 2016

Business Secretary, Sajid Javid, has announced plans to look into employment rules that could be stifling British entrepreneurship by preventing employees from starting up their own business after leaving a job.

In a move designed to back even more small businesses and entrepreneurs across the country, the government is launching a call for evidence asking for views on what are known as ‘non-compete clauses’ – which can be written into employment contracts and can prevent individuals from competing against their former employer or working for a competitor for a set period of time, sometimes up to 9 months after leaving a firm.

The clauses are only enforceable in a court of law if it protects a legitimate interest and is reasonable. However, there have been suggestions that they can hinder start-ups from hiring the best and brightest talent, so the government is asking for views from individuals and employers on whether this type of practice is acting as a barrier to innovation and employment.

The move is the latest by the government to deliver on its pledge to make Britain the best place in Europe to innovate and start up a new business, with an Innovation Plan, setting out how the government can help make the UK a better place to turn ideas into new products and technologies, due to be published later this year.

The plan will look at a range of key areas, including how better regulation can drive innovation and opportunities to use the millions of pounds spent on public procurement every year to support new and exciting businesses. And today, UK businesses are being asked to give their ideas to feed into the new government Innovation Plan launched online today.

The government is asking businesses and entrepreneurs to give their views on whether clauses that prevent an individual from competing against their former employer are stifling opportunities to innovate and grow.

Known as non-compete clauses, these are provisions in a contract that prevent an individual from competing against their former employer and can include restrictions on individuals approaching former clients or working for a competitor for a set period of time, sometimes up to 9 months, after leaving a company.

Due to be launched shortly, the call for evidence will look for views from individuals and employers on whether this type of restrictive practice is acting as a barrier to innovation and employment and preventing British start-ups from prospering.

Companies to be liable for employees who facilitate tax cheating

Thursday, April 28th, 2016

The UK will bring forward plans to introduce a criminal offence for corporations who fail to stop their staff facilitating tax evasion, the Prime Minister has announced in a statement to the Commons, ahead of next month’s summit to tackle corruption in all its forms.

For the first time, companies will be held criminally liable if they fail to stop their employees from facilitating tax evasion. At the March 2015 Budget the Chancellor said the government would be delivering on its pledge to introduce the measure in this Parliament. The Prime Minister has confirmed that the offence will be introduced in legislation this year.

The move is part of the government’s efforts to clamp down on corruption in all walks of life. The government has already confirmed plans to create a cross-agency taskforce to investigate all evidence of illegality that has emerged from the so-called ‘Panama Papers’.

Prime Minister David Cameron said:

This government has done more than any other to take action against corruption in all its forms, but we will go further.

That is why we will legislate this year to hold companies who fail to stop their employees facilitating tax evasion criminally liable.

On 12 May, the Prime Minister will host the London Anti-Corruption Summit aimed at stepping up global action to expose, punish and drive out corruption in all walks of life.

The summit will seek to galvanise a global response to tackle corruption. As well as agreeing a package of actions to tackle corruption across the board, it will deal with issues including corporate secrecy, government transparency, the enforcement of international anti-corruption laws and the strengthening of international institutions.

It will be the first summit of its kind, bringing together world leaders, business and civil society to agree a package of practical steps to:

  • expose corruption so there is nowhere to hide
  • punish the perpetrators and support those affected by corruption
  • drive out the culture of corruption wherever it exists

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