In the April 2021 Employer Bulletin HMRC touched on the subjects of payrolling benefits and PAYE settlement agreements (PSAs) during COVID, amongst others. What do you need to know?
PSAs and COVID. If you have additional items to add to your PAYE settlement agreement (PSA) in respect of COVID-19, for example paying for taxis to get people to work so they can avoid public transport, you need to email HMRC at [email protected] to add them to your P626 PSA agreement.
Tax year 2020/21. Remember that the earlier year update is no longer a valid RTI submission for 2020/21 corrections. Instead, a year to date full payment submission (FPS) must be used. It should contain a payment date that is the same as, or later than, the final payment date previously submitted for the employee that you’re correcting.
Pro advice. If you’re correcting an employee’s NI contributions for 2020/21 and future years, such that they need a refund and they’re no longer working for you, submit the year to date FPS and then write to HMRC requesting that the refund be paid to the individual directly. You’ll need to include your name and PAYE scheme number, the name, date of birth and NI number of the affected employee, the tax year of the overpayment, how much is to be refunded, why the issue occurred and why you can’t make the refund.
Payrolling benefits. If you’re payrolling benefits for the first time in 2021/22 don’t forget that you must still provide P11Ds in respect of 2020/21 by 6 July 2021 and complete the P11D(b) to pay over the Class 1A NI. You can only payroll benefits if you have registered to do so before 6 April 2021 unless you have a good reason not to have been able to register, for example you were not providing the benefit before the start of the tax year. Payrolled benefits must be properly registered now; no informal arrangements are permissible for 2021/22.
Paper P11Ds and substitute listings. The Bulletin says HMRC considers paper P11Ds to be unacceptable, however the legislation allows for them to be submitted online or paper, so this is a rather strange instruction. Many employers offer a limited range of benefits in kind but have significant numbers to report, so use substitute listings rather than individual P11Ds and have done so for many years. The Bulletin also indicates that these can only now be permitted in exceptional circumstances, which is again not something that has ever been communicated before.
To add any COVID-19 related benefits to your PSA you need to email the details to HMRC and get its agreement. If payrolling benefits for the first time in 2021/22, you must still provide P11Ds in respect of 2020/21 by 6 July 2021.
The next step
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.