Employer Review. In this edition: Pensions update. Payroll update. Benefits and expense update. Spring 2018

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1 Spring 2018 Employer Review In this edition: Pensions update 1 Payroll update 1 Benefits and expense update 1 Reporting and compliance deadlines 2 Spotlight on 3 Other news 4 Pensions update From 6 April 2018, minimum pensions contributions under autoenrolment increased from 2% to 5% (of which at least 2% must be paid by the employer) and will increase to 8% from 6 April 2019 (of which at least 3% must be paid by the employer). Payroll update Termination payments Changes to the taxation of non-contractual payments in lieu of notice ( PILONs ) came into effect from 6 April All PILONs on, or after, 6 April 2018 are chargeable to income tax and Class 1 National Insurance Contributions ( NICs ), whether or not they are contractual payments. Foreign service relief on termination payments has been removed for UK residents from 6 April Employees whose employment terminated on, or after, 6 April 2018 and who receive a payment or benefit in connection with that termination will not be eligible for tax relief in respect of any period of foreign service undertaken as part of their office or employment. Benefits and expense update Payrolling benefits If you are registered with HM Revenue & Customs ( HMRC ) for the voluntary payrolling of benefits, the following action is required with regard to the 2017/18 tax year: You should have provided your employees with the following information before 1 June 2018: 1. Details of benefits that have been payrolled, for example, car fuel. 2. The cash equivalent of each benefit that has been payrolled. 3. Separate details of any benefits you have not payrolled. You can include this information on your employees pay slips or in a separate note or statement. HMRC recommends that whatever you do, you make it clear to your employees: 1. What benefits have been subject to PAYE tax. 2. How much of the value of each benefit you have collected and reported tax on. If the employees complete a self assessment tax return they ll need these details so they can report them to HMRC. You will still need to work out the Class 1A NICs on the cash equivalent and complete form P11D(b). The Class 1A NICs liability applies whether you re payrolling the benefits or they re reported to HMRC on form P11D. You must keep a record of cash equivalents for benefits you provide throughout the tax year so that you can accurately report and submit your P11D(b) and the associated Class 1A NICs payment. This must be done by 6 July after the end of the tax year. 1

2 If you are considering voluntary payrolling of benefits: You must register them with HMRC using the payrolling employees taxable benefits and expenses service. You must do this before the start of the tax year. For the 2019/20 tax year this must be done prior to 5 April If you miss the registration deadline, you cannot payroll benefits until the following tax year. However, if you have a valid reason, HMRC may agree that you can informally payroll, but you must still complete form P11D at the end of the tax year. Mark each P11D payrolled. This stops HMRC collecting tax that has already been deducted from your employees. PAYE Settlement Agreements As the deadline for agreeing the 2017/18 PAYE Settlement Agreements ( PSA ) is fast approaching, you should consider the items you wish to include in the PSA and submit the agreements to HMRC for approval by 6 July What are the benefits? The process for agreeing PSAs has changed. From 6 April 2018, PSAs will be agreed between the employer and HMRC and will remain in place for subsequent tax years unless varied or cancelled by the employer or HMRC. This means that employers will no longer have to renew their PSAs annually so long as this enduring agreement remains accurate. Reporting and compliance deadlines What you need to do: Voluntary payrolling of benefits Register for voluntary payrolling of benefits for 2018/19 tax year Payroll Send your final payroll report of the year When: By 5 April 2018 On or before your employees final payday of the year before 5 April 2018 Give your employees a P60 By 31 May 2018 Expenses and benefits Report employee expenses By 6 July 2018 and benefits PAYE Settlement Agreements ( PSAs ) Share schemes Report share scheme transactions and stock options Short term business visitors ( STBVs ) Apply for an agreement to relax PAYE for any overseas STBVs to the UK Ensure PSAs are in place by 6 July 2018, and calculations of tax and NIC due are agreed and paid by 19 October 2018 By 6 July 2018 Application should be made and approval received from HMRC before 5 April 2018 Submit required reports to HMRC with respect to any STBVs Report on STBVs working in the UK during the 2017/18 tax year to be provided to HMRC by 31 May

3 Spotlight on SAP Concur Every year SAP Concur celebrates and honours clients who have pushed the boundaries of travel and expense through their Annual Innovation Awards. This year Blick Rothenberg made it to the top 10 as a global finalist in the 2018 SAP Concur Innovation Awards. International business travel The employer compliance obligations associated with international business travellers continues to present challenges. One of the key challenges for employers is keeping track of where employees are working globally, especially those who work for short periods across multiple countries. How do you know when a tax charge or payroll obligation has been triggered as a result of a business traveller? At Blick Rothenberg, we have launched a new technology offering (the International Business Trips App) which, alongside our tax support, can really help employers in this area. International Business Trips App The International Business Trips App ( IBT App ) is an innovative technology solution to help manage the employer tax compliance and immigration issues created by international business travellers. Blick Rothenberg was acknowledged as a pioneer in the professional services marketplace by being the first accounting, tax and advisory firm to have successfully made SAP Concur Expense with SAP Business One available to their clients. This use of mobile technology complements the firm s strategy to offer expertise and integrated solutions to companies throughout their life cycle - from entrepreneurs and start-ups with one employee to large internationally listed firms with global operations. Simon Gleeson, partner at Blick Rothenberg said, Our goal from the outset was to give our clients access to leading innovative technology that helps to meet the needs of the modern mobile workforce, offering a rich experience for both employee and employer. Using SAP Concur removes administrative burdens and facilitates quicker, more frequent reimbursements of expenses. It also provides our clients with a simplified, compliant year end reporting process when combined with our own benefits reporting and employer solutions offering. It provides a simple, efficient and accurate way to track business travel and delivers alerts when key tax and immigration thresholds may be breached. The IBT App also enables HR, finance and payroll to access real-time reports on employee business travel globally. How does it work? Uses GPS (or manual entries depending on user preference) software to track the location of employees working internationally and sends the real-time data to an employer platform. Provides alerts by automatically reviewing employee travel data and then drawing on a comprehensive information store of all the key tax and immigration thresholds. Employer platform provides real-time information on where business travellers are working, alerts and historic business travel data. 3

4 The Government intend to ensure workers are being paid fairly by providing agency workers with a clear breakdown of who pays them, and any costs or charges deducted from their wages For more information on the IBT App, please click here. Workers are to get new day one rights with sick and holiday pay to be enforced for vulnerable workers for the first time. A new right to a pay slip for all workers, including casual and zero-hour workers. A right for all workers, not just zero-hour and agency, to request a more stable contract, providing more financial security for those on flexible contracts. Reforms will be introduced to ensure employment law and practices keep pace with modern ways of working created by rapid technological change. Other news The Good Work Plan Following the Taylor Report on UK working practices last year, the Government has now published its response, which it calls the Good Work Plan. There are potentially significant changes afoot for employers large and small. Over the coming weeks, we are reviewing the detail of the employment status consultation and will be providing further thoughts as to how this may impact employers. In the meantime, here is an overview of some of the key elements of the Good Work Plan: New rights for employees Under this plan the Government have announced that: The government will be accountable for good quality work as well as quantity of jobs - a key ambition of the UK s Industrial Strategy. Protection of existing rights The Government intends to further protect worker s rights by: Taking further action to ensure unpaid interns are not doing the job of a worker. Introducing a new naming scheme for employers who fail to pay employment tribunal awards. Quadrupling employment tribunal fines for employers showing malice, spite or gross oversight to 20,000 and considering increasing penalties for employers who have previously lost similar cases. 4

5 Consultation on enforcement of employment rights recommendations. Fair play In addition, the Government intend to ensure workers are being paid fairly by: Consultation on agency workers recommendations. Providing agency workers with a clear breakdown of who pays them, and any costs or charges deducted from their wages. Consultation on measures to increase transparency in the UK labour market. Consultation on employment status. Asking the Low Pay Commission to consider the impact of higher minimum wage rates for workers on zero-hour contracts. Whilst the Government have acted on almost all of the recommendations made by the Taylor report, they have however rejected the proposal to reduce the difference between the NICs of employees and the self-employed following the Budget 2016 and subsequently do not intend to revisit the issue. Considering repealing laws allowing agencies to employ workers on cheaper rates. Defining working time for flexible workers who find jobs through apps or online, so they know when they should be being paid. Blick Rothenberg s tax risk and dispute resolution specialists, along with our employment tax team have significant experience and expertise in this field, with a number of recent notable successes in favourably resolving employment status disputes on behalf of clients. Transparency We are well placed to help businesses test their existing employment engagement arrangements, and where appropriate, recommend remedial action. The Government are also looking to increase transparency in the working environment by: Launching a task force with business to promote awareness and take-up of the right to request flexible working introduced in Managed service companies Making sure new and expectant mothers know their workplace rights and raise awareness amongst employers of their obligations. Following a recent tribunal case which was won by HMRC (Christianuyi and others v HMRC) and the focus on the engagement of self-employed workers following the Taylor report, this is a timely reminder of the risks associated with using workers provided through a managed service company ( MSC ). Launching a new campaign to encourage more working parents to share childcare through Shared Parental Leave a right introduced in Government consultations A MSC is a form of intermediary company through which workers provide their services to end clients. The definition of a MSC in the legislation encompasses both composites and managed personal service companies. In order to implement the above changes, the Government are to launch the following consultations: In essence, a scheme provider promotes the use of these companies and provides the structure to workers. The worker, 5

6 despite being a shareholder (or partner), does not exercise control over the company. For a company to be considered a MSC please see the guidance here. Where a company is set up to provide a worker s services to an engager and the MSC legislation applies, amounts paid to a MSC for those services that are not already subject to PAYE income tax and Class 1 NICs (for example, share dividends), are treated as employment income. HMRC s firm view, now supported by the tribunal decision, has always been that these types of arrangements do not work. HMRC continues to open enquiries into users of such arrangements that include the provision of workers in many different industry sectors, including road haulage, healthcare and education and challenge these arrangements through every route open to it (including litigation) and seek full settlement of the tax due, plus interest and penalties where appropriate. If any part of the tax and NICs are irrecoverable, HMRC will transfer unpaid debts to others, including the service company s directors, the MSC provider and the MSC provider s directors and associates. All are jointly and severally liable for the debts. Blick Rothenberg In an increasingly globalised world, businesses and individuals face a wide range of tax challenges and opportunities. Blick Rothenberg is a market-leading accounting, tax and advisory practice that supports over 800 international businesses. Our specialist Employer Solutions team can help you and your employees manage tax, payroll, pension and policy issues and will work with you to find practical solutions to these complex areas. Blick Rothenberg was awarded the best International and Expatriate Tax Team at the 2015 Taxation Awards. Recognised as a mark of excellence within the sector, the awards were judged by a panel of leading professionals and officers of major tax institutions. In addition we were awarded Corporate INTL Magazine s Global Award for Cross Border Pensions Adviser of the Year in We have also been highly commended by the Chartered Institute of Payroll Professionals ( CIPP ) as being a leading firm in the provision of international payroll services. To view our Global mobility tax services brochure which highlights the services we offer, please click here. Mark Abbs Partner Lee Hamilton Partner Simon Gleeson Partner +44 (0) mark.abbs@blickrothenberg.com +44 (0) lee.hamilton@blickrothenberg.com +44 (0) simon.gleeson@blickrothenberg.com Blick Rothenberg 16 Great Queen Street Covent Garden London WC2B 5AH +44 (0) @blickrothenberg.com June Blick Rothenberg Limited. All rights reserved. While we have taken every care to ensure that the information in this publication is correct, it has been prepared for general information purposes only for clients and contacts of Blick Rothenberg and is not intended to amount to advice on which you should rely. Blick Rothenberg Audit LLP is authorised and regulated by the Financial Conduct Authority to carry on investment business and consumer credit related activity. 6 blickrothenberg.com