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News Items – at 22nd April 2008
HMRC has published a brief statement, thanking those who responded to the consultation on the proposal to collect tax and NICs on benefits and expenses through the payroll and promising to give an update at the time of the Pre-Budget Report at the end of 2008.
Included in the matters for consultation was a proposal to scrap the £8,500 annual earnings rate threshold, above which tax is payable on the provision of most benefits. The responses to the consultation indicated that the removal of the threshold would have an adverse impact on low-paid employees and possibly the voluntary sector. As a result, the Government has decided already that the threshold will be retained and the proposal will be withdrawn.
Further information:
Summary of Responses: Benefits in kind and expenses payments through the payroll http://customs.hmrc.gov.uk/channelsPortalWebApp/
downloadFile?contentID=HMCE_PROD1_028544
Payroll deadlines during the next month
May 3 – This is the date by which any changes to the provision of company cars in the three months to April 5 must be reported using form P46(Car).
May 5 – This is the final day of tax month 1. Tax and NICs etc for payments made in the tax month to May 5 are due for payment to the Accounts Office by May 19, or by May 22 if paid electronically.
May 19 – For employers required to pay tax and NICs etc to the Accounts Office monthly, this is the deadline for payment to be received by the Accounts Office, unless made electronically.
May 19 – This is the deadline date for filing, in paper form or electronically,
- form P14 End of Year Summary
- form P35 Employer Annual Return
- form 38A Supplementary Return
May 22 – For employers required to pay tax and NICs to the Accounts Office monthly, this is the deadline for electronic payments to be cleared into the HMRC bank account. Payments through BACS must be initiated by May 20 at the latest.
May 26 – The date after which non-receipt by the HMRC of year-end returns P14s, P35 and P38A will automatically result in late-filing penalties.
May 31 – This is the deadline for issuing P60s to qualifying employees.
Payroll FAQ's
PAYE Records
Regulation 97 of the Income Tax (Pay As You Earn) Regulations 2003 requires “PAYE records”, other than those that have to be sent to HMRC, for a period of three years following the tax year to which they relate. Put another way, employers must keep the current year’s records, plus those for the previous three years.
What are PAYE records? They are defined as:
- all wages sheets, deductions working sheets, P46 forms for low-paid employees that were not sent to HMRC, and any other documents and records that relate to
- the calculation of employees’ income for PAYE purposes,
- any other relevant payments to employees, and
- the deduction of tax from such payments, e.g. P45s, coding notices, and
- all documents and records relating to any information which an employer is required to provide on forms P11D and P9D.
These definitions refer to paper records but, where the information from paper records is retained on computer instead of on paper, e.g. the figures needed to complete year-end P14s, P46 details, P38(S) details, the employer must ensure that the computer records are kept in such a way that an HMRC officer would be able to inspect them.
Similar provisions are to be found in the Regulations relating to NICs, statutory payments, national minimum wage, payments to subcontractors, gains on share options and student loan deductions. The three-year retention period applies, therefore, to all records that are created solely for PAYE and related purposes.
An employer’s PAYE records, including those of employers based abroad, must be available for inspection by HMRC at a location in the United Kingdom.
Employers that made payments of working tax credit to employees up to April 2006 should note that, after the responsibility for the payment of tax credits transferred in full to HMRC from that date, the three-year retention period continues to apply to the records of those payments.
However, some records that are relevant for PAYE and other payroll-related purposes are, strictly speaking, accounting records and, as a result, they must be retained for the periods defined for accounting records. Examples of such records would be expenses claims relating to business travel, business entertaining and staff entertaining. The Companies Act 2006, sections 386 to 389, requires public companies to keep accounting records for six years. This means, for corporation tax purposes, six years starting from the end of the company’s accounting period.
Although the retention period for most payroll records is three years, most employers keep such records for six years, to match the general retention period for accounting records.
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