Employers sometimes pay benefits to their employees and want to pay tax on behalf of workers. A PAYE billing agreement (PAYA) is an annual voluntary agreement that allows them to do so. Not all items covered by an EPI should be reported on a staff member`s P11D form. They must submit an annual calculation of the income tax payable and the Class 1B NIC. HMRC will verify the calculation and confirm the consent if the basic calculation appears to be correct. From April 2018, the PSA process has become even simpler, as the PAYE settlement contract must only be requested once by the employer, and then operates year after year, until the employer or HMRC decides to terminate or modify it. Previously, the annual agreement had to be renewed every year, a process that could be repugnant to active businesses. If you don`t have a PSA agreement yet, our team of labour tax specialists can help you set up and contact HMRC to make sure the agreement contains everything you want to include now and in the future. An EPI can also help reduce employer management by removing and replacing the requirement to include certain taxable expenses/benefits in employeeS` P11Ds with an annual comparison of HMRC. For THMC experts, tax advice to businesses like this is daily. If you would like to know more or would like to discuss something accounting, call us on 0800 470 4820 or email us email@example.com.
If you do not have an PPE yet and miss this deadline, it is possible to make a voluntary disclosure and a tally of items that you would otherwise have included in an EPI. However, in certain circumstances, HMRC may impose penalties and collect interest on amounts paid in this way. The value of the services provided should be taxed under the EPI at the marginal tax rates of each worker concerned. It is therefore important that tax rates for workers residing in each of the UK countries are also taken into account, as deceded governments (currently Scotland and Wales) are able to set the tax rates payable by taxpayers based in those countries. An PPE is a great way to ensure compliance with HMRC regulations and simplify the calculation of the tax, but some employers will find that they simply do not have enough authorized expenses to include them in the agreement to be worth it. As these benefits and expenses were not deducted from tax at the time of payment, the amount of tax payable by agreement must be “taken care of”. Some examples help … If you do not have an PPE in place and miss the deadline to apply for an EPI, but still want to pay taxes in this way, you may be able to make an optional disclosure and billing with HMRC. However, you should be aware that, in certain circumstances, you must pay a fine. To manage their resources, HMRC requests calculations that are submitted annually until a specified date that may differ by agreement, but which is usually July 31 or August 31. It is interesting to note, however, that there is no legal time limit for submitting calculations, so no penalty can be imposed for not presenting your calculation until that date. PAYA compensation agreements (PAYA) are often used by employers to maintain compliance with employee cost and social benefits procedures.
By entering into this formal agreement, an employer can pay any tax due on expenses and benefits to workers through an annual submission and payment to the HMRC.