Last week we explored the tax implications of paying interest to a director of an owner-managed company. We looked ahead to the reduction in the pension lifetime allowance from 6 April 2016, which may catch-out those who plan to retire shortly after that date. The reporting requirements for RTI are also changing for micro businesses on 6 April 2016.

This is an
extract from our topical tax tips newsletter dated 25 February 2016
(5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

RTI reporting 
HMRC believe that all employers should be familiar with the RTI reporting system now, so they are removing the relaxation for late filing of the FPS (full payment submission) by micro businesses. This was expected, but you may need to remind your clients about the detailed rules for reporting on or before the date of payment. 

Employers with fewer than 10 employees, who were registered for PAYE before 6 April 2014, are currently permitted to submit their FPS on or before the last payment date in the month, rather than on or before each day employees are paid in the month. Thus this relaxation only affects small employers who pay their employees more frequently than monthly. From 6 April 2016 those employers will have to submit an FPS for each payday in the month, on or before those payment dates. 

There are other RTI relaxations that continue after 6 April 2016 (see link below), including for casual employees such as harvest workers who are paid according to their efforts on the working day. If the FPS is submitted later than the payment day it’s important to include a code in the late reporting reason field. For the harvest workers this would be code F. 

The latest Employer Bulletin (no. 58) explains what the law determines to be the payment date for PAYE (ITEPA 2003 s 686 rules 1&2). This is the earlier of:
  • the time the payment is made; and
  • the time the employee becomes entitled to the payment.
This means that if the employee is paid later than the day they are entitled to be paid, the regular pay day should still be reported. Bank holidays that fall around the end of the month, such as Christmas and Easter, can mess-up payment dates. Page 3 of Employer Bulletin no. 58 includes a handy grid to determine the reportable payment date, when employees are paid just before or just after the Easter holiday. 

This is an
extract from our topical tax tips newsletter dated
25 February 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The
full newsletter contained links to related source material for this
story and the
other two topical, timely and commercial tax tips. We’ve been
publishing this newsletter weekly since 2007; it’s clearly written
and focused on precisely what accountants in general practice need to
know about each week.
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