Get ready for end of year reporting
With the end of the fiscal year swiftly approaching, now is a good time for employers to prepare for their RTI end of year reporting.
The last Full Payment Submission (FPS) should be sent on or before your employees’ last payday for 2016/17 tax year. A ‘Yes’ should be put in the ‘Final submission for the year’ field in the employer’s payroll software. This tells HMRC that the employer has sent everything they expect to send for the year ending 5th April 2017, and HMRC can finalise their records for both employer and its employees.
Some commercial payroll software does not allow a ‘Yes’ indicator to be put on an FPS. In these cases, you should send your last FPS and then send an Employer Payment Summary (EPS) with the indicator ticked. You can also send an EPS with the indicator ticked if you forget to put the indicator on your last FPS, didn’t pay anyone in the final pay period of 2016/17 or you sent your final FPS early and didn’t pay anyone for one or more full tax months in the last tax year.
Forms P.60 must be given to employees by 31st May 2017.
Avoiding a penalty
The last FPS for 2016/17 must be sent no later than the last payday for your employee. This is the last day your employee was entitled to receive their pay or the day that you actually paid them if this was earlier.
If you are not going to pay anyone again this tax year, then remember to send an EPS with the indicator ticked to show you didn’t pay anyone in the final pay period and it’s the final submission. You have until 19th April to do this but you will get a reminder from HMRC’s Generic Notification Service if you file it after 11th April.
Check that you’ve put the correct pay date and pay frequency on your FPS. If you use the wrong day or the wrong frequency, you may get a penalty notice.
Correcting errors
Where you notice that you’ve made a mistake on an FPS, this can be corrected by sending another FPS up to 19th April.
Mistakes that are realised post 19th April must be corrected by using an Earlier Year Update (EYU). HMRC has produced a YouTube video that provides instructions on how and when to complete the EYU.
Reporting expenses and benefits
The deadline for reporting expenses and benefits-in-kind for 2016/17 is 6th July 2017. Failure to file forms P11D and P11D(b) by this date may result in an employer receiving late filing penalties.
Where you have payrolled expenses and benefits-in-kind, then you will need to send:
- A P11D for any benefits not payrolled
- A P11D(b) to tell HMRC about the Class 1A NIC due on all benefits (including the payrolled ones)
Employees must be given a letter telling them which benefits were payrolled and the amount of the benefit.
Employers wanting to avoid filing forms P11D in the future can do so by including employees’ expenses and benefits in their pay, ie payrolling, but need to inform HMRC before the start of the tax year for which they want to payroll. So, for 2017/18, you will need to register before 6th April 2017 using HMRC’s payrolling benefits and expenses online service.
Expenses Exemption
From 6th April 2016, an exemption was introduced for employer funded expenses and benefits, which an employee would otherwise be able to claim as being fully tax deductible. Employers no longer need to apply to HMRC for a PAYE dispensation in respect of such employment expenses and do not need to report them.
Employers should be able to demonstrate to HMRC that they are operating a system for checking that employees are, in fact, incurring and paying expenses at the point of reimbursement and that they have satisfied themselves that the expenses are not taxable.
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