Draft amendments to PAYE regulations (UK).
16th November 2017.
Changes to the ways in which employers are required to report benefits in kind from 6 April 2018 relating to i) car and fuel data and ii) optional remuneration arrangements are set out in separate documents amending the ‘pay as you earn’ regulations.
Legislation allowing employers to opt to tax most benefits in kind (BiKs) through their payrolls via Real time Information instead of by submitting Form P11D at the end of the year was introduced in April 2016.
Employers were informed at the consultation stage of this legislation that additional reporting requirements would be introduced for employers choosing to payroll car and fuel benefit. ‘The Income Tax (Pay As You Earn) (Amendment No. 2) Draft Regulations 2017- Car data reporting’ sets out what information is required and how it should be submitted to HM Revenue & Customs.
Legislation was introduced in the Finance Act 2017 to remove the tax and employer NICs advantages of Optional Remuneration Arrangements (ORAs) – which are also known as Salary Sacrifice Arrangements and involve employees giving up cash pay in return for BiKs that are usually taxed on an amount lower than the pay given up or left untaxed.
The new legislation requires that where a BiK is provided in conjunction with salary sacrifice, the taxable amount will be the greater between the BiK calculated under normal rules and the amount of salary sacrificed. ‘The Income Tax (Pay As You Earn) (Amendment No. 3) Draft Regulations 2017 – Optional Remuneration Arrangements’ clarifies the taxable amounts that need to be reported.
‘Draft legislation: The Income Tax (Pay As You Earn) Regulations 2017’ links to an explanatory memorandum covering both regulations.
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