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HMRC have published their April 2018 Employer Bulletin – ‘your route to the latest in payroll news’...

View the HMRC Employer Bulletin here.

Here is a look at some of the articles that are covered – even if I do not mention it below, all of the Bulletin is worth reading:

Benefits and Expenses 2017/18

The new tax year has begun, though 2017/18 is not completed until the P11D and P11D (b) have been completed (if appropriate).  This section on pages 2 and 3 is worth a read and covers the following:

  • Reporting online which does not pre-populate the total amount liable to Class 1A National Insurance contributions
  • Links to the P11D (b) form and pointers to the Class 1A guidance in the CWG5.  Employers need to be aware of the form they should complete to tell HMRC there are no Class 1A NICs due
  • The Employer Bulletin is helpful when it talks about payroll of benefits and the need to manually adjust the P11D (b).  Further, where an employer has to make a Class 1A payment, there is information about the all-important ‘month 13’ Accounts Office reference number that needs to be used
  • There is plenty of information about correcting errors, however, possibly should have mentioned the Expenses and Benefits Toolkit for 2017/18 which focuses on preventing them in the first place.  Although, there is a link to the very useful A-Z guide

Late FPS Reporting

There is a section on late filing penalties and information to how to appeal these on pages 3 and 4.

Responsibly, the Employer Bulletin points to the ‘late reporting reason’ codes where the FPS is sent after the employee’s payday for one reason or another.  Even though there is a requirement to send the FPS on or before payday, HMRC’s systems recognise late filing by looking at the RTI field ‘Payment Date’.  Up until 05 April 2018, there was an easementfrom HMRC that said there would be no late filing penalty issued if the FPS was sent within 3 days of the Payment Date.  This is with the exception of persistent offenders.  The Employer Bulletin says nothing about this being extended into 2018/19 so I have asked HMRC this question.

Until we hear otherwise, make sure you file on or before the Payment Date and make sure you populate this field correctly.

Simplifying PAYE Settlement Agreements

The change to ‘reduce the burden for employers’ is not the revolution in simplification that it could have been.  My article of 14 February 2018 explains how 4 simplifications became 2 and now we are down to 1 from 06 April 2018 in the form of the enduring agreement.  This is, essentially, an ever-lasting PSA until circumstances change.  So:

  • HMRC will be sending the ‘How to get a PSA’ form P626 to employers who had a PSA in 2017/18 by the end of April 2018. One copy of this needs to be returned to HMRC and that is the first enduring agreement for tax year 2018/19
  • Employers that did not have a PSA for 2017/18 can make an application to HMRC’s Business Tax Operations PSA Team, as long as this is done by 06 July 2018. If accepted, this will form the basis of the PSA for 2017/18 and the enduring agreement for 2018/19 onwards
  • If circumstance change, see the ‘change or cancel a PSA’ guidance on Gov.UK for what to do

Have a look at the PAYE Settlement Agreements guidance on Gov.UK or the in-depth HMRC internal manual which tells you everything you could possibly want to know about PSAs.

Year-End Reporting

On pages 4 and 5, the Employer Bulletin gives two pieces of handy advice on the following subjects:

  1. RTI reporting and the Net of Foreign Tax Credit Relief Scheme
  2. RTI reporting via the Earlier Year Update

This is reminder guidance only.

Diesel cars in 2018/19

The diesel supplement has increased from 3% to 4% from 06 April 2018.  Except if the car meets the Real Driving Emissions 2 (RDE2) standard and the manufacturer has issued a Certificate of Conformity.  This is as per the UK Autumn Budget 2017 announcement.  There are unlikely to be many of these ‘cleaner diesel’ cars around until 2019/20, however, there may be some.  So, the impact of RDE2 is:

RDE2 and Certificate of Conformity

  • No diesel supplement at all
  • Use Fuel Type A ‘All other cars’ when reporting these diesel company cars on forms P11D and the P46 (Car)
  • Where payrolling car benefit, ensure that the diesel supplement is not applied when calculating the payrolled benefit and highlight as ‘A’ on the Full Payment Submission (RTI data item 177)

Other diesel cars

  • Supplement increases from 3% to 4%
  • Use Fuel Type D when reporting forms P11D or the P46 (Car) and in payroll systems when payrolling

Payments in Lieu of Notice (PILONs)

Compared to the guidance in the February Employer Bulletin, I am not sure that this section on pages 5 and 6 provides any more clarity on the change from PILONs to Post Employment Notice Pay (PENP) from 06 April 2018.  Although, it does contain links to the guidance in the Employment Income Manual.

I absolutely must complete my article on this complicated issue once I understand it myself!

This section also provides a useful reminder on the removal of Foreign Service relief.  Employees whose employment terminates on, or after, 06 April 2018 and receive a payment or benefit in connection with that termination will not be eligible for tax relief in respect of any period of foreign service undertaken as part of their office or employment if they are UK resident for the tax year in which their employment is terminated.  See ‘Termination payments: removal of foreign service relief’ for guidance on this.

Student Loans

There are three pieces of information in this section on page 7, though not really new information but worth repeating possibly:

  1. A reminder of the Plan 1 and Plan 2 thresholds for 2018/19. These should be ingrained in our heads by now, however, this part does stress the importance of employers ensuring that they are operating the correct Plan
  2. The Plan type will be declared to HMRC from 2018/19 – meaning that if we don’t get it right at the very start, HMRC will know as soon as we submit the FPS and we can expect
  3. A new Generic Notification Service (GNS) message. Essentially, this will add to the current one and be issued where HMRC believe the employer to be operating the incorrect Plan

As I said when the February Bulletin was published, this could have been a good place to say ‘the P45 format is not changing and employers are advised to ask new employees with a Student Loan which Plan type they have’.

Soft Drinks Industry Levy

This was also mentioned in the February 2018 Employer Bulletin and two months later I am still unsure as to how this is payroll-related!  Information is provided on page 8 if I have missed something here.

Employer-Supported Childcare

Page 9 headlines that ‘Childcare vouchers to remain open to new entrants for an additional 6 months’.  It is probably more correct to say that Employer Supported Childcare schemes did not close to new entrants on 06 April 2018 but will close on 04 October 2018.  By mentioning Employer Supported Childcare rather than just vouchers, this clarifies that this applied to employers that offer directly-contracted childcare as well.

04 October 2018 is set in legislation as the ‘relevant day’.  This means that the employee must have a contact of employment dated on or before 03 October 2018 to remain eligible for Employer Supported Childcare.  Further, they have to remain with this employer to maintain eligibility.  The exception to this would be if the employee moves with their work under a business transfer covered by the Transfer of Undertakings (Protection of Employment) rules.

The Bulletin gives links to the Childcare Choices ‘communications toolkit’ where the employer wants to communicate this information to their workforce.  I am very much one for communication and education, however, I wonder if a simpler message would be to point employees to the Childcare Choices Website itself.  This gives information about the Tax-Free Childcare scheme that replaces Employer Supported Childcare and information about free childcare – something that is being introduced alongside.  Everyone has to be very careful about free childcare, as this is a devolved responsibility and the scheme in England is not the same as the schemes that operates in Wales, Scotland and Northern Ireland.


Page 10 outlines the fact that the first ‘grandfathering’ period for the new Optional Remuneration Arrangements (OpRA) came to an end on 05 April 2018 – i.e. the end of the tax year 2017/18.  This affects the following schemes:

Type A

These are salary exchange arrangements where the employee gives up a present or future right to receive an amount of earnings in order to receive a benefit – for example, the employee gives up the right to salary in exchange for a benefit such as dental cover.

Type B

These are cash alternative arrangements, where the employee is given the option of receiving a benefit rather than an alternative increase in earnings – for example, an employee has the option of receiving a car allowance or a company car and decides to take the benefit.

In either type, the OpRA regime requires that the employee is taxable at the higher of:

  • The cash forgone (in the salary sacrifice / exchange), or
  • The taxable value, as per the normal way of calculating the benefit – though there have been modifications to this normal calculation for some benefits such as cars and accommodation

For contracts that were in place at 06 April 2017, the employer had to consider the trigger point for the new rules.  This is the earlier of the date that the contract changes / modifies / renews or one of two automatic trigger dates:

  1. 06 April 2018 for non-protected benefits
  2. 06 April 2021 for accommodation, non-ULEV cars and school fees where the arrangement started before 06 April 2017

There are three places that employers should go for guidance in HMRC’s Employment Income Manual:

  1. EIM44030 for guidance on optional remuneration arrangements from 6 April 2017
  2. EIM44030 for the transitional / grandfathering provisions above
  3. EIM44130 for the benefits that are excluded from the OpRA provisions, either because they are an excluded exemption or a special case exemption

Possibly the greatest impact will be felt by employees that have exchanged (sacrificed) for items that were exempt pre 06 April 2017 but now fall into the OpRA regime. This may be, for example, salary exchanges for workplace parking, health assessments or a mobile telephone.


I always say that HMRC’s bi-monthly Employer Bulletin is a must-read.  Also, the Agent Update is released around the same time as the Bulletin.  Update 65 contains, largely, the same payroll information but more on other taxes and information.  Even though it is targeted at agents, this does not prevent employers reading it.

UK payroll professionals are advised to get this delivered straight to their desks by signing up for E-Mail updates.  Gov.UK do seem to have improved their E-Mail updates (but there is a chance to improve this more by volunteering on page 9).

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