The P60 deadline is behind us and employers’ attention is certainly focused on the upcoming P11D deadline for tax year 2017/18 (Friday 06 July 2018). So, I thought that I would gather all the necessary information into one place for the benefit of the profession...
Main changes for 2017/18
Optional Remuneration Arrangements (OpRA)
The Finance Act 2017 renamed and expanded the salary sacrifice regime into two types:
These are salary exchange (sacrifice) 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.
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.
In either case, though subject to ‘grandfathering periods’, the OpRA regime requires that the employee is taxable at the higher of:
- The cash forgone (in the salary sacrifice / exchange), or
- The cash equivalent, if offered, or
- The taxable value, as per the normal way of calculating the benefit – though there have been modifications to this normal calculation for cars, loans, non-cash vouchers, vans and accommodation
Cars and Vans
The appropriate percentages and scale charges always change from one tax year to the next and 2016/17 to 2017/18 is no exception. See:
- General Gov.UK guidance on cars
- Appropriate percentages (ready reckoner 2013 to 2020)
- Fuel and van benefit charges (‘rates and thresholds’ document 2017/18, supported by ‘travel’ document updated 06 April 2017)
- Car benefit and car fuel calculator (which is not applicable if the car is provided through an Optional Remuneration Arrangement (OpRA)
Assets made available to employees
here an asset is made available for private use but ownership is not transferred, Finance Act 2017 made changes to the calculation.
Employer-arranged pensions advice
From tax year 2017/18, the first £500 of advice on pensions (including general financial and tax issues relating to pensions) can be provided without a tax or NICs consideration. The exemption applies to pensions advice that is provided by the employer or where the employer pays for or reimburses the cost of advice. This advice must be incurred by, or in respect of, an employee, a former employee or a prospective employee.
For some benefits, it is possible for the employee to ‘make good’ some or all of the cash equivalent of the benefit, thereby reducing the value that is taxable on them (via the P11D or through payrolling). The impact on the employer is that it also reduces the value of the benefit on which Class 1A National Insurance (NICs) is payable.
From tax year 2017/18 onwards, an employee who wants to make good on a non-payrolledbenefit in kind will have to make the payment to their employer by 06 July following the end of the tax year, i.e. by 06 July 2018.
Note that the revised making good dates do not apply to benefits that have been payrolled and these remain:
This does not claim to be an exhaustive list of all of the expenses and benefits information that is available. However, it is certainly a good start:
- Gov.UK (basic guidance)
- Payrolling Benefits (basic guidance)
- A to Z of Benefits and Expenses
- PAYE Settlement Agreements (PSAs) (and remember the new regime for 2018/19)
- Advisory Fuel Rates
- 480 (Expenses and Benefits) – the ‘Bible’ and a must-read
- 490 (Employee travel)
- CWG5 (Class 1A NICs on benefits in kind)
- P11D Guide
If you want detailed guidance, try also HMRC’s internal Employment Income Manual – though I would recommend this after you have tried the above!
Forms and Working Sheets
These are the main forms:
- The P11D (pdf)
- P11D (online version)
- Working Sheet 1 (Accommodation)
- Working Sheet 2 (Car and car fuel)
- Working Sheet 2b (Car and car fuel via OpRA) – new for 2017/18
- Working Sheet 3 (Vans)
- Working Sheet 4 (Loans)
- Working Sheet 5 (Relocation expenses)
- Working Sheet 6 (Mileage allowance payments)
I hope that this information proves useful.