Employers Bulletin issue 17 - April 2004

Contents

Welcome

Welcome to the April issue of Employer's Bulletin.

I hope you enjoyed your Easter break despite payroll pressures.

By now most of you will be running your 2004-05 payroll. For those of you who are new to this (or perhaps a bit rusty) we have a checklist of things to help you get it right and so avoid unnecessary enquiries from us.

In his recent Budget the Chancellor announced a range of measures and we have set out the changes that might affect you. You can read more about them on the Inland Revenue website at Budget2004

The largest employers amongst you should now be geared up to pay electronically from May 2004.

All employers can take advantage of a later payment date if they adopt electronic payment methods. Our article tells you what you need to do.

At this time of year many of you are preparing to send in your P35s and P14s. There's still time to 'Do it online' if you want to. Enclosed with this Bulletin is a 'Do it online' supplement - Your online filing choices. Those of you who aren't sure whether the Internet or EDI will be better for your business, or whether engaging a payroll bureau or agent would be easiest all round, will find this information invaluable. We also remind you how you can use the Internet to send in forms during the year.

Over the coming months there will be a number of opportunities for you to come and talk to our experts about forthcoming changes. See our article with the details of the dates and venues of our EmployerTalk events.

I hope you find this issue useful. Our next issue will be with you in early October.

Don Macarthur
Employer Programme Director

Starting the tax year right?

Checking now that you've started the tax year right can save you a lot of headaches later on.

Have you used (from 6 April 2004):

  • the P9X - Tax codes from 6 April 2004 to change your employees' tax codes

and either

  • the tax and NICs calculators on the Employer's CD-ROM

or

  • the Taxable Pay Tables
    • the Calculator Tables (June 2003) or
    • Tables SR + B to D (June 2003)

and

  • the new National Insurance contributions Tables - the cover says 'start using from 6 April 2004'.

If you haven't updated tax codes, or you've used the wrong tables, you must make these changes now.

All of these forms and tables are available:

  • on the Employer's CD-ROM 2004

or

  • on the Inland Revenue website

or

  • from the Employer's Orderline.

If you need any help contact the Employers Helpline.

If you use payroll software, it's probably updated regularly but check your employees' codes are right.

From the first pay day after 17 May 2004 you will also need to make further changes to tax codes and tables arising from Budget 2004 (see Budget article). But make sure you make the changes shown aside before making any Budget

2004 changes, otherwise your employees may pay the wrong amount of tax.

National Minimum Wage changes

The national minimum wage will be increased from 1 October 2004. The main rate (for those aged 22 and above) will be £4.85 an hour. The development rate (for 18-21 year olds and trainees) will be £4.10 an hour.

National minimum wage for 16 and 17 year olds

A national minimum wage for 16 and 17 year olds will be introduced from 1 October 2004. The new rate will be £3.00 an hour. It applies for all 16 year olds who are no longer of compulsory school age, and 17 year olds.

Compulsory School age

  • In England and Wales: a person is no longer of compulsory school age after the last Friday of June of the school year in which their 16th birthday occurs.
  • In Scotland: pupils whose 16th birthday falls between 1 March and 30 September may not leave before the 31 May of that year. Pupils aged 16 on or between 1 October and the last day of February may not leave until the start of the Christmas holidays in that school year.
  • In Northern Ireland: a person is no longer of compulsory school age after the 30th June of the school year in which their 16th birthday occurs.

National minimum wage for Pieceworkers

Legislation comes into effect on 1 October 2004 affecting pieceworkers (also known as output workers, outworkers, and homeworkers).

It requires employers to pay pieceworkers:

  • the minimum wage for all hours worked or
  • under a system called "rated output work". Under this system the employer has determined the mean hourly output for each type of piece, and has given the worker written notice that they are entitled to be paid a fair piece rate, what the rate is, how it was calculated and the number of the minimum wage helpline.

For further information about any of these changes visit the DTI website or the Inland Revenue minimum wage helpline on 0845 6000 678.

Student employees and P38(S) forms

2003-04 will be the last year that you must send in any P38(S) forms with your P35 and P14s. So, after May this year don't send P38(S) forms to the Revenue, unless they relate to 2003-04 or an earlier tax year.

For the 2004-05 tax year (which began on 6 April 2004) and for the future, you should keep your P38(S) forms for 3 years after the end of the relevant tax year or longer if asked to by the Revenue. They may be required for inspection.

The latest version of the P38(S)(2004) has been revised to reflect this change and is available now from the Employer's Orderline.

P11D: type of fuel or power used

We have been asked to make it clear that the key letter shown in the P11D (Guide) refers to the car, not to the fuel in isolation.

The letter "L" is for diesel cars approved to the European Euro IV standard. Letter "D" is for diesel cars not approved to that standard.

Using a cleaner type of diesel fuel has no effect on the car benefit charge.

The Vehicle Contribution Agency website has a searchable database of currently available cars (including the Euro Standard to which the cars are approved).

 

Large employers must start paying electronically soon

From this May (2004) all large employers, that is those with 250 or more employees, must pay their monthly PAYE and National Insurance contributions, including deductions from payments to subcontractors and student loans electronically in full and on time.

We wrote to all large employers in early March telling them what this involves and what will happen if they do not pay electronically. So make sure you are geared up to make electronic payments from May.

Even if you have fewer than 250 employees, you can pay electronically if you want to. And if you do so, you can take advantage of the later electronic payment date of the 22nd of the month from May 2004.

To benefit from the later payment date, we must have cleared funds in our account by the 22nd. You will have to check with your bank to confirm the date you need to arrange payment to make sure cleared funds are with us by the 22nd. The funds will need to clear on the previous working day if the 22nd falls on a weekend or Bank Holiday.

The electronic payment methods you can use are:

  • BACS direct credit
  • telephone banking
  • bank or building society Internet service
  • BillPay (payment by debit card over the Internet)
  • CHAPS or
  • Paymaster.

If you have a payslip booklet you can also pay by:

  • Bank Giro, and
  • Alliance & Leicester Commercial Bank (used to be known as Girobank).

For more about how to pay electronically:

  • go to Payment of PAYE
  • see either the Do it online Guide or Handbook (see supplement for details)
  • call Accounting & Payments Service Cumbernauld (01236 783717) or Shipley (01274 539328).

Changes to Paternity and Adoption Pay

The new Pensions Bill, published 12 February, contains provisions that align the treatment of occupational pension contributions during paid paternity and adoption leave with the treatment of contributions during paid maternity leave.

Some minor technical changes have also been made to tidy up the Statutory Paternity Pay (SPP) and Statutory Adoption Pay (SAP) schemes. For example:

  • the payment schemes will be more closely aligned to ease administration, and the changes will ensure working parents benefit in the way the Government set out during consultation
  • the definition of 'partner' for SPP (adoption) has been brought into line with the 'partner' definition used for SPP (birth)
  • the increased rate of SPP will be payable for SPP pay weeks beginning on or after 4 April in the same way as increased rates of SMP and SAP.

More information about these changes and the provisions in the Pensions Bill can be found on the DTI website

E101 treatment and the new EU states

Workers in the European Union (EU) are entitled to E101 National Insurance (NI) arrangements and E128 Health care form treatment. From 1 May 2004 the existing E101 arrangements will be extended to workers:

  • going to the new EU States from the UK and
  • coming from the new EU States to the UK.

Workers leaving the UK to work in the new EU states will also be eligible for the E128 Health care form. The new countries joining the EU on 1 May are:

  • Cyprus
  • Lithuania
  • Czech Republic
  • Malta
  • Estonia
  • Poland
  • Hungary
  • Slovakia
  • Latvia
  • Slovenia

E101 treatment of NICs

The E101 is not UK specific - it applies across the EC. It keeps an employee insured (for NI purposes) in their home country when they are sent to work temporarily in another EU State. One condition of eligibility is that the employer must be based in the home country. A successful application means the employee continues paying NICs in his home country but does not also have to pay NICs in the country he is working in temporarily.

The E101 is valid for up to 12 months, and should be obtained before the employee is sent abroad. If you employ anyone from an EC State and they do not have an E101, operate NICs as you would for a normal UK employee.

If you need further information, or want to obtain an application form on behalf of your employee, you can:

Employees from abroad

In our last edition of Bulletin we said we were setting up specialist teams to deal with employees from abroad (inward expatriates). Their tax affairs need specialist attention because:

  • they may have complex and substantial remuneration packages
  • their employers may meet some or all of their tax liability
  • the tax and National Insurance at stake is relatively large or
  • decisions can sometimes depend on domestic legislation and on interpretation of treaties between countries.

We recently wrote to employers we identified as having these employees.

We may not have identified all concerned so we are inviting employers who think they may be affected to contact us (if you haven't already heard from us).

You should contact us if you:

  • are part of a multi-national group which may have overseas workers seconded or assigned to work in the UK or
  • have an overseas worker who also works for (or is paid by) a non-UK employer that is connected to you as the UK employer.

The specialist teams are organised regionally so your contact number depends on where your PAYE office is based:

Southern England 023 9285 8343
Wales and Central England 01978 297809
Northern Ireland & North West England 0161 261 3398
North East England 0191 490 3843
Scotland 0131 519 7194

New website launch

The Government will be formally launching a new website for businesses this May. It aims to help businesses find out about rules and regulations that they are affected by, and to direct them to help and support available.

The new website Business link has been built by a number of government departments working together, including the Small Business Service, Inland Revenue and Customs and Excise.

The website has been designed using extensive research of customer needs.

The new website:

  • gives quick access to important information and advice from a range of Government departments
  • is in plain, simple language
  • gives access to over 400 business guides, designed to give answers and tell businesses what actions they need to take
  • is easy to navigate with many topics available from the home page such as:
    • Starting up
    • Finance and grants
    • Tax & payroll
    • Employing people
    • Sales & marketing and so on
  • gives access to over 2,000 useful publications, forms and contacts including local Business Links operators
  • will have a number of useful tools:
    • a simple to use 'do I need to register for VAT' tool
    • a filter to decide which licences and permits are needed to do business
    • an integrated service to register for and access online filing for the Inland Revenue (PAYE, CT), Customs and Excise (VAT) and Companies House
    • a directory of online and national training opportunities and events
    • an email alert facility to keep people informed of changes and developments (via Help)
    • a database of around 2,400 government, private and voluntary sector support schemes (via Finance and grants).

Business link has many things you need to know to run your business. Take a look at it and use the feedback mechanism to let us know what you think.

Employers Diary

April 2004

  • April - Mid to End
    • You can still register for PAYE Online. If you've recently registered to use PAYE Online, keep an eye out for your user ID - you need to activate the service within 28 days
  • April 19
    • Cheque payments for month ended 5 April should reach the Accounts Office
    • Any outstanding 2003-04 PAYE and Class 1 NICs must reach your Accounts Office (Interest will be charged on any payments received after this date)

May 2004

  • May 3
    • Deadline for Forms P46(CAR) for quarter ended 5 April
  • May 9
    • Last chance to register to send in your P35 and P14s online - you'll be cutting it fine
  • May 19
    • Cheque payments for month ended 5 May should reach the Accounts Office
    • Deadline for your 2003-04 end of year forms P14 and P35 (penalties are chargeable if forms are received after this date and charged automatically for forms received after 26 May)
  • May 22
    • Electronic payments for month ended 5 May should reach the Inland Revenue bank account
  • May 31
    • Last date for giving a form P60 to each employee working for you at 5 April 2004

June 2004

  • June 19
    • Cheque payments for month ended 5 June should reach the Accounts Office
  • June 20
    • Register NOW to use PAYE Online to submit P11Ds
  • June 22
    • Electronic payments for month ended 5 June should reach the Inland Revenue bank account

July 2004

  • July 5
    • Last date for agreement of your PAYE Settlement Agreement for 2003-04 (if any)
  • July 6
    • Deadline for P11D(b), P9D and P11D for the tax year 2003-04
    • 2003-04 form P9D/P11D to be given to relevant employees
    • Deadline for return of Class 1A NICs (penalties will be charged on any P11D(b) returns not received by 19 July 2004)
  • July 19
    • Deadline for cheque payments for month/quarter ended 5 July
    • Payment of Class 1A NICs should reach the Accounts Office (please do not send payments to Class 1A Group in Longbenton for years 2000-01 onwards)
  • July 22
    • Electronic payments for month ended 5 July should reach the Inland Revenue bank account

August 2004

  • August 2
    • Deadline for forms P46(CAR) for quarter ended 5 July
  • August 19
    • Cheque payments for month ended 5 August should reach the Accounts Office
  • August 22
    • Electronic payments for month ended 5 August should reach the Inland Revenue bank account

September 2004

  • September 19
    • Cheque payments for month ended 5 September should reach the Accounts Office
  • September 22
    • Electronic payments for month ended 5 September should reach the Inland Revenue bank account

Online filing success

We've had huge Internet success in the last year:

  • the number of end of year returns you filed online has tripled and
  • you've sent us more than double the number of in-year online forms
    compared to the previous year.

You can find out more about end of year online filing in the article "Online filing" .

Clearly many employers recognise the benefits that PAYE Online for Employers offers throughout the year.

For example, when employees circumstances change our response times are much faster for statutory notices (Tax code changes, Collection of Student Loans, Tax Credits) and in most cases you should have a reply within days when you send a P45 or P46 online.

Find all the information you need to do it online on this website and select 'PAYE for employers'.

Employers not using software can use the Online Return and Forms - PAYE product on our website that enables you to send and receive a number of forms and returns over the Internet:

  • P35
  • P14
  • P38A
  • P12 (Domestic Schemes)
  • P37
  • P11D
  • P11D(b)
  • P9(D)
  • P46(Car)
  • WNU
  • P45(1)
  • P45(3)
  • and P46.

This automatically validates and calculates the information put on the forms and returns. If our product doesn't suit your needs check out PAYE Online for Employers: Internet software and forms for alternatives.

Improvements

As a result of work with employers and agents, and customer feedback we have recently improved our website:

  • easier access. A single entry point at the IR Portal means you only have one User ID and password per scheme (unless you run a Domestic scheme). And
  • you can register, enrol, activate, complete and view forms all in one place
  • you can start completing your forms before receipt of the Activation PIN
  • forms will be pre-populated with the employer data that you gave us when you registered to use PAYE Online for Employers - for example, your employer reference
  • you can now set up an employee list, so you don't have to repeat employee information for each form. Employee details only need to be entered once and will be reused on all relevant PAYE forms.

Check out Online Services: News Headlines for further information or future developments.

New for Agents and payroll bureaux

The new service has:

  • an improved registration process. You can now use the IR Online Services through one single, comprehensive customer entry point. We will also send you an email reminder if you've not activated the service within 28 days. If an agent registered on an employer's behalf the reminder will go to the agent.
  • a download facility to list authorised clients onto your own computer
  • facility to choose how you or your clients receive notifications from us (i.e.
  • you can choose to have coding notices by paper or online to your secure mailbox). Employers can also use this facility.
  • a client selection and sort facility. (Available when you log in at the IR Portal)
  • easier access to other services (i.e. Corporation Tax) and secure messages
  • a facility to request a new User ID and password online. Employers can use this facility too.

Online filing

Don't forget that if you are a large employer (250 or more employees) you must file your 2004-05 end of year returns (P35 and P14 data) using the Internet or Electronic Data Interchange by 19 May 2005. Magnetic Media or paper is no longer an acceptable format.

If you haven't started planning for online filing yet, now is the time to do so. You should either talk to your payroll software/service provider, or get in touch with us (see Support below).

Medium and small employers

Medium-sized employers (50 to 249 employees) must start filing online by 2006.

If you have fewer than 50 employees, you do not have to start filing online until later, but you can get £250 for filing your 2004-05 end of year return online.

All employers

In November we wrote to all UK employers saying that our records showed them as a small, medium or large employer. If you did not receive that letter please get in touch with your PAYE office.

All employers can find out more about their filing options by looking at the enclosed supplement - 'Your online filing choices' or by looking at 'Do it online - your guide to filing PAYE returns and paying electronically' which we sent out last November. This is also available at Do It Online: Your Guide to Filing PAYE Returns and Paying Electronically

We have also produced a detailed guide 'Do it online - Online filing and electronic payment handbook' which tells you more about the technical and practical issues, including filing large amounts of data online, sending data in parts, the Inland Revenue Payroll and Quality Standards and guidance for agents.

The Payroll Standard

All Payroll Standard accredited software will allow you to file your end of year returns using the Internet or by Electronic Data Interchange (EDI). Since April 2004 it also ensures that the P14 and P35 data will pass the relevant Quality Standard checks.

The Revenue developed the Payroll Standard to help employers identify payroll software suitable for their needs.

Software developers can apply to the Revenue to test their products and if the software correctly completes a number of tests it meets the Payroll Standard. These include calculation of tax, NIC, and statutory payments as well as other payroll functions.

Software developers can then display the Payroll Standard Accreditation logo on the marketing material associated with the product.

Accreditation lasts for 12 months so software developers have to apply annually.

We update the Payroll Standard periodically because software may need to reflect changes in legislation. The current version of the Payroll Standard is available at Online Services: Payroll Standard and Test Data

If you already use software, your supplier will be able to tell you if it is accredited. If you are looking for a new supplier you will find a list of accredited software products on our website at Online Services: Payroll Standard Accreditation Scheme

Alternatively, you can find out the accredited products by contacting the Payroll Accreditation process Helpline on 0845 915 9146. This helpline is mainly for software developers who have queries about whether their product will satisfy the Payroll Standard.

In the last issue of the Bulletin this number was incorrectly given as the Payroll Helpline. The Editor apologises to any employers who rang this number incorrectly and the staff on this helpline for any inconvenience caused.

The Quality Standard

The Quality Standard is a series of checks that an online return must satisfy before being accepted by the Revenue. It applies for the first time to the 2004-05 end of year returns (P35 and P14s) due by 19 May 2005.

The 2004-05 Quality Standard was amended and republished in July 2003.

If a return fails the Quality Standard it will be rejected with an error message explaining why.

Examples of what would cause the return to fail the Quality Standard include:

  • the Employer's name is missing
  • the Employer's PAYE reference is missing
  • the tax year is missing
  • the employee's surname is missing
  • an amount field shows a letter rather than a number.

If you use payroll software, talk to your software provider about whether your software will meet the Quality Standard.

If you do not use payroll software, you may wish to use a payroll specialist, like a bureau, to file online on your behalf. Look in the phone book under "payroll services".

This guide is on the enclosed Employer's CD-ROM 2004, and we are sending out a paper copy to everyone with 50 or more employees at the end of April.

Support

All employers (established and new) who want to take advantage of the benefits of online filing can attend a presentation on it. Check out Business Support Teams

If you are a new employer, our Business Support Teams can help you get your tax and National Insurance right from the start. They are located across the UK.

Shortly after you register as a new employer with us, we will contact you and to invite you to come along to our free workshop on 'Paying Your Employees'. This workshop also tells you about basic tax and NICs as well as the benefits of sending your PAYE returns online, and the practical issues involved.

Credit where credit's due

Between now and the end of September we will be finalising claimants' awards for 2003-04 and, as they renew, setting their initial awards for 2004-05 on the basis of actual income and circumstances in 2003-04.

If you were still paying Working Tax Credit at 5 April 2004, continue to pay it at the last rate that we told you. If we want you to stop paying or to amend the daily rate we will give you 42 days' notice, as normal.

Tax credits payments made from 6 April for 2004-05 are provisional and based on the claimant's 2003-04 award. Where these payments include an increase in Working Tax Credit from 6 April 2004, the Revenue will pay the amount of the increase direct in the vast majority of cases.

Where a claimant advises us of a change in personal circumstances after 6th April but before submitting a renewals claim, we may need to ask an employer to pay a different rate of Working Tax Credit before we are able to set the initial award for 2004-05. We will do this by issuing an amendment notice as normal. All claimants' provisional payments will be reviewed when they submit a renewals claim.

So, over the next few months we will send at least one stop or amendment notice for each employee that you pay Working Tax Credit to. In some cases you will correctly receive two amendment notices for the same employee, one relating to a change in personal circumstances and one relating to income.

If we send more than one amendment notice for the same employee with the same effective date, pay tax credits in line with the amendment notice with the highest issue number.

To find out more about the renewals process visit Working Tax Credits for up to date information.

Tax Credit Payment Via Employer (PVE) Notices

For new users of our PAYE Online Service we will now send you tax credits PVE notices to your secure mailbox. Existing users who want this service should contact the Online Services Helpdesk.

Improvements to PAYE Online for Employers also mean you can now return PVE rejections online too.

Tax credit funding

  • You can ask for any funding not used in 2003-04 to be carried forward to 2004-05. Please contact your Accounts Office (see phone numbers below).
  • Don't forget to renew your funding application if you need funding to continue in 2004-05.
  • If you have not received funding renewal form TC716, please contact your Accounts Office. You must return the form to us by 20 May 2004 to ensure that funding continues without a break.

If you have any questions about tax credit funding, call the NTC Employer Funding teams at your Accounts Office:

Cumbernauld 0845 602 3518
Shipley 0845 602 3516

Form TC703 (emergency stop notice)

From 6 April a revised version of form TC703 will be in use. We will use it as:

  • an emergency stop notice for employers who have already started paying Working Tax Credit to the employee named, or who have already set up the payroll to make a tax credits payment (and it is too late to stop it), or as
  • a cancellation notice where the employer has not yet started paying Working Tax Credit to the employee concerned i.e. in the 42 days between the issue of a start notice (form TC700) and the start date given.

The new TC703, however it is used, will only be issued as a follow-up confirmation of details already agreed between us (the Revenue and the employer) on the telephone.

P60s

Remember to provide a form P60 to all employees in employment at 5 April who have been receiving Working Tax Credit, whether or not they have earnings at or above the thresholds for tax and National Insurance contributions. You must provide P60s by 31 May.

If you need information about paying tax credits, see the 2004 edition of booklet E6, Working Tax Credit paid with wages, which is also available:

  • from the Employer's Orderline 0845 7 646 646.

For further help call the Employer Helpline on 0845 7 143 143 (textphone 0845 602 1380).

Budget: the key points

Income Tax Rates and Tax Codes

The rates of income tax and bandwidths for 2004-05 are:

Starting rate: 10% - up to £2020
Basic rate: 22% - £2021 to £31400
Higher rate: 40% - over £31400

As announced in the Pre-Budget Report, the National Insurance rates will not change from 6 April 2004, but the Lower Earnings Limit, Earnings Threshold and Upper Earnings Limit have all been raised.

The tax and NICs calculators on the Budget Employer's CDROM 2004 have been updated in line with these budget changes. Otherwise you should use the revised Taxable Pay Tables:

  • Calculator Tables (May 2004) or
  • Tables SR + B to D (May 2004)

from the first payday after 17 May 2004. Keep on using the new NICs tables - the cover says 'start using from 6 April 2004'.

If any of your employees' tax codes need to be amended as a result of the Budget changes, we will send you a form P6 (T) (either manually or online) for each employee. Make sure you use the P7X - Tax codes to be operated from 18 May 2004 to amend the tax codes at the right time. Remember these Budget changes are in addition to the tax code and tables changes that you should have made at 6 April 2004 (see Have you started the tax year right? article).

All of these forms and tables are available:

  • on the Budget Employer's CD-ROM 2004, and
  • on the Inland Revenue website and
  • from the Employer's Orderline.

Company Car Tax

The level of carbon dioxide (CO2) emissions to qualify for the minimum company car benefit petrol percentage of 15% (the lower threshold) for 2006-07 will remain at 140 grams per kilometre (g/km).

Company Car Fuel Benefit

The company car fuel benefit charge uses the same emissions-based percentage charge as the company car for which the free fuel is provided. For free fuel the company car tax percentage is applied against a set figure (the multiplier). In 2004-05 the multiplier is £14400.

Employer-Supported Childcare

New tax exemptions of up to £50 a week on employer-contracted childcare and employer-provided childcare vouchers will apply from April 2005. The legislation for the changes will be included in this year's Finance Bill.

Guidance will be published nearer the time.

Beneficial loans

Rate of interest for 2004-05

The official rate of interest for calculating the cash equivalent of beneficial loans to employees is set to remain at five percent for 2004-05. This official rate will continue to apply for the whole of the tax year unless there are any significant changes in mortgage rates.

Tax credits - future changes to payment method

The Chancellor announced that payment of Working Tax Credit by employers would be phased out and replaced by direct payment by the Inland Revenue. The Government will be consulting employers to ensure a smooth transition to direct payment for both employers and tax credits claimants.

The current arrangements will remain in place for the foreseeable future, so you should continue to pay Working Tax Credit through the payroll in line with any start, amendment or restart notices that we send you. See tax credits article.

Pension scheme earnings cap

The limit on the level of earnings that may be pensionable under Approved Pension schemes (the Pension scheme earnings cap) has been increased to £102,000 for 2004-05.

Pension Simplification: 6th April 2006

The operative date for Pensions Simplification has been moved from 6 April 2005 to 6 April 2006 because of concerns raised during the second consultation. Because of this delay, the lifetime allowance has been raised accordingly to £1.5m. Similarly, the annual allowance will be £215,000 on implementation.

Employer provided vans

The new rules for company vans are very far reaching and are expected to take most current van users out of charge.

Changes with effect from 6 April 2005 are:

  • a new basis of charge. It moves from availability for private use to the type of private use available, i.e. home to work use only or unlimited private use over evenings and weekends
  • a nil charge will apply where a van is provided mainly for business purposes and an employee takes the van home and has no other private use
  • where a van is available for unrestricted private use the existing £500 or £350 scale charge will apply dependent upon the age of the van
  • calculations for shared vans have been simplified and changed to a "just and reasonable" basis.

There is still no charge where a van is available for business use only.

Changes with effect from 6 April 2007 are:

  • the discount for older vans will be removed and the unrestricted private use charge will increase to £3000
  • a new charge of £500 will apply where the employer provides fuel for unrestricted private use.

The definition of a van remains unchanged. The interim arrangements introduced in Budget 2002 for double cab pick-ups have now been established as permanent practice. We will publish guidance on the new rules closer to the time.

Exemption for on-call emergency vehicles

The tax and National Insurance charge that arises when emergency service personnel have to take their emergency vehicles home when on call will be removed with effect from 6 April 2004. Legislation is being introduced to do this.

The tax and National Insurance rules on employee travel mean that if an employee is provided with a vehicle for such travel there will be a tax and National Insurance charge.

New rules will ensure that this does not apply where there is an operational requirement for members of the fire, ambulance and police services to take their emergency vehicles home. An example would be when they must take them home at night when on call so they can provide a rapid response to emergencies without having to go to their normal base.

The new rules apply where the vehicle is fitted out as an emergency vehicle and is only used privately when on call as part of the employee's normal duties.

Who says EmployerTalk is a major success? You do!

EmployerTalk is a chance to speak to IR experts face to face, and to listen to key speakers give IR's latest news and payroll developments.

You can do this in just one morning or afternoon at events across the UK.

People said:

The whole event was well thought through. Thank you for a thoroughly positive, helpful and friendly set of presentations Plymouth, 2003

I thought the show was excellent so hats off to all organisers London, 2004

Good balance of information and humour very important Harrogate, 2003

Travelled over 40 miles to get there but it was worth it! Chorley, 2003

By invitation only.

Events are free of charge but capacity is limited so book your place early.

See the information below for contact details for each event.

Thursday 20 May:

NEWPORT, Celtic Manor
Ted Wise 02920 326661
Helen Burr 01633 261673

Wednesday 9 June:

BELFAST, Ramada Hotel
Ian Patterson 02890 939754
Jackie Heron 02890 532476

Tuesday 6 July:

TONBRIDGE, The River Centre
Val Barclay 01622 760321
Darren Grimsted 01233 653695

Thursday 8 July:

NEWBURY Racecourse Conference and Event Centre
Andrew Russ 0118 901 1477
Steve Pimley 0118 9011383

Thursday 2 September:

GLASGOW Royal Concert Hall
Anne-Marie McNab 0131 4734096
June Reid 0131 4734187
Jim Doak 01355 275263

Tuesday 21 September:

EXETER University
Andy Pike 01392 280 706
Claire Weatherhogg 01392 280747
Allison Stacey 01626 208581

Thursday 7 October:

NOTTINGHAM, East Midlands Conference Centre
Deepa Girithananda 0115 9741365
Susan Birchnall 0115 9741390

Finding NINO

2003-04 will be the last year we will accept a temporary number in place of the NINO on the employer's end of year returns (due by 19 May 2004).

In all cases you should try to obtain a NINO, and include it on the P14.

But if you aren't able to obtain a NINO we will accept, for 2003-04, a temporary number in the format TN + date of birth + gender e.g.TN020363F. The gender letter can be upper or lower case (F or f, M or m).

But entries like this will be rejected for the employer's 2004-05 end of year returns (due by 19 May 2005) onwards. We will also not accept temporary references in the format: 2 numbers, 1 letter and 5 numbers (e.g. 63T12345) - even though there are occasions where we use them in correspondence to employers and employees.

If you have used either of these temporary number formats you will need to review your practices during the coming year.

If a NINO is missing for 2004-05

From April 2004 (i.e. for the returns due in May 2005) if you have not been able to identify an employee's NINO, the NINO box of the P14 should be left empty. The date of birth and gender boxes must be completed - this enables us to trace the person's NINO and match their tax and NIC paid to their records.

In those exceptional cases where by the year-end you cannot identify a NINO or obtain a date of birth you should leave the NINO box empty and use a default date of birth of 01/01/1901. If both fields are left empty the return will be rejected. Employer Compliance teams will consider this as part of their reviews and where they identify employees for whom NINOs are not held, employers will be advised of correct reporting procedures.

We suggest that to help reduce any rejections at the end of the year you run regular checks for any missing data in-year. Your payroll system supplier or agent may be able to help you with this by providing a standard report.

NINO Tracing service

We offer a NINO Tracing service for employers, which can be used by submitting CA 6855 trace form which can also be obtained from:

  • the Employer's CD-ROM
  • the Employer's Orderline on 0845 7 646 646,
  • an Inland Revenue office.

If you are unable to obtain a CA 6855 you can prepare a schedule clearly setting out the following:

  • employee's title
  • surname
  • first name
  • address
  • date of birth
  • gender
  • works/payroll number
  • date employment started
  • date employment ended (if applicable)
  • the Employers' PAYE reference.

You then send it to Inland Revenue, National Insurance Contributions Office, Additional Business Workstream, Room H3002, Benton Park View, Newcastle upon Tyne, NE98 1ZZ.

Unfortunately we do not have the facilities to accept or return the information to you in anything other than paper format.

Save time with a PSA

You may be able to save yourself work and your employees tax by applying to your Inland Revenue Office for a PAYE Settlement Agreement (PSA).

A PSA is an annual voluntary agreement between you and your local office under which you agree to:

  • pay the tax due on certain (grossed up) expenses and benefits in kind that you give to your employees
  • pay Class 1B National Insurance contributions (NICs) on those expenses and benefits in kind.

A PSA is a more flexible way of dealing with some expenses payments and benefits in kind. PSAs normally apply to items that are minor, irregular and impractical to apply PAYE to.

Once you have a signed PSA, you do not have to:

  • enter the items covered on P11Ds or P9Ds
  • operate PAYE on items covered
  • assess NICs liability for included items which are normally liable for Class 1 or Class 1A NICs for the year in question.

Your employees do not have to include PSA items on their Tax Return either as you have paid the tax on their behalf.

More about PSAs can be found in our guidance on PAYE Settlement Agreements, or by contacting your Inland Revenue office.

Hands-free mobile phone kits

There can be tax consequences when an employer provides a hands-free mobile phone kit to an employee.

If an employer provides a mobile phone to an employee but it remains the property of the employer, no tax charge arises. We treat hands-free kits in a similar way.

If an employer provides an employee with a hands-free mobile phone kit and:

  • pays for it to be fitted in the employees' own cars: no benefit accrues if the employer retains ownership. But if the employer buys the kit then passes ownership to the employee, a benefit may arise (depending on the terms of transfer). If the employee buys the kit and retains ownership but the employer reimburses the cost, the reimbursement is treated as earnings.
  • it is fitted in company cars: if an employer fits a hands-free mobile phone kit to a company car there are no benefit implications because mobile phones are not accessories for tax purposes. There are also no benefit implications where an employee buys the kit and fits it with the employer's permission. But, if the employer reimburses the cost of a kit of which the employee retains ownership, the reimbursement is again treated as earnings.

You can find more about this in EIM21781

Get in gear for end of year!

In our last edition of Bulletin (p19) we gave tips on how to complete your end of year returns (P35 and P14s). They are due by 19 May but you can send them in earlier.

If you've already filed your P35 and P14s the next task you face is to give us details of your employee's expenses and benefits. Forms P11D, P9D and P11D(b) are due by 6 July. You can file these online if you want to and there's still plenty of time to enrol for PAYE Online for Employers to do this.

Here are a few pointers to help you get your P11D right first time:

  • give the employee's correct National Insurance number
  • give the employer's correct PAYE tax reference
  • ensure that writing/printing can be read. When typing, check the font sizeused is not too small
  • if benefits are supplied in list format, clearly indicate the types of benefit provided to each individual employee. Make sure if an entry goes on to a second page it is clear which employee it relates to, and what benefit is given
  • identify Class 1A National Insurance items
  • submit a signed P11D(b) Return of Class 1A National Insurance Contributions

Section E - Mileage Allowance and passenger payments

  • Please only enter the amounts paid that are over the Revenue's approved rates - see the P11D Guide for the IR approved rates.

Section F - Car and Fuel Benefits

  • Enter the exact Make and Model of the vehicle supplied
  • Enter the Car's List Price and fuel type. See February's Bulletin (p17) about type of fuel/power used
  • If the Car was registered before January 1998, enter the cylinder capacity
  • If an employee has had two cars during the year the Cash Equivalent of the earlier vehicle must be completed in the appropriate field
  • Only complete this section to report information about cars made available by you to the employee for private use.

Section H - Beneficial Loans

  • If you have an entry under this section complete all applicable boxes.

Error Alert

The 2003-04 P11D has a mis-print at Section B.

You should report the tax on notional payments not borne by the employee within 90 days of receipt of each notional payment, not 30 days as shown on the form.

Contact numbers and online services

Calls may be monitored for quality control and training purposes

Helpline (telephone advice) and orderline (order your forms and guidance) numbers

Been an employer less than 3 years?

Helpline 0845 60 70 143
Mon-Fri 8am-8pm
Sat-Sun 8am-5pm

Been an employer more than 3 years?

Helpline 0845 7 143 143
Mon-Fri 8am-8pm
Sat-Sun 8am-5pm

Textphone 0845 602 1380 (for employers with hearing difficulties)
Orderline 0845 7 646 646 Mon-Fri 8am-8pm, Saturday 10am-1pm
Fax 0870 2 406 406 (Please use your Fax Order Form)
Website Employer's Orderline

Most of the forms you'll need can be downloaded from the Employer's CD-ROM

IR Online Services Helpdesk (including technical support for Employer's CD-ROM )

Helpline 0845 60 55 999
Mon-Fri 8am-10pm
Sat-Sun 10am-6pm
e-mail helpdesk@ir-efile.gov.uk

Payroll Standard

Helpline 0845 915 9146
Mon-Fri 9am-4pm

Stakeholder Pensions

Helpline 0845 7 143 143
Mon-Fri 8am-8pm
Sat-Sun 8am-5pm

If we are sending you too many packs, CD-ROMs or Bulletins, or you have changed address, please contact the Inland Revenue office that you normally deal with and let them know. Thank you.

Managing Editor: Don Macarthur

Editor: Jo Hegarty

If you want to send us any feedback about Employer's Bulletin please log on to Employer's bulletin questionnaire

e-mail: emporderline.ir@gtnet.gov.uk

Production: Inland Revenue, Business Services Forms, London

Bulletin is not comprehensive and has no legal force. It does not affect any right of appeal.

The Inland Revenue has a range of services for people with disabilities, including Braille, audio and large print. Contact your Inland Revenue office for details.

Accounts Offices:

Shipley 01274 530750
Cumbernauld 01236 736121

To find the number of your local Inland Revenue office, look in the phone book under 'Inland Revenue'.

Contractors

Helpline 0845 7 33 55 88
Mon-Fri 8am-8pm
Sat-Sun 8am-5pm
Orderline 0845 3000 551
7 days a week 8am-10pm

Sub contractors

Helpline 0845 3000 581
7 days a week 8am-8pm
Orderline 0845 3000 551
7 days a week 8am-10pm

National minimum wage (NMW)

Helpline 0845 6000 678
Mon-Fri 8am-6pm
Orderline 0845 845 0360
7 days a week 24 hours

NICs special topics

Contracted out Pensions

Helpline & Orderline 0845 9 150 150
Mon-Fri 8am-5pm

Non-residents

Helpline & Orderline 0845 9 154 811
Mon-Fri 8am-5pm

Employer services

Visit the Employer's Website

Here you will be able to access a wide variety of information for employers, and have access to the Internet version of the Employer's Orderline.

Do it Online

Your online filing choices - a pull out and keep handy guide (PDF 119K)

 

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