Year End Employer COMPLIANCE FILING OBLIGATIONS

Companies that have employees in the UK (irrespective of size) will likely need to comply with various annual employment/expatriate tax reporting and compliance obligations.  This article provides an overview of some of the common/key UK employment/expatriate annual reporting/filing obligations.  It is important to ensure that you as an employer are fully compliant with these requirements.

PAYE SETTLEMENT AGREEMENT (PSA)

A PSA is used by employers to report any benefits which are minor, irregular or items which are provided to employees on which it is impractical to operate PAYE.  Common examples of benefits normally included in the PSA include staff entertaining, staff gifts, working lunches, late night taxis etc. If you do not currently have a PSA in place, we would recommend undertaking a review to determine whether a PSA is required.  Please note, the deadline for entering into this agreement with HMRC 6 July following the end of the tax year.  We have developed Software to support employers with analysing their expenses data and further information can be found here.

FORMS P11D

Used to notify HMRC and employees of what non-cash benefits (e.g. medical, employee loans etc) have been provided in the tax year.  This is only required if you have not registered for HMRC to payroll your Company benefits or if benefits are provided which cannot be payrolled e.g. living accommodation and interest free loans.

FORM P11D(B)

Used to notify HMRC of the total amount of Class 1A National Insurance due on the non-cash benefits reported on Forms P11D.

EMPLOYMENT RELATED SECURITIES (ERS) REGISTRATION

All new and existing employment related securities plans must be registered online with HMRC before 6th July following the end of the relevant tax year.  Employment related securities consist of and is not limited to for example restricted securities, stock options loan notes etc.

ERS ONLINE FILING (PREVIOUSLY KNOWN AS THE FORM 42)

The deadline for completing the online ERS return and filing this with HMRC is 6 July after the end of the tax year  This return would include details of all employment related securities (granted/vested/exercised) to employees in the tax year.

APPENDIX 4 (SHORT TERM BUSINESS VISITORS) AGREEMENT

Where overseas employees spend time working in the UK on an ad hoc basis, strictly there is a requirement to operate UK PAYE from day one.  The main exception to this is where for example the individual is coming to the UK from a country with which the UK has double tax treaty and the treaty conditions are satisfied.   In this case there is no requirement ot operate UK PAYE provided the Company has entered into an Appendix 4 Short Term Business Visitors agreement with HMRC.  Under the terms of the agreement, employers will have to file an Appendix 4 return and submit this to HMRC by 31 May following the end of the relevant tax year.

Next Steps

Employers in the UK are facing increasing demands from HMRC in ensuring they are compliant from a UK employment and expatriate tax perspective.  As such, there are a number of processes/agreements which employers should look to have in place in order to ensure they are compliant as well as minimising the risk of any tax underpayments arising.  If you do not already have these agreements in place, we would recommend undertaking a review to determine whether these agreements should be entered into and suitable processes implemented.

If you would like further information on the above agreements or are not sure whether these are required, then please give us a call or send us an email and we would be pleased to provide any further clarification required.