Draft Pay As You Earn (PAYE) Regulations in respect of Car Data Reporting Requirements and Reporting Taxable Amounts due under Optional Remuneration Arrangements have been published in a consultation.
Changes are required to the PAYE Regulations 2003 from April 2018 as a consequence of policy measures relating to Voluntary Payrolling and Optional Remuneration Arrangements.
In April 2016, legislation was introduced that allowed employers to tax most Benefits in Kind (BiK) through the payroll rather than at year end. By reporting BiK through Real Time Information the need to submit a P11D was removed. However, for company cars, HMRC still needs employers to provide certain data regarding the vehicles.
The changes to the PAYE Regulations set out what information employers who choose to payroll car and car fuel benefit are required to report and how it will be submitted to HMRC. The Income Tax (Pay As You Earn) (Amendment No 2) Draft Regulations 2017 set out what car and fuel data information is required.
In addition, this consultation also considers Optional Remuneration Arrangements. The Finance Act 2017 introduced legislation to remove the tax and employer NICs advantages of Optional Remuneration Arrangements, also known as salary sacrifice arrangements.
An Optional Remuneration Arrangement is where an employee gives up cash pay in return for a BiK which was usually taxed on an amount lower than the pay given up, or left untaxed.
The new legislation specifies that now, where a BiK is provided in conjunction with salary sacrifice, the taxable amount will be the greater of the BiK calculated under normal rules or the amount of salary sacrificed.
As the amount of the calculation will be different under Optional Remuneration Arrangements, the changes to the PAYE Regulations will clarify the taxable amounts that need to be reported either via Real Time Information, where employers are payrolling BiKs, or at year end. The Income Tax (Pay As You Earn) (Amendment No 3) Draft Regulations 2017 explain the new requirements.
