What's in Store for Payroll in 2016?

Changes to payroll come into effect with the start of each new tax year. It's part of the reason why it's so important to have a good accountant who you know will stay on top of things.

This year, HMRC brought in a number of new initiatives on April 6th, and companies in Surrey and Hampshire need to know about these. Here are some of the most important changes to payroll this year, as well as some of the other important changes to know about.

Payrolling of Benefits

One of the biggest changes this year is the way that tax on benefits and expenses are dealt with because real-time collection has now come in.

Previously, employers reported benefits on the payroll on the P11D Form at the end of the year. Now the Payrolling Benefits in Kind (PBiK) service has come into effect, which is a new online system.

When payroll is processed at end of the week or month, all the payrolled expenses and benefits now have to be included in the Full Payment Submission. Employers had to register for the service before April 5th, so you may have already done this.

Employers can now payroll all benefits apart from credit cards, loans that are interest-free or low-interest, vouchers and living accommodation. For these, the P11D Form is still used.

However, you will want to find out whether all of your benefits can be payrolled. If they are not, this option could actually increase compliance because you will still have to submit P11Ds for benefits that are non-payrolled.

We will be happy to help you with this to ensure you don't have any extra work to do.

Self-Assessment of Expenses

Another change is that employers are now responsible for deciding whether expenses can be paid tax free. This is a good move for both employers and HMRC because it will lead to less admin. However, the type of expenses that are taxable and non-taxable have not changed.

Trivial Benefits Limit

There is also a new statutory benefits limit of £50. This was actually supposed to be introduced earlier, but it was delayed until this year. This is again a positive move because it provides more certainty for employers in what until now has been something of a grey area.

The New Living Wage

The other big change this year is that the minimum wage has been replaced. This happened on April 1st 2016, when the National Living Wage came into effect. This is essentially the same thing but under a new name. Now, for the over 25s the Living Wage is £7.20 an hour.

Keep Up with All the Changes

Employers must keep up with all the changes to payroll and any other changes to the tax system that are introduced. Because these can often be complicated, it can be a great idea to hire an experienced accountant to help you out with all of your payroll requirements, so just let us know if we can help.