By Ian Holloway, head of legislation and compliance at Cintra HR & Payroll Services
6 April 2017 marked the start of a tax year that sees more changes that I can ever remember.
We are more than used to the usual changes to tax and National Insurance bands, Student Loan thresholds and rates of SSP and SMP, etc. These are just something that happen at the start of every tax year and we take all of these in our stride. Besides, we have known about them for months, our software is updated and we are fully prepared.
The same cannot be said for Optional Remuneration Arrangements (OpRA), replacing salary sacrifice. Unless a grandfathering period exists, these rules are effective 6 April 2017 and require employers to ascertain whether they are providing a Type A or Type B OpRA and then make the taxable and NI’able benefit calculation accordingly. Finance (No.2) Bill 2017 was published on 20 March and provides all the necessary information. However, that will not / cannot be read by the vast majority of employers – and why should we have to digest technical information directly from legislation in the first place? However, HMRC published guidance on 20 March 2017 in the form of pages that will be inserted into their Employment Income Manual once the Bill receives Royal Assent (later in 2017). This is not easy to digest either.
Nevertheless, despite the fact that there is no easy-to-read guidance, the fact that the March bill differs from the draft bill in December and the fact that there are unanswered questions, employers will still be required to implement the new rules. If they can understand them, will they be able to amend their software and communicate with their employees in time? Of course not, and it is absurd to place this new administration burden on employers, advisers and service providers with the expectation that they will be compliant. Would HMRC be expected to implement something totally new and fundamentally different in the space of less than three weeks? They are still getting used to the collection and administration of data in real time!
I hold my hands up in awe to anyone that can fully understand and explain OpRA. I hold my hands up even higher if they are able to change software and communicate before the first payday in the new tax year. Plus, this is not just about making the right tax and National Insurance choices – it is also about amending employee contracts as well.
When it comes to significant changes, the profession needs more time to prepare. I foresee non-compliance all over the place through no fault of the employer at all. While it has been done before, the start of the new tax year is probably the time to make our concerns known to the co-chairs of the Employment and Payroll Group (EPG). After all, their raison d‘être is to focus on “high-level operational policy and process issues” and to “discuss issues or problems in administering payroll obligations or in relation to employment tax issues more generally”.
Posted on 7th April 2017 by Jerome Smail
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