You must continue to use a payment reference, even if HMRC has not sent you a confirmation letter. Fortunately, there is a payment reference in the HMRC letter that is attached to your counter-signed P626, the letter by which the agreement came into effect. Although it is not tax, it is unique to each employer and HMRC has therefore confirmed to us that it can be used in this situation. This is in format XX0000123456789. The value of the services provided should be taxed under the EPI at the marginal tax rates of each worker concerned. It is therefore important that tax rates for workers residing in each of the UK countries are also taken into account, as deceded governments (currently Scotland and Wales) are able to set the tax rates payable by taxpayers based in those countries. PAYE Billing Agreements (PAYA) are voluntary agreements that allow employers to pay taxes and social security contributions (NIC) on behalf of their employees. They are also useful when reporting benefits on P11D forms would be administratively binding. You can learn more about PAYE billing agreements on GOV.UK. They must submit an annual calculation of the income tax payable and the Class 1B NIC.
HMRC will verify the calculation and confirm the consent if the basic calculation appears to be correct. PAYA compensation agreements (PAYA) are often used by employers to maintain compliance with employee cost and social benefits procedures. By entering into this formal agreement, an employer can pay any tax due on expenses and benefits to workers through an annual submission and payment to the HMRC. To manage their resources, HMRC requests calculations that are submitted annually until a specified date that may differ by agreement, but which is usually July 31 or August 31. It is interesting to note, however, that there is no legal time limit for submitting calculations, so no penalty can be imposed for not presenting your calculation until that date. From April 2018, the annual process for renewing PPE contracts has been simplified, so employers are not required to agree to a PSA with HMRC each year if the categories remain the same. Under the agreement, the EPI will remain in place until the employer or HMRC terminates or amends it. Similarly, the exemption does not apply if, at the beginning of the agreement, an automatic transfer of ownership is based on you at the end of the rental period. Some elements of travel and living expenses paid to certain construction and related industries workers under labour rule agreements are paid tax-free under an agreement with HMRC. Not all allowances or portions of the certificates covered by this contract are listed on the P11D form and should not be included on your tax return.
If you don`t have a PSA agreement yet, our team of labour tax specialists can help you set up and contact HMRC to make sure the agreement contains everything you want to include now and in the future.