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Self Assessment – Easy task or employee nightmare?

Self Assessment tax returns - how you can help your employees

Around 16% of the UK’s workforce are required to complete a Self Assessment tax return.

The deadline for the Paper Self Assessment Tax Return has now passed, which means that any outstanding returns must be completed on-line by 31 January 2012 to avoid penalty.

At this time of year employees who have to complete a Self Assessment tax return may panic – trying to gather the required information with which they will complete their Online Self Assessment to avoid severe penalties can be a daunting task.

You will probably notice an increase in the number of requests for copies of P60’s or P11D’s; important documents in this process as they contain vital information required to complete the Self Assessment.

So as an employer, what can you do to help your employees reduce their reporting burden, and ensure they have the right information at the right time, to complete their self assessment correctly and on time?

Reducing the reporting burden

Typically areas of unnecessary reporting will involve expenses and benefits paid or provided to an employee. But what do we mean by that?

The salary you pay your employees will be subject to PAYE legislation, however if you provide your employees with anything in addition to salary it may be regarded as an expense or benefit, and therefore attract a tax and national insurance liability. The rule of thumb basically is that anything received by an employee is subject to tax and national insurance until proven otherwise.

If we think about expenses incurred ‘wholly and exclusively’ in the line of business, you would probably question why these should be reported to HMRC at the end of the tax year. However, if your company does not have a dispensation in place which allows it to be exempt from reporting such expenses, then anything an employee receives of this nature would by law, have to be reported to HMRC on form P11D.

In other words, you as the employer would have to declare such expenses on the P11D, and the employee would have to declare them and apply for tax and national insurance relief through the self assessment process.

This same exercise may also apply to many other items you provide to your workforce such as long service awards or professional subscriptions.

External support in this area can help:

• Review and identify the full list of all the expenses and benefits you provide to your workforce during the course of their employment
• Determine which of these may be exempt from tax and national insurance under normal circumstances
• Prepare a dispensation application to HMRC, or
• Review a current dispensation against current company activity.

Find out how Ceridian can help you in this area by calling 0800 0482 737.