HM Revenue and Customs (HMRC) has published a consultation on proposed amendments to regulations that will allow employers to delay reporting advance salary payments made to an employee.
The proposed amendments will mean that employers can delay reporting these until the remainder of that salary instalment has been paid and certain conditions have been met. This change will impact employers that would otherwise have to report the advance and regular salary payment to HMRC separately, and give clarity on how to report these to employees.
The proposals are intended to simplify the process for employers which pay salary advances and give them a clear and consistent approach in reporting these to HMRC. In order to ease the administrative burden, under the proposed changes employers can delay reporting a salary advance to HMRC’s real time information (RTI) system until the payment of the remainder of that salary instalment, and will not need to submit extra reports.
The amendments are not intended to impact on other Pay-As-You-Earn (PAYE) or RTI processes and will also not apply where an employee’s normal payment interval is less than a week or more than a month.
As it stands, Regulation 67B and Schedule A1 of the Income Tax Pay As You Earn Regulations 2003 set out requirements for reporting relevant payments, including salary advances, to HMRC, with salary advances needing to be reported on or before the date they are paid. Meanwhile, regarding Class 1 national insurance contributions, a salary advance must be reported on or before the date it is paid under the Social Security (Contributions) Regulations 2001.
HMRC is seeking views on whether the amendments meet the stated policy aims, if they will cause any reporting or administrative difficulties, or any other consequences for employers and their agents, and whether organisations anticipate any necessary software changes.
HMRC has been contacted for comment prior to publication.