Self Assessment: Employers: Tips to help with Self Assessment

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Tips to help with Self Assessment

During consultations and testing, which have been a major part of the development of Self Assessment, many employers have made suggestions and asked for advice or tips on coping with the rules. One of the suggestions - from employers who took part in a test of the system - was that we should publish some tips for employers: so we have!

This information is probably most useful for staff running Payroll Offices for employers with quite large numbers of employees - but some of the material is relevant for any employer.

We hope that this information will:

  • help employers manage the changes which Self Assessment brought to their statutory obligations
  • help those employers who wish to help their employees with queries about the employment side of tax. There is no obligation on employers to support their employees in this way, but these tips may be useful for those who want to.

Quite a lot of the advice involves communication with employees, and we have produced a section on designing forms and guidance for employees.

Providing pay and tax details to employees

P45 and P160
P45s have four parts and P160s have two. Part 1A of each of these forms is for the employee to keep. When receiving a P45 from a new employee, make sure you hand back any Part 1A given to you with Parts 2 & 3 to avoid a later request for it.

P60
There is a deadline for supplying P60s to employees in post at 5 April. The deadline is 31 May. Remember, you do not have to prove that you have given them a P60. (The Inland Revenue will take a pragmatic approach to sorting out the very rare occasions where there may be a dispute.)

If you use your own design of the P60 you may be able to make design changes which make it easy for employees who get tax returns to identify the figures which they need to put on their return. The easier it is for them to recognise the information, the fewer enquiries they will raise with the Payroll Office. You might want to 'road test' prototype forms and guidance with some of your employees. And remember that substitute P60s have to be approved by the

HMRC Forms
New Wing
Somerset House
London WC2R 1LB

Telephone: 020 7438 4264

See 'Tips on the design and content of substitute forms and information for staff' for design and guidance tips which aim to help you produce information for employees which ties in with the Self Assessment tax return.

Duplicate pay and tax details

All employees must by law keep records, to help them fill in a tax return if they get one. For further information about keeping records see SA/BK 4 - Self Assessment - A general guide to keeping records

They need to keep them for about two years after the end of the tax year to which they apply. But employees often come to Payroll Offices for duplicate details. You may want to:

  • think about your policy on supplying duplicate pay and tax details. You should never provide a duplicate P45. If you are prepared to supply duplicate P45 and P60 details, this is best done in a letter
  • remind employees to keep their P60 by putting a message on the P60 and at other suitable opportunities
  • encourage them to keep payslips (especially the last one of the employment or the last one in the tax year) so if they lose their P45 or P60 they may still have the necessary information
  • use the 'Keep It' logo to make it easier for employees to identify what they need if they get a tax return. Click here to download the logo.

Providing expenses and benefits in kind details to HMRC and employees

Having all the required expenses and benefits information (including FPCS details) on one sheet of paper is best for employees. And doing this should save queries from employees who might otherwise wonder when they have received everything that's coming.

Computers can make this easy, although it might mean system and procedural changes - especially for employers who have offices on a number of sites.

Employers may find it most efficient to produce P11D details to HMRC and to employees in the same format. (Non-standard formats for providing P11D information to HMRC have to be agreed with the HMRC Office, so approach your Tax Office in good time if you want to change your format.)

If you use your own format for providing P11D details to employees, you may be able to incorporate design features which will help employees who get tax returns to identify the figures which they need for their return. The easier it is for them to recognise the information, the fewer enquiries they will raise with your Payroll Office. You might want to road test prototype forms and guidance with some of your employees.

For design and guidance tips on P11D information for employees see 'Tips on the design and content of substitute forms and information for staff'

Dispensations and PAYE Settlement Agreements (PSAs)

There is no obligation on employers to tell employees about Dispensations or PAYE Settlement Agreements (PSAs) which affect them. But if they don't, employees might not understand why something was not shown on their P11D details (or why they didn't get a P11D at all), and might raise a query with the Payroll Office.

There are mixed views about the best way to give the information to the employees involved. This seems to depend on what was included in the arrangement, which and how many employees received the item, etc. The main alternative suggestions have been:

  • publish (eg in the in-house magazine or in the staff manual) full details of the dispensation and PSA items, and give enough information so employees can identify which of the items apply to them
  • provide each member of staff with a private notice of the items which apply to them. This could be done:
  • with the P11D
  • on appointment/when the dispensation or PSA was first applied.

The need for good internal communications - Looking after the Payroll Office

Payroll Offices receive information from a number of sources, eg decentralised sites and individual employees. And they need to send it out to a variety of people, eg HMRC and employees. Good communications within the business is the key to success for the Payroll Office. For example:

  • make sure staff providing information from employer systems know what, when and how the details should be sent in and to whom. And make sure someone has clear responsibility for seeing this is done
  • make sure employees know what forms to use to supply information (eg for expenses claims or about business mileage), when they should be sent by, to whom and with what details
  • make sure the internal forms you use actually give you all the information you want. If you have a computer system, make sure your forms ask for information in a format that can easily be input to any computer system you have. If you are manually calculating the cash equivalent of benefits in kind, make sure the details on your form can be easily fed into HMRC's working sheets for calculating cash equivalents.

Many employers see it as a natural part of their role to answer some queries from employees about their tax affairs. But they generally want to minimise the call on the Payroll Section for this service. You may want to:

  • make sure employees know where to go for written guidance on the systems for dealing with expenses and benefits in kind. Does the staff manual have up-to-date and helpful information?
  • make sure employees know what questions the Payroll Office is prepared to answer and which they are not. Do they know what questions should be referred to other parts of the business, eg to Personnel?
  • encourage employees to telephone their HMRC Office; give them the telephone number and reference and tell them to have their National Insurance number handy. Reassure them that HMRC Office staff are there to help.

In order to reduce the number of enquiries to the Payroll Office, employers might also want to take the initiative and:

  • provide basic information to employees about Self Assessment and related changes. For example, information about record-keeping, and about what Self Assessment is and whether it is likely to apply to them.
  • tell employees when they will be getting forms and information from the Payroll Office, and where to go for guidance about how your internal systems work.

See 'Tips on the design and content of substitute forms and information for staff'.

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