B2: PAYE Returns

Obligation to submit real time information

"(1) Subject to paragraph (1A), on or before making a relevant payment to an employee, a Real Time Information employer must deliver to HMRC the information specified in Schedule A1 in accordance with this regulation unless the employer is not required by regulation 66 (deductions working sheets) to maintain a deductions working sheet for any employees." (SI 2003/2682, r.67B)

Must be included in return

"(2) The information must be included in a return.

(3) Subject to paragraph (4), if relevant payments are made to more than one employee at the same time, the return under paragraph (2) must include the information required by Schedule A1 in respect of each employee to whom a relevant payment is made at that time.

(4) If relevant payments are made to more than one employee at the same time but the employer operates more than one payroll, the employer must make a return in respect of each payroll." (SI 2003/2682, r.67B)

Obligation to submit real time information

- Not required to maintain deduction working sheets

"(1) This regulation applies if an employer makes a relevant payment to an employee in respect of whom the employer is not required by regulation 66 (deductions working sheets) to maintain a deductions working sheet.

(2) The employer need not deliver the information required by regulation 67B(1) on or before making the payment.

(3) The employer must deliver that information no later than the end of the period of 7 days starting with the day following the day on which the payment is made." (SI 2003/2682, r.67BA)

Include in return for any other relevant payment

"Where regulation 67BA or 67BB applies, the information required by regulation 67B(1) in respect of the relevant payment may be included in a return with the information for any other relevant payment." (SI 2003/2682, r.67BC)

- Not required to maintain deduction working sheets

- Not reasonably practicable for employer to calculate payment due before completion of work

"(1) This regulation applies if an employer makes a payment to an employee and all of the circumstances in paragraph (2) apply.

(2) The circumstances are that—

(a) the payment includes an amount which is a relevant payment for work undertaken by the employee on—

(i) the day the payment is made, or

(ii) provided that the payment is made before the employee leaves the place of work at the end of the employee's period of work, the day before the payment is made,

(b) in respect of the work mentioned in sub-paragraph (a), it was not reasonably practicable for the employer to calculate the payment due before the completion of the work, and

(c) it is not reasonably practicable for the employer to deliver the information required by regulation 67B(1) on making the payment.

(3) The employer need not deliver the information required by regulation 67B(1) on or before making the payment.

(4) The employer must deliver that information no later than the end of the period of 7 days starting with the day following the day on which the payment is made." (SI 2003/2682 r.67BB)

Include in return for any other relevant payment

- Not reasonably practicable for employer to calculate payment due before completion of work

- Unable to comply in respect of notional payments

"(1) This regulation applies if an employer makes a relevant payment which is a notional payment (including a notional payment arising by virtue of a retrospective tax provision) to an employee.

(2) If the employer is unable to comply with the requirements in regulation 67B(1) to deliver the information required by that regulation on or before making the relevant payment, the employer must instead deliver the information as soon as reasonably practicable after the payment is made and in any event no later than 14 days after the end of the tax month in which the payment is made." (SI 2003/2682, r.67C)

- Unable to comply in respect of notional payments

Return must be submitted electronically

"(5) The return is to be made using an approved method of electronic communications." (SI 2003/2682, r.67B)

Paper return not valid

“It seems to us that, notwithstanding the possible redundancy of the penalty provisions in Regulation 210, a paper return is not a valid return for the purposes of Regulation 73. Accordingly, the penalty provisions in Section 98A are engaged where an employer who is obliged to file electronically instead submits a paper return, unless there is a reasonable excuse for the failure. Although this tribunal expressed a contrary view in Waring Investments we note that the view which we have adopted is consistent with the decisions of the tribunal in Chi International Ltd v Revenue & Customs [2011] UKFTT 730 (TC) and JN Dimensions Ltd & Anor v Revenue & Customs [2011] UKFTT 653 (TC).” (Mike Hyanes Ltd v. HMRC [2014] UKFTT 279 (TC), §30, Judge Brannan).

Return must be submitted electronically

- Exception on religious grounds

"(1) This regulation applies to—

(a) an individual who is a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications,

(b) a partnership, if all the partners fall within sub-paragraph (a),

(d) a care and support employer, and

(e) an employer to whom a direction has been given under paragraph (11),

but this is subject to paragraph (2B).

(2) A Real Time Information employer to whom this regulation applies may proceed in accordance this regulation instead of regulation 67B." (SI 2003/2682, r.67D)

Company

"(9) In paragraph (1)(c), “company” means a body corporate or unincorporated association but does not include a partnership." (SI 2003/2682, r.67D)

- Exception on religious grounds

- Exception for care and support employers

"(1) This regulation applies to—

[...]

(d) a care and support employer, and

[...]

(2) A Real Time Information employer to whom this regulation applies may proceed in accordance this regulation instead of regulation 67B." (SI 2003/2682, r.67D)

Care and support employer

(10) In paragraph (1)(d), “a care and support employer” means an individual (“the employer”) who employs a person to provide domestic or personal services at or from the employer's home where—

(a) the services are provided to the employer or a member of the employer's family,

(b) the recipient of the services has a physical or mental disability, or is elderly or infirm, and

(c) it is the employer who delivers the return (and not some other person on the employer's behalf)." (SI 2003/2682, r.67D)

- Exception for care and support employers

- Exception where HMRC satisfied not not reasonably practicable

"(1) This regulation applies to—

[...]

(e) an employer to whom a direction has been given under paragraph (11),

but this is subject to paragraph (2B).

(2) A Real Time Information employer to whom this regulation applies may proceed in accordance this regulation instead of regulation 67B.

[...]

(11) Where the Commissioners for Her Majesty's Revenue and Customs are satisfied that—

(a) it is not reasonably practicable for an employer to make a return using an approved method of electronic communication, and

(b) it is the employer who delivers the return (and not some other person on the employer's behalf)

they may make a direction specifying that the employer is not required to make a return using an approved method of electronic communication." (SI 2003/2682, r.67D)

- Exception where HMRC satisfied not not reasonably practicable

- Where exception applies: return for each quarter within 14 days

"(3) On and after 6th April 2014, a Real Time Information employer must deliver to HMRC the information specified in Schedule A1 in respect of each employee to whom relevant payments are made in a tax quarter unless the employer is not required by regulation 66 (deductions working sheets) to maintain a deductions working sheet for any employees and, for the purposes of this regulation, references in Schedule A1 to a relevant payment shall be read as if they were references to all the relevant payments made to the employee in the tax quarter.

(4) The information must be included in a return.

(5) The return required under paragraph (4) must be delivered within 14 days after the end of the tax quarter the return relates to.

(6) If relevant payments have been made to more than one employee in the tax quarter, the return under paragraph (4) must include the information required by Schedule A1 in respect of each employee to whom a relevant payment has been made." (SI 2003/2682, r.67D)

- Where exception applies: return for each quarter within 14 days

Requirement to correct where employer becomes aware of inaccuracy

"(1) This regulation applies where there is an inaccuracy in a return made under regulation 67B (real time returns of information about relevant payments) or 67D (exceptions to regulation 67B), whether careless or deliberate, and paragraph (2), (3) or (4) applies.

(2) This paragraph applies where the inaccuracy relates to the information given in the return in respect of an employee under paragraph 16, 16A or 17 of Schedule A1 (real time returns).

(3) This paragraph applies where the inaccuracy was the omission of details of a relevant payment to an employee.

(4) This paragraph applies where the inaccuracy arises because, as a result of a retrospective tax provision, the total amount of the relevant payments made by an employer to an employee increases for any tax year in which the employer was a Real Time Information employer." (SI 2003/2682, r.67E)

Correct in next return for tax year in question

"(5) Where an employer becomes aware of an inaccuracy in a return submitted under regulation 67B or 67D, the employer must provide the correct information in the next return for the tax year in question." (SI 2003/2682, r.67E)

Supplemental return if not corrected before 20 April after end of tax year

"(6) But if the information has not been corrected before 20th April following the end of the tax year in question, the employer must make a return under this paragraph." (SI 2003/2682, r.67E)

Content and submissions of supplemental return

"(7) A return under paragraph (6)—

(a) must include the following—

(i) the information specified in paragraphs 2 to 4, 8 to 13, 15 and 22A of Schedule A1,

(ii) …

(iii) if the return relates to the tax year 2017-18 or to an earlier tax year, the value of the adjustment to the information given under paragraphs 16, 16A or 17 of Schedule A1 in the final return under regulation 67B or 67D containing information in respect of the employee in the tax year in question,

(iiia) if the return relates to the tax year 2020-21 or a subsequent tax year, the amount which should have been given under paragraphs 16, 16A or 17 of Schedule A1 in the final return under regulation 67B or 67D containing information in respect of the employee in the tax year in question,

(iiib) if the return relates to the tax year 2018-19 or 2019-20—

(aa) the value of the adjustment to the information given under, or

(bb) the amount which should have been given under,

paragraphs 16, 16A or 17 of Schedule A1 in the final return under regulation 67B or 67D containing information in respect of the employee in the tax year in question,

(iv) the tax code used by the employer in respect of the employee in the tax year in question and,]2

(v) if paragraph (8) applies, the information specified in paragraphs 36 to 43 of Schedule A1,

(b) must be made as soon as reasonably practicable after the employer becomes aware of the inaccuracy, and

(8) This paragraph applies if—

(a) the inaccuracy is within paragraph (3),

(b) the relevant payment was the first relevant payment to the employee in the employment, and

(9) In the application of paragraphs (6) and (7) to cases within paragraph (3), if no information was given in any returns under regulation 67B or 67D in respect of the employee in the tax year, the value of the adjustments required by paragraph (7)(a)(iii) or (iiib) must be calculated as if there was a final return containing information for the employee in the year and the figure requiring adjustment was zero." (SI 2003/2682, r.67E)

Exception to requirement to submit electronically

"(10) Paragraph (7)(c) does not apply if the employer is one to whom regulation 67D applies." (SI 2003/2682, r.67E)

Requirement to correct where employer becomes aware of inaccuracy

Failure to submit RTI return

"(1) This regulation applies where an employer does not make a return as required by regulation 67B (real time returns of information about relevant payments) or 67D (exceptions to regulation 67B).

(2) The employer must provide the information in the next return made under regulation 67B or 67D for the tax year in question.

(3) If the information has not been provided before 20th April following the end of the tax year in question, the employer must make a return under this paragraph.

(4) A return under paragraph (3) must—

(a) include the information specified in Schedule A1,

(b) be made as soon as reasonably practicable after the discovery of the failure to make the return, and

(5) If a return under paragraph (3) is not made before 20th May following the end of the tax year in question section 98A of TMA 1970 (special penalties in case of certain returns) will apply to the return, but this paragraph does not apply to a return in respect of the tax year 2014–15 or a subsequent tax year." (SI 2003/2682, r.67EA)

Failure to submit RTI return

Notification to HMRC of final return for year (or that no return required)

"(1) A Real Time Information employer may send to HMRC a notification if—

(a) for a tax period, the employer was not required to make any returns in accordance with regulation 67B or 67D because no relevant payments were made during the tax period, or

(b) the employer has sent the final return under regulation 67B or 67D that the employer expects to make—

(i) in the circumstances described in paragraph 5 of Schedule A1 (real time returns), or

(ii) for the tax year.

(2) A notification under paragraph (1)(b) must—

(a) …

(b) be sent within 14 days of the end of final tax period of the tax year,

(3) A notification under this regulation must—

(a) state—

(i) the tax year to which it relates,

(ii) the employer's HMRC office number,

(iii) the employer's PAYE reference, and

(iv) the employer's accounts office reference, and

(b) be sent using an approved method of electronic communications unless the employer is one to whom regulation 67D applies.

(4) This regulation applies in addition to the provisions set out in regulation 147D (duty to report amount of apprenticeship levy to be paid)." (SI 2003/2682, r.67F)

Notification to HMRC of final return for year (or that no return required)

P11D (return of benefits in kind)

"(1) Before 7th July following the end of a tax year, the employer must provide the Inland Revenue—

(a) with the information listed in regulation 86 for each employee, and

(b) with the additional information listed in regulation 87 for each employee whose employment is subject to the benefits code.

(2) At the same time and in the same manner as the employer provides that information, the employer must also provide a declaration stating that—

(a) all information required to be provided has been provided, and

(b) the information is complete and accurate to the best of the employer's knowledge and belief.

(3) For the purposes of this regulation an employment is “subject to the benefits code” if, for the purposes of the benefits code in ITEPA, it is a taxable employment under Part 2 of ITEPA (as defined by section 66(3) of ITEPA)." (SI 2003/2682, r.85)

Does not apply to benefits treated as PAYE income

"(4) But this regulation does not apply in relation to a benefit provided in a tax year which has been treated as a payment of PAYE income under Chapter 3A of the Regulations." (SI 2003/2682, r.85)

Benefits to be included

"(1) Particulars of the following information must be provided in the case of each employee—

(a) any earnings which the employee receives from the employer or related third party otherwise than in money, including the amount of those earnings;

(b) any payments made on behalf of the employee by the employer or related third party and not repaid, including the amounts;

(c) any non-cash voucher provided by the employer or related third party by reason of which the employee is treated by [section 87(1) (benefit of non-cash voucher treated as earnings) or 87A(1) (benefit of noncash voucher treated as earnings: optional remuneration arrangements) of ITEPA as receiving earnings in that tax year, including the amount of those earnings;

(d) any use of a credit-token provided by the employer or related third party by reason of which the employee is treated by section 94(1) (benefit of credit-token treated as earnings) or 94A(1) (benefit of credit-token treated as earnings: optional remuneration arrangements) of ITEPA as receiving earnings in that tax year, including the amount of those earnings;

(e) the due amount in respect of any notional payment where that amount is treated by section 222 of ITEPA (payments on account of tax where deduction not possible) as earnings of the employee received in that tax year;

(f) any living accommodation which has been provided for the employee or a member of the employee's family or household by the employer or related third party, including the amount that is treated as earnings for that tax year by [section 102 (benefit of living accommodation treated as earnings) or 103A (accommodation provided pursuant to optional remuneration arrangements: relevant amount) of ITEPA;

(g) any earnings consisting of the amount by which the value of the exemption under subsection (2) of section 287 of ITEPA (limit on exemption of removal expenses and removal benefits) exceeds the limit specified in subsection (1) of that section and having effect in relation to the employee." (SI 2003/2682, r.86)

"(1) Particulars of the following information must also be provided in the case of each employee whose employment is subject to the benefits code—

(a) …

(b) any sums put by the employer or related third party at the disposal of the employee by reason of the employment and paid away by the employee;

(c) any benefits provided by the employer or related third party for the employee such as give rise to any amount treated by Chapters 6 to 10 of Part 3, and section 223, of ITEPA (cars and vans, loans, shares, other benefits and payments on account of director's tax) as earnings of the employee received in that tax year, including the amount of those earnings.

(d) any mileage allowance payments which are not approved mileage allowance payments;

(e) any passenger payments which are not approved passenger payments.

(2) Particulars are not required under paragraph (1) of removal expenses and removal benefits to which section 271 of ITEPA (limited exemption of removal benefits and expenses) applies (as to which see regulation 86(2)).

(3) In the case of any earnings relating to business entertainment, as defined by section 577 of ICTA, the employer must also inform the Inland Revenue whether the amount of the earnings has been or will be disallowed as a deduction or inclusion as mentioned in section 577(1)(a) of that Act in any tax computation relating to the trade, business, profession or vocation of the employer." (SI 2003/2682, r.87)

Removal expenses and benefits

"(2) Particulars of removal expenses and removal benefits to which section 271 of ITEPA (limited exemption of removal benefits and expenses) applies are required—

(a) only under paragraph (1)(g), and

(b) only to the extent that they exceed the limit in section 287(1) of ITEPA which applies to the change of residence of the employee in question." (SI 2003/2682, r.86)

Business entertainment

"(3) In the case of any earnings relating to business entertainment, as defined by section 356(1) of ITEPA, the employer must also inform the Inland Revenue whether the amount of the earnings has been or will be disallowed as a deduction or inclusion in any tax computation relating to the trade, business, profession or vocation of the employer." (SI 2003/2682, r.86)

Related third party

"(4) “Related third party” means a person making payments or providing benefits to an employee, if the making or provision of the payments or benefits by that person has been arranged, guaranteed or in any way facilitated by the employer." (SI 2003/2682, r.86)

P11D (return of benefits in kind)

- Information to employee

"(1) Before 7th July following the end of a tax year, the employer must give a statement to every current employee in respect of whom particulars are to be provided under regulation 85(1) by the employer for that tax year.

(2) The statement must contain the particulars provided under regulations 86 and 87 in so far as they relate to the employee.

(3) If a person who was a current employee ceases to be an employee at any time before 7th July following the end of the tax year, the statement is given to the employee if it is sent or delivered to, or left at, that person's usual or last known address.

(4) A former employee in respect of whom particulars are to be provided under regulation 85(1) by the employer for a tax year may by notice require the employer to give the statement specified in paragraph (2) to that former employee—

(a) before 7th July following the end of the tax year, or

(b) within 30 days of receiving the notice,

whichever is the later.

(5) The notice may be given to the employer at any time up to 3 years after the end of the tax year.

(6) A former employee who has received a statement from the employer under paragraph (4) in respect of a tax year may not require a further statement from the employer under that paragraph in respect of the same tax year.

(7) In this regulation—

“current employee” means a person who was an employee on 5th April in the tax year to which the particulars provided under regulation 85(1) relate;

“former employee” means a person who was an employee during a part of the tax year to which the particulars provided under regulation 85(1) relate, but who was no longer an employee on 5th April in that tax year." (SI 2003/2682, r.94)

- Information to employee

Termination award return

"(1) Before 7th July following the end of the tax year, an employer must, in respect of each employee who received a termination award, provide the Inland Revenue with the information specified in paragraph (3) relating to that award.

[...]

(6) Information required to be provided by an employer in accordance with paragraphs (1) and (3) may be provided after the termination award is made but before the end of the tax year in which it is made.

(7) If information is provided in accordance with paragraph (6), paragraph (3)(b) and (c) have effect, so far as concerns the providing of information relating to the tax year, as if they required the amounts and benefits there specified to be estimated by the employer as accurately as possible.

(8) This regulation is subject to regulation 93 (return if more than one employer)." (SI 2003/2682, r.91)

Termination award

"(2) “Termination award” means an award consisting of payments combined with other benefits, or consisting solely of other benefits—

(a) which were awarded in that tax year in connection with the termination of the employee's employment with the employer, or any change in the duties of or earnings from that employment,

(b) which when provided (whether in that or a subsequent tax year) would constitute payments and other benefits received to which Chapter 3 of Part 6 of ITEPA applies (payments and benefits on termination of employment etc), and

(c) the total amount of which is estimated by the employer to exceed £30,000, when aggregated with other payments and other benefits provided or to be provided (whether in that or a subsequent tax year) in respect of the same person as mentioned in section 404(1) of ITEPA (aggregation of payments in respect of other related employments)." (SI 2003/2682, r.91)

Information to be provided

"(3) The information to be provided is—

(a) the total amount of the payments and other benefits awarded;

(b) the total amount of the payments made in that tax year in connection with the award;

(c) details of the non-cash benefits provided in that tax year in connection with the award, other than benefits previously contained in a return for that tax year under regulation 85, and the total amount of their amounts calculated in accordance with section 415(2) of ITEPA (valuation of benefits);

(d) the estimated total number of the tax years in which payments and non-cash benefits are to be provided in connection with the award and, if the duration of any of those payments and non-cash benefits is capable of being reduced in certain circumstances, details of those circumstances;

(e) the estimated total amount of the payments to be made in subsequent tax years in connection with the award;

(f) a description of each of the other benefits to be provided in subsequent tax years in connection with the award, and the terms of their provision." (SI 2003/2682, r.91)

Calculating cash equivalents

"(4) In calculating the cash equivalents of non-cash benefits for the purposes of this regulation, the employer must make all deductions and other adjustments which the employer is able to show, by reference to information in the employer's possession or otherwise available to the employer, are authorised or required by any of the provisions of the benefits code as applied by section 415 of ITEPA.

(5) In calculating the total amount of payments and other benefits for the purposes of paragraphs (2)(c) and (3)(a), the employer—

(a) must have regard to the provisions of Chapter 3 of Part 6 of ITEPA,

(b) must take into account the matters referred to in paragraph (3)(d),(e) and (f), and

(c) in valuing the amount of non-cash benefits for future tax years in connection with the award, must assume that the provisions of ITEPA relating to those benefits will remain unchanged with respect to those years." (SI 2003/2682, r.91)

Meaning of employee and employer

(9) In this regulation and regulations 92, 93 and 96 (further provisions about termination awards)—

“employee” includes a former employee; and

“employer” includes a former employer." (SI 2003/2682, r.91)

Termination award return

- Information to employee

"(1) This regulation applies if an employer is required to provide the information specified in regulation 91(3) to the Inland Revenue by—

(a) regulation 91(1) (termination award), or

(b) regulation 92(3) (change in termination award).

(2) The employer must also give a copy of that information to the employee before 7th July following the end of the tax year.

(3) A copy of the information is given to the employee if it is sent or delivered to, or left at, the employee's usual or last known address.

(4) As to the person who is the employer in cases where there is more than one employer, see regulation 93." (SI 2003/2682, r.96)

- Information to employee