July tax deadlines for employers

In the rare June sunshine, and the even rarer shot at a British Wimbledon winner this summer, will you forget about the July tax deadlines?

What are the deadlines coming up?

Although many of the year end deadlines for PAYE have now passed, there are still returns and payments due in respect of taxable benefits from employments, PAYE settlement agreements and returns in respect of certain employment-related securities.

July 5

• Last date for agreeing your PAYE Settlement Agreement with HM Revenue and Customs (HMRC) for 2008-09.

July 6

• Last date for Forms P11D(b), P9D and P11D to reach HMRC
• Last date for Forms P9D and P11D to be provided to relevant employees.
• Last date for annual return Form 42 to reach HMRC (the annual returns for "approved" share plans, being Form 34, Form 35, Form 39 and Form 40 should be filed by the date in the accompanying notice issued by HMRC or if there is none, within 3 months of the issue date on the relevant form and it is advisable to submit the form to reach HMRC by 6 July).

July 19

• Class 1A NICs payments for 2008-09 paid by cheque must be paid by this date (extended to 22 July for payments made by approved electronic methods).

What is a PAYE settlement agreement?

A PAYE settlement agreement (PSA) is a voluntary agreement between an employer and HMRC for the employer to settle the tax liability arising on certain benefits in kind that would otherwise have to be paid by the employees. It covers benefits that are minor, or irregular, or where it is impracticable for the employer to operate PAYE or identify the amount that needs to be shown on each recipient's form P11D or P9D. Any tax payable by the employer in a PSA is on a grossed up basis meaning that employees benefit as they will not be required to report benefits in kind included in a PSA on their self assessment tax returns. Class 1B NIC is payable by the employer on items included in the PSA which would have attracted Class 1 or Class 1A NIC and on the tax payable under the PSA.

What are P11ds and P9ds?

These are the forms that detail the taxable benefits received by employees in the tax year ended 5 April 2009 that are not covered by a PSA. They also form the basis of calculation of any Class 1A NIC due later in the month. Employees will need a copy of their form in order to complete their Self Assessment tax returns.

What are forms 34, 35, 39, 40 and 42?

Forms 34 (Save As You Earn (SAYE)), 35 (Company Share Option Plan (CSOP)), 39 (Share Incentive Plan (SIP)) and 40 (Enterprise Management Incentives (EMI)) all relate to approved company share plans. Various details in respect of share awards under the rules of the plan need to be included on the relevant return. This is an employer return, rather than an individual return, so if any transaction gives rise to a tax charge on the employee, that employee must also declare the relevant details on his own personal tax return.

Form 42 asks for details of reportable events in relation to shares and other forms of securities that are obtained by reason of employment, which would include any unapproved share option plans or other award of shares or securities other than under an approved share plan.

Caroline Harwood, Director in Employer Solutions at Grant Thornton says: "Given the current economic squeeze, more and more employers have been choosing to reward key employees through alternative methods of remuneration such as benefits or share-based incentives, particularly those which allow the employee to benefit from cost or tax savings. It is important that any relevant transactions are correctly identified and reported to avoid costly compliance failures and penalties for the employer and to preserve any advantageous treatment for the employee."

Please contact us if you would like further advice on any of the above.