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Another PAYE year
At this time of the year, the annual drudge of PAYE year-end returns - P35s, P14s, P60s, P11Ds, Class 1A returns, the list seems to grow - is drawing to a close. If you do these for yourself, you will appreciate the effort involved in a highly unproductive piece of Government red tape.
The Revenue don't like handling all those forms either. They are keen to get everyone filing by internet over the next few years. If you have more than 250 employees you will have to do this for the 2004/05 tax year, on pain of penalties. If you are a small business, employing fewer than 50 staff, you will actually be paid an incentive to get online from 2004/05 onwards - £250 for the first two years, falling to £75 for 2008/09, £825 in total. That won't start being paid until after April 2005, but if you are looking at your payroll system, it's worth building this in as a requirement.
Another thing that can simplify your life is a 'dispensation'. The strict tax rule is that any expenses paid out to directors and employees earning over £8,500 should be entered on P11D, and the employee then claims a deduction on the tax return. The two items cancel out, as long as all the expense allowances are genuine reimbursements of business costs. The Revenue actually recognise that this is a waste of time - if you can convince them that you would never pay an expense claim unless it was allowable for tax (employers can, after all, be even more fussy than the taxman), then the Inspector can grant a dispensation to leave certain categories of expense out of the P11Ds. That saves you and the employee a lot of bother.
Of course, you then must be as strict about expense claims as you told the Inspector you would be. If you are interested in applying for a dispensation, we can advise you.
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