Reporting arrangements for Social Care employers arrears’ payments

25 April 2018

HMRC’s Software Developers Support Team (SDST) has provided the following update which includes four documents which relevant employers may find useful:

"HMRC and Social Care employers are working together to address the underpayment of national minimum wage for staff on sleep in shifts in the social care sector.

We wrote to you in February 2018 (confidentially) to give you some advance information about how the process will work for Social Care employers wanting to pay arrears to employees and PAYE deductions to HMRC.

  1. For Income Tax an employee’s tax liability on a payment of arrears arises in the tax year that the employee was originally entitled to be paid.

  2. For National Insurance the liability will depend entirely upon the period when earnings are paid not earned.

To help pay the tax on arrears related to sleep-in shifts all Social Care employers have the choice of using an alternative PAYE arrangement (APA) or our business as usual procedures. In brief, the APA allows employers to calculate tax at 20% on the taxable sum without reference to the allowances or tax code for the years concerned.  I would stress that the APA is only available to support social care employers pay sleep-in shift arrears.

Our business as usual approach requires employers to submit Earlier Year Updates (EYUs) for each of their employees for all relevant years.

National Insurance must be reported on a Full Payment Submission for the period in which any payment is made and payment must be made in accordance with the normal monthly or quarterly payment date. This applies to all employers regardless of whether or not they use the APA.

Our finalised APA process is now ready.  From today (24 April 2018), we will start issuing this on a phased basis, to those Social Care employers who have opted to join the National Minimum Wage Social Care Compliance Scheme (SCCS). This will include:

A copy of each of the documents is available for your information as you may get contact from employers asking if they can export data from their payroll software into the spreadsheet.”

Further information