HMRC issue the 2021/2022 further guidance

The HMRC have update their employer guidance CWG2, CWG5 and also the guide to gross-up where employer pay the tax and NICs on expenses and benefits.

CWG2 further guide to PAYE and National Insurance

HMRC have issued the updated CWG2 for the 2021/2022 tax year (for the tax year which commences from 6th April 2021).

The CWG2 outlines more detailed guidance on the responsibilities of employers in the application of Income Tax, National Insurance Contributions and the requirements for reporting and rules for various payroll activities.

The button following takes you through to the new version along with access to prior year versions. This is the bible for many payroll process activities from the viewpoint of HMRC.

So – Find out about detailed Pay As You Earn (PAYE) and National Insurance contributions for current and previous years if you’re an employer.

CWG2 further guide PAYE and NICs

Tax and primary Class 1 National Insurance contributions on expenses and benefits paid by employer

There are circumstances where employers agree to voluntarily meet the tax and primary Class 1 National Insurance contributions due on employees’ non-deductible expenses. For example, when an employer pays for travel or accommodation costs for an employee travelling to a permanent workplace.

Tax and primary Class 1 National Insurance contributions
on expenses and benefits paid by employer

CWG5 Class 1A National Insurance contributions on benefits in kind

Class 1A National Insurance contributions are payable on most benefits provided to employees. These are reported on form P11D with the Class 1A declared and paid via P11Db.

Class 1A National Insurance contributions are also payable on non- contractual termination payments that exceed the £30,000 threshold and are not already subject to Class 1 National Insurance contributions. This Class 1A is reported and paid in real time.

Class 1A National Insurance contributions are also payable on non-contractual/non-customary testimonial payments paid to a sportsperson by a Sporting Testimonial Committee which exceeds the £100,000 threshold. This Class 1A is reported and paid in real time.

CWG5 Class 1A NICs on benefits in kind

If you’re a new employer, or are providing benefits to your employees for the first time, the following HMRC booklets may help:

480 Expenses and benefits – a tax guide

490 Employee travel – A tax and NIC guide for employers