Employment of casual and seasonal workers to become administrative 'nightmare'

Rigorous new tax rules on the employment of casual staff are set to give farmers and landowners an administrative nightmare and also increase their costs.  Penalties for mistakes can be severe; employers could be fined up to 100% of any tax they have overlooked.

The tightening rules arise from the introduction of new payroll regulations which require employers to provide the tax authorities with more timely information under the 'Real Time Information' PAYE system.  The system requires employers to report payments to workers to HM Revenue & Customs (HMRC) as they are made, rather than at the end of each tax year.

"Under the new rules, all payments to casual harvest workers and beaters must now be included on the payroll, even if no tax or national insurance is owing to the tax authorities," said Jerry Barnes,  partner and member of the specialist landed estates group at Smith & Williamson, the accountancy and investment management group.

Barnes added: "Therefore beaters and casual harvest workers must now be treated in the same way as all other employees."

Even if an individual is taken on for just one day, the employer must report the payment to HMRC and notify them of their name, address, date of birth and gender. If possible, the employer should also supply the individual's NI number.

"Previously, the system for employing casual staff was far more relaxed so these new rules will hit thousands of farmers and landowners very hard," noted Paul Tucker, partner and employment tax specialist, also at Smith & Williamson.

He warned: "The new system could result in a significant increase in costs for employers.  Their payrolls are likely to take longer to process and they may need to increase the amounts paid to the workers."

A briefing note on this issue is available free of charge by contacting Vanessa Houlford

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