Employers should be aware that if you have employees to whom you are paying Working Tax Credits with their wages that a change is on the horizon.
Payment of Working Tax Credits by this method is being phased out between 7 November 2005 and 31 March 2006. From 7 November 2005 all new claimants will receive their Working Tax Credits directly and from 1 April 2006 all existing claimants will be paid directly rather than via their employers. Payments are to be made direct to the claimant’s bank, building society or Post Office accounts.
The regulation requires employers to write to their employees to whom they pay Working Tax Credits to alert them of the change in the payment method.
Employers currently paying Working Tax Credits through their payroll will need to write to effected employees before 7 November 2005 to let them know what is happening. This is obligatory and any employer failing to do so before 7 November 2005 could be charged a penalty of £300, plus a penalty of up to £60 per day.
You can view a draft of the letter employers should send to employees concerned via the download section of this site.
Employers should receive stop notices for all employees to whom you pay tax credits by 20 February 2006. If these have not been received you should contact the helpline on 0845 143 143. You should also contact this helpline if you inadvertently make any payments after 31 March 2006.
Further details can be found by visiting the HMRC website on www.hmrc.gov.uk
Alternatively, please contact ourselves directly if you require any assistance or advice.
Mrs C.Cheesman - Clifford Towers Accountants
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