However should the sums paid exceed those reasonable expenses then the excess may fall Under Section 16, Taxes Management to be chargeable to tax as Act 1970, HMRC is entitled to ask for Miscellaneous Income, potentially details of payments to non-employees giving rise to personal tax liabilities at their discretion; but they would not of the individuals which should be routinely ask for details for small notified to HMRC under Self payments such as those described on Assessment Procedures (see ) the previous page. which is the mechanism whereby other sources of income are declared e.g capital gains, dividend income and interest income. No specific agreement exists with HMRC. Tax consequences be HMRC have advised that even determined under employment status when the sums are paid outside rules. If the individual completes no the payroll system, the onus is on more than three sessions a year, it is TEACHING, the individual to determine if they LEARNING, unlikely that an employee/employer need to declare the income as COMMUNITY relationship exists. In this instance earnings. Where the sums paid do ENGAGEMENT public can be paid outside of the no more than reimburse the and ALL payroll system. individual’s reasonable costs, OTHER including costs of travel and PUBLIC If the individual completes more than subsistence, it is unlikely that this INVOLVEMENT three sessions a year, advice should would be treated as taxable ACTIVITY be sought from the Payroll Section as income. However the individual is to their employment status. Payroll responsible for making this staff will advise based on such things judgement. as frequency of involvement, nature of the activity and payment rate. Payment Processes There are two approaches to payment depending on whether the person’s contribution is viewed as A) paid work or B) not paid work. Paid work PAYROLL SYSTEM If the member of the public is required (as has employment status - see page 8 for circumstances) or wishes to be paid through the payroll system for ease, the following procedure should be followed:
Under Section 16, Taxes Management Act 1970, HMRC is entitled to ask for details of payments to non-employees at their discretion; but they would not routinely ask for details for small payments such as those described on the previous page. However should the sums paid exceed those reasonable expenses then the excess may fall to be chargeable to tax as Miscellaneous Income, potentially giving rise to personal tax liabilities of the individuals which should be notified to HMRC under Self Assessment Procedures (see ) which is the mechanism whereby other sources of income are declared e.g capital gains, dividend income and interest income. TEACHING, LEARNING, COMMUNITY ENGAGEMENT and ALL OTHER PUBLIC INVOLVEMENT ACTIVITY No specific agreement exists with HMRC. Tax consequences be determined under employment status rules. If the individual completes no more than three sessions a year, it is unlikely that an employee/employer relationship exists. In this instance public can be paid outside of the payroll system. If the individual completes more than three sessions a year, advice should be sought from the Payroll Section as to their employment status. Payroll staff will advise based on such things as frequency of involvement, nature of the activity and payment rate. HMRC have advised that even when the sums are paid outside the payroll system, the onus is on the individual to determine if they need to declare the income as earnings. Where the sums paid do no more than reimburse the individual’s reasonable costs, including costs of travel and subsistence, it is unlikely that this would be treated as taxable income. However the individual is responsible for making this judgement. Payment Processes There are two approaches to payment depending on whether the person’s contribution is viewed as A) paid work or B) not paid work. Paid work PAYROLL SYSTEM If the member of the public is required (as has employment status - see page 8 for circumstances) or wishes to be paid through the payroll system for ease, the following procedure should be followed:
SNMSWSS-and-HS-proposed-Public-Involvement-Payments-Guidance-v10-FINAL.docx