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bigduckontax
bigduckontax, Accountant
Category: Tax
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IF we are a third party paying rewards to non employees but

Customer Question

IF we are a third party paying rewards to non employees but want to opt for a TAS on 'cash to card' rewards - how is this calculated?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
TAS is simply a payroll package, part of the Sage group of IT assistance to organisations and individuals. If you buy it and use it it will run RAYE for you, but if you are paying non employees why would you wish to deduct tax unless they were in the construction industry in which case 20% flat rate Income Tax is with held.
In the circumstances you may wish to enlighten me further as to your problem. Normally one would just pay non employees on invoice and that would be the end of the matter.
Customer: replied 2 years ago.

I may need to elaborate here.

Concept - agent reports a sale and gets rewarded.
They are NOT our employees, they are employees of other companies.

We reward them with cash onto a pre-paid card.
We don't want them to have to deal with tax declaration but we want to deduct and pay for them

Expert:  bigduckontax replied 2 years ago.

Right, you are effectively acting as a payroll agency. Any of the payroll packages, Sage is but one, will calculate the deductions for you and advise you of the amounts to be with held for Income Tax and National Insurance (NI). You will then pay the net sum to the employee, pay the deductions due to HMRC and receive from the organisation on whose behalf you are operating the wages to be distributed plus the employer's element of NI plus, of course your fee with VAT thereon, if appropriate.

You will have to undertake monthly on line real time returns to HMRC as well as an annual summary. If you are going to run payroll you have no alternative but to make tax declarations at intervals, but, of course, the good software packages do all this for you.

Customer: replied 2 years ago.

I don't have sage and don't want to run 'payroll'
What are my options?

Or is it simply a term 'payroll'
Can I report monthly who I've paid and how much?

I need to know UP FRONT the value % I am holding back or to add to a reward value so that it is fixed.
E.g. £10 reward + X% tax to be added

or £10 less the % deduction

I need to know this BEFORE we release and spend the money as we have to charge that to a client who we act for.

Expert:  bigduckontax replied 2 years ago.
I merely quotes Sage as a popular payroll package; its use, or indeed that of any other similar arrangement, as merely one method of doing this.
If you are going to pay employees you have to run a payroll system. This can be done monthly at the report stage on HMRC's real time system for wages, the use of which is now mandatory. You cannot know up front the percentages involved until you are notified of the amounts due. It is far more complex than you seem to be planning.
Customer: replied 2 years ago.

They are not my employees -they are third party employees.

Do I still have to run payroll for third party persons?

If I know the amount e.g. £10 - can I know the value of the tax implication?

Expert:  bigduckontax replied 2 years ago.
Yes, I know they are not your employees, but you are paying them on a third party's behalf and must thus operate PAYE. Of course, it is possible that their principal is doing this and merely notifying you of the net sums due in which case you merely pay as advised and need make no returns to HMRC.
Employees emoluments change month by month depending on the remuneration and any tax code alterations. Unless you are paying with a flat 20% deduction you cannot calculate the value of the tax due. The main industry in which such schemes operate is construction.
Customer: replied 2 years ago.

Can I therefore opt to pay a flat 20% on any reward ?

Expert:  bigduckontax replied 2 years ago.
You could, but you would still have to report the payments to HMRC on their real time system monthly and provide end of the year summaries also, issuing P60s in the process. If an employee left you would have to issue P45s also.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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