THE "most significant change to the income-tax system in 70
years" will require churches to notify Her Majesty's Revenue and
Customs (HMRC) the moment they make a payment to an organist,
cleaner, or other staff.
At the moment, employers tell HMRC whom and what they have paid
at the end of each tax year; but in the coming tax year, under the
new Real Time Information (RTI) system, employers will need to make
an online notification to HMRC "on or before" the date on which
they make regular payments to staff; or within seven days of the
payment, if it is a casual or ad-hoc arrangement.
The new requirements, which take effect on 6 April, will affect
all Pay As You Earn transactions, regardless of whether the amount
is above the threshold for income tax and National Insurance.
The new arrangements will not apply to payments made to
self-employed contractors, but HMRC warned that churches must
ensure that organists and other suppliers really are self-employed,
and that they keep adequate records.
"Anybody paying somebody else needs to ensure that they have
identified the correct employment status," an HMRC spokesman said.
A self-employed person "should bill or invoice the church for their
services". It was not sufficient for the church to obtain a receipt
for a cash payment, and then to assume that the person being paid
was self-employed, he said.
HMRC said that it had written to all registered employers last
month, and in October and November last year, to inform them of the
change; but last weekend's Money Box programme on Radio 4
reported a survey that suggested that half of all employers were
not aware of the change.
HMRC's chief executive, Lin Homer, defended the changes. She
told the programme: "Everything about the workplace is changing,
including the speed with which people change jobs, and the number
of people, like a church organist, who have part-time employment.
Unless we have a system that keeps up to date with that as those
things happen, the year-end reconciliations were always behind the
She said that the changes were designed to make the tax system
more accurate, and to reduce administration. "If you employ
someone, you already have the responsibility for recording what you
are paying, and making sure you are making the deductions. What you
are going to have to do in the future is share that information