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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
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Employer returns: employer return post capture: form P38(S) (Action Guide)

From 6 April 2013, form P38(S) is withdrawn and students will be treated in the same way as all other employees for PAYE tax and NIC’s purposes regardless of when they work for an employer. Employers already within RTI have dealt with students this way since joining RTI.

Note: From the 2004-05 tax year employers will be asked to retain all completed forms P38(S) for at least 3 years after the end of the year to which they relate, or longer if they are asked to do so.

These forms must be made available for inspection by HMRC if required, but there is no longer a requirement to submit forms P38(S) with the end of year return.

To review forms P38(S) for tax years 2003-04 and earlier follow steps 1 - 4 below. The Guide is presented as follows

Step 1

Step 2

Step 3

Step 4

Initial action for tax years 2003-04 and earlier

  1. Examine each form P38(S) and ensure it has been completed correctly
  • If all parts of the form have not been completed go to step 2
  • If the amount of pay on the form is more than the basic personal allowance go to step 3
  • If the student is foreign and the form has not been stamped by or include details of an authorised sponsor go to step 4
  • If none of the above apply the form can be filed away with the employer returns for that year

Omission(s) on P38(S)

  1. If there are omissions on the form P38(S) your next action will depend upon whether this appears to be a one-off or there are several other forms P38(S) with similar omissions
  • Where there are omissions on a number of forms P38(S) you should refer the papers to your Employer Compliance Unit to investigate, otherwise
  • Contact the employer pointing out the omission and requesting the missing details
    • If the employer is unable to provide you with the missing details consider referring the papers to your Employer Compliance Unit to investigate, otherwise
    • On receipt of the details file away the P38(S) with the employer returns for that year

Pay exceeds personal allowance

  1. If the total earnings on the form P38(S) exceeds the basic personal allowance your next action will depend upon whether this appears to be a one-off or there are several others
  • Where there are a number of forms P38(S) which indicate the total earnings exceed the basic personal allowance you should refer the papers to your Employer Compliance Unit to investigate, otherwise
  • Contact the employer pointing out that PAYE should be applied to the employee
    • If the employee is still being employed by the employer and is likely to continue to be paid at a rate that will exceed the basic personal allowance advise the employer to operate a tax code 0T on a Week 1 basis and pass the details to the PAYE section to set up a taxpayer record, otherwise if the employee has now left
    • Pass the form to the PAYE section to consider recovery of unpaid tax

Non-sponsored foreign students

  1. If the student is foreign and the form has not been stamped by, or include details of an authorised sponsor your next action will depend upon whether this appears to be a one-off or there are several others
  • Where there are a number of forms P38(S) where foreign students have been employed but do not appear to have been sponsored you should refer the papers to your Employer Compliance Unit to investigate, otherwise
  • Contact the employer pointing out that PAYE should have been applied to the employee as the P38(S) was not stamped by an authorised sponsor
    • If the employee is still being employed by the employer and is not sponsored advise the employer to operate a tax code 0T on a Week 1 basis and pass the details to the PAYE section to set up a taxpayer record, otherwise if the employee has now left
    • File away the P38(S) with the employer returns for that year