Source:  HMRC

In this month’s edition of the Employer Bulletin there are important updates and information on:   

PAYE   

• end of year reporting
• employers PAYE and Construction Industry Scheme repayments
• basic PAYE Tools — new release
• electronic payment deadline falls on a weekend
• payrolling employees’ benefits and expenses
• reporting expenses and benefits for the tax year ending 5 April 2025
• get ready for changes to employer National Insurance
• new online iForm for PAYE employment expenses
• update on employee hours data requirements

Tax updates and changes to guidance   

• company cars — classification of double cab pickups
• expanding the cash basis
• the Official Rate of Interest from 6 April 2025
• guidance updated — check your payroll for female employees who pay less National Insurance
• Guidelines for Compliance — Help with labour supply chain assurance  
• relevant motoring expenditure — National Insurance contributions
• basis period reform — reporting on a tax year basis

General information and customer support

·         tax advice — don’t get caught out by tax avoidance

·         payments to employees for pension scheme changes — the correct charging provision to apply

·         statutory Neonatal Care Leave and Pay

·         the deadline is approaching — help your employees top up their State Pensions

·         HTML format of Employer Bulletin 

·         getting more information and sending feedback 

HMRCs support for customers who need extra help 

HMRCs principles of support for customers who need extra help set out our commitment to support customers according to their needs and underpin the HMRC Charter.   

Find out how to get help and the extra support available.   

PAYE   

End of year reporting  

It is time to prepare for making your last Full Payment Submission (FPS) or Employer Payment Summary (EPS) of the year. Your last FPS or EPS of the year, up to and including 5 April 2025, needs to include an indicator that you are making the final submission. This tells us you have sent us everything you expected to send, and we can finalise our records for you and your employees. Some commercial payroll software will not let you put the indicator on an FPS. If that is the case, send your last FPS and then send an EPS with the indicator ticked. You can also send an EPS with the indicator ticked if you forgot to put the indicator on your last FPS submission for the tax year. 

You also need to prepare to give your employees a P60 if they are in your employment on 5 April 2025. This information must be provided to the employee by 31 May 2025. If you are not going to pay anyone again this tax year, remember to send an EPS with the indicator ticked to show you did not pay anyone in the final pay period and that this is your final submission. You have until 19 April 2025 to do this. If you have not filed by 11 April 2025, you will receive a reminder notification from the Generic Notification Service.  

Employers PAYE and Construction Industry Scheme repayments  

Following updates in the October 2024 Employer Bulletin and December 2024 Employer Bulletin, HMRC has made a number of improvements to support online claims for Employers’ repayments.  

You can find the new version of the online repayment claim form for Construction Industry Scheme (CIS) deductions at claim a refund of Construction Industry Scheme deductions if you’re a limited company or an agent. This online claim form enables you to upload evidence for your claim when requested by HMRC.  

HMRC has also introduced an online claim form for Employers’ PAYE repayments. Follow the guidance at you paid HMRC the wrong amount and claim a refund if you’ve overpaid. Make sure you work out why you overpaid before you claim. You can also ask for your overpayment to offset other taxes you owe, for example Corporation Tax.  

You can find out when you can expect to receive a reply from HMRC on the new online claim forms.  

Basic PAYE Tools — new release 

An update to the Basic PAYE Tools (BPT) will be released at the end of March 2025 to support the 2025 to 2026 tax year. It is important that you update and use version 25.0 from 6 April 2025.  

To update or check for updates you should select ‘Check now’ in the update section of settings in the top right-hand corner of the tool. It is also recommended that you set the automatic updates to ‘Yes’.  

As a new customer, before you can use BPT to run your payroll, you must have registered for online PAYE as instructed in your new employer letter.  

Further information and help on how to download BPT is available.

Electronic payment deadline falls on a weekend  

In February and March 2025 the electronic payment deadlines fall on Saturday 22 February 2025 and Saturday 22 March 2025 respectively. To make sure your payment for these months reaches us on time, you need to have funds cleared into HMRC’s account by 21 February 2025 and 21 March 2025, unless you are able to arrange a Faster Payment.  

It is your responsibility to make sure your payments are made on time and, if your payments are late, you may be charged a penalty.  

Check your bank or building society’s single transaction daily value limits and cut-off times well in advance of making your payment. Make sure you know when to initiate your payment, so it reaches HMRC on time.  

Further information on pay employers’ PAYE is available.  

Payrolling employees’ benefits and expenses

Employers can register to payroll benefits and expenses for their employees so they can be taxed through the payroll from 6 April 2025.  You can do this using the online payrolling benefits and expenses service any time between now and 5 April 2025 so your employee’s tax code is updated in time.   

You can only start to payroll benefits and expenses from the beginning of the new tax year. You have to payroll the benefits and expenses for the whole year, unless you stop providing them.  

You can payroll all benefits and expenses except:  

·         employer provided living accommodation 

·         interest free and low interest (beneficial) loans  

To use the online service you will need a Government Gateway user ID and password. You will also need to be enrolled for PAYE Online for Employers.   

You should also note:  

·         you must have payroll software that can calculate the tax due on benefits for each pay period  

·         instead of giving your employees a P11D, you need to give them a letter explaining what expenses and benefits you have payrolled   

·         if you are payrolling expenses and benefits in kind you may still have a Class 1A National Insurance contributions liability and will still need to submit an online P11D(b) to tell us how much employer Class 1A National Insurance contributions you owe  

·         you must still complete and submit P11D forms for any benefits and expenses which have not been payrolled in the tax years 2024 to 2025 and 2025 to 2026   

·         to reduce the likelihood of errors, you can prepare for payrolling by ensuring that data about employees, their earnings and their benefits are up to date  

More information about how to report expenses and benefits you provide to employees or directors is available.  

Reporting expenses and benefits for the tax year ending 5 April 2025  

P11D and P11D(b) deadlines 

For those employers who do not yet payroll, the deadline for reporting P11D(b) Class 1A National Insurance contributions, P11D expenses, and benefits in kind provided in the 2024 to 2025 tax year, is 6 July 2025.    

Your P11Ds and P11D(b) must be filed online and at the same time.   

Late submission may result in a penalty. HMRC charge penalties on a monthly basis and issue penalty notices each quarter until you file your return. 

If you make a mistake and need to submit an amendment to your P11D or P11D(b), you must also do this online. HMRC no longer accepts paper amendments. Refer to guidance Expenses and benefits for employers for further information. 

Joint beneficial loans    

If you provide joint beneficial loans to your employees, remember to divide the total cash equivalent figure by the number of employees on the joint beneficial loan. Use this final figure to complete the cash equivalent for each employee on their P11D before you file your returns.   

If the final cash equivalent figure is nil, record this as £0.00 on the P11D before submission.

Get ready for changes to employer National Insurance  

Changes to employer National Insurance will take effect on 6 April 2025.   

HMRC is reminding employers of the details so you can prepare. The changes will be incorporated into existing payroll software for employers who already report PAYE. The threshold changes mean that some employers may be liable to pay employers’ National Insurance and required to report their employee pay and deductions to HMRC for the first time.  

Contribution rate increases  

The employer Secondary Class 1 National Insurance contributions rate will increase to 15% from 13.8%.  The associated Class 1A and 1B National Insurance contributions rates on expenses and benefits given to employees are also increasing to 15%.  

Secondary Threshold for employer National Insurance liability to reduce  

The Secondary Threshold is the point at which employers start to pay employer National Insurance contributions on an employee’s salary. The Secondary Threshold is decreasing from £9,100 to £5,000 per year.  

Employers will need to pay employer National Insurance contributions where they employ staff earning £5,000 a year or more, and report these payments to HMRC.  

Those new to paying employer National Insurance contributions will need to register with HMRC to use payroll software through PAYE.  

Employment Allowance changes 

The Employment Allowance (EA) reduces eligible employers’ National Insurance contributions liability. The EA is currently restricted to employers with National Insurance contributions bills of less than £100,000 in the previous tax year. From 6 April 2025, the £100,000 threshold will be removed, and the maximum amount of EA will increase from £5,000 to £10,500 meaning more eligible businesses will be able to claim, and at an increased amount. Abolition of the £100,000 EA threshold means that, from 6 April 2025, employers will no longer need to consider State aid where they had done so because of the threshold restriction.  

Most businesses or charities can apply for Employment Allowance. However, they cannot do so if they are a public body or a business whose activities wholly or mainly involve the performance of functions which are of a public nature. Whether these functions are publicly funded can indicate functions of a public nature, but funding alone is not a deciding factor. If the company has just one director and that director is the only employee liable for secondary Class 1 National Insurance contributions they are also ineligible.  

.