Employer Bulletin: June 2022

HMRC have published their Employer Bulletin for June 2022. We have summarised the key content for you, with links to our detailed guidance on the topics covered.

PAYE

Changes to HMRC webchat service

• Following a three-month pause and review, HMRC are now offering webchat services for employers on their reporting obligations when submitting PAYE submissions through Real-Time Information (RTI).
• They will shortly be bringing back a service for contractors for monthly and annual returns and trialing digital assistants/chat bots.

Increase in National Insurance thresholds

In their Spring Statement 2022, the government announced an increase in National Insurance Contribution (NIC) thresholds for the 2022-23 tax year.

The threshold changes will take effect from 6 July 2022, meaning employees will pay NICs on less of their income.

• The Primary threshold from 6 July 2022 to 5 April 2023 will be £242 per week or £1,048 per month, equivalent to £12,570 per year.

The lower profits limit for self-employed people also increases:

• The annual lower profits limit will be set to £11,908 for 2022-23. This is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570
• Self-employed people are no longer required to pay Class 2 NICs on profits between the Small Profits threshold (£6,725) and Lower Profits limit (£11,908), but will still be able to build National Insurance credits.

See Rates and allowances

Basic PAYE Tools: additional in-year release

An important update to the Basic PAYE Tools (BPT) will be released at the beginning of July 2022 to calculate the correct NIC deductions from 6 July 2022

Employers must install this new update and can do so by updating their Basic PAYE Tool settings now:

1. Click on ‘Settings’ in the top right-hand corner of Basic PAYE Tool
2. Set the automatic updates to ‘Yes’.

Check you are using the right PAYE reference

When making PAYE payments to HMRC, check your payment reference number. If you use the wrong reference your payment may not be recognised which can lead to penalties and charges even if you have paid on time.

• Your online banking may default to a previous payment reference. Check it's right every time you pay HMRC.
• For PAYE it should be a 13-character reference with four extra characters if you are not paying for the current period.
• You can find your reference on:
  • The letter HMRC sent you when you first registered as an employer.
  • The front of your payment booklet.
  • The letter from HMRC that replaced the booklet.
  • Your Business tax account if you’ve already added Employer PAYE enrolment to it.

Reporting PAYE in real-time

Following HMRC’s review of the risk-based approach to late filing PAYE and late payment penalties, they have confirmed that this approach will continue for 2022-23. As a result:

• Late filing and late payment penalties will continue to be considered on a risk-assessed basis rather than being issued automatically.
• The first penalties for the tax year beginning 6 April 2022 will be issued in August 2022.

Late filing penalties

• HMRC will also continue not to charge penalties automatically if a Full Payment Submission (FPS) is filed late but within three days of the payment date and there is no pattern of persistent late filing.
• Employers who persistently file after the statutory filing date but within three days will continue to be monitored and may be contacted or considered for a late filing penalty.

See Penalties: PAYE and late payment and Penalties: RTI (Real-Time Information) for PAYE

Reporting your payroll information accurately and on time

The payment date you report on your FPS should be on or before the date you pay your employees, not the payroll run date or another date from your payroll system, unless the normal payment date falls on a non-banking day (Saturday, Sunday or bank holiday).

When a regular payday falls on a non-banking day, for PAYE and NICs purposes the payment is treated as having been made on the regular payday, even though it is made on the:

• Last working day before the regular payday.
• Next working day after the regular payday.

This is also the date you should put on the FPS as the ‘payment date’.

It is important to check this and make any changes to your payroll software so that when you report, you use the correct payment date or you may receive a penalty.

• If you cannot report payments on time and have a reasonable excuse you should use a late reporting reason code for every payment on the FPS where the circumstances apply.

See RTI: Real-Time Information for PAYE

Generic Notification Service electronic warning messages

These messages are used to notify you that you have not filed or paid on time and give you a chance to review your submission process to ensure things are correct in the future.

Messages will be sent to you either:

• Once in a month if HMRC receives an FPS later than the payment date without a valid reason.
• On the 11th or 12th of the month if HMRC has not received an FPS for the month that just ended on the 5th or an EPS stating no employees were paid in that month.

How to access Generic Notification Service electronic warning messages

• Log into PAYEOnline and select generic notifications from within the ‘Notice summary’ section.
• Use the PAYEDesktop Viewer or your commercial software.
• Access Business tax account and use the ‘messages’ link.

Student and Postgraduate Loans

Off-Payroll Working

Student or Postgraduate (SL or PGL) loan deductions should not be taken for workers who are subject to the Off-Payroll Working rules. 

• These workers will pay their SL or PGL obligations through their Self Assessment return.

Start notifications

• Employers should update their payroll software using the correct loan or plan type from the notice and start taking deductions from the next available payday, even if the earnings are below the appropriate loan/plan type threshold.

Stop notifications

• Employers must cease taking the appropriate student or postgraduate loan deductions as stated on the stop notice from the next available payday, but only if they have been asked to by HMRC either in writing or by phone.

Once the notifications have been actioned, they must be kept for three years. Do not return the notice to HMRC.

P11D and P11D(b) filing and payment deadlines

• You need to report any Class 1A National Insurance contributions owed for the year ended 5 April 2022 and send any P11D forms by 6 July 2022.
  • Failure to do so may result in a penalty.
  • Any Class 1A National Insurance you owe must reach HMRC by 22 July 2022.
  • The April 2022 Employer Bulletin contained detailed information on how to do this.

What you need to file

If you paid any benefits or non-exempt expenses, or if you payrolled any benefits, you need to file a P11D(b) to report any employer’s Class 1A NICs liability.

• Include the total benefits liable to Class 1A NICs even if you taxed some or all of them through the payroll.
• Send a P11D for each employee in receipt of benefits or non-exempt expenses unless you registered with HMRC online before 6 April 2021 to tax them through the payroll.
  • If you did not register online but then went on to tax benefits through your payroll, you still must send a P11D form but mark clearly (on each form) which benefits have already been taxed through the payroll.

If you have not yet registered online to payroll company benefits, you may wish to do so now for the 2023-24 tax year.

You have not paid any expenses or benefits you only need to tell HMRC that you do not need to make a return if HMRC sent you a paper P11D(b), an electronic notice to file a P11D(b), or a reminder to file a P11D(b) letter.

See P11D: Reporting benefits and expenses and Payrolling of benefits

How to make sure you’ve filled everything in correctly: tips based on some of the most common mistakes:

• Do not put ‘6 April 2021’ in the start date or ‘5 April 2022’ in the end date for Company cars, unless these are actually the dates your employee received or returned a company car.
  • If your employee had the car at the start of the tax year, leave the ‘from’ box blank.
  • If they kept the car into the new tax year, leave the ‘to’ box blank.
  • Ensure you have included the Approved CO2 emissions figure even if that figure is zero.
  • When reporting a hybrid car with an approved CO2 emissions figure between one to 50, ensure you have included the approved zero-emissions mileage
  • If you’re sending a paper P11D(b) form, do not forget to sign it.
  • Only send one P11D(b) for each scheme, showing the total amount due, do not send a separate one for employees and directors.
  • Check your P11D(b) to see if you need to use the ‘adjustments’ at Part 4 before you complete Part 1 box C. If you do need to make an adjustment, leave Part 1 box C blank.
  • When reporting a Beneficial Loan ensure that you’ve completed all parts of Section H.

See P11Ds: Employers' checklist & top tips

Where to send amendments or paper P11D and P11D(b):

P11D and P11D(b)
HM Revenue and Customs
BX9 1WE

Paying Class 1A National Insurance contributions due on 22 July 2022

Electronic payment for Class 1A NICs for the year ended 5 April 2022 must clear the HMRC account by 22 July 2022.

• Use your 13-character Accounts Office reference followed by 2213 with no gaps between the characters to ensure your payment is correctly allocated.

Employers providing medical benefits update

The April 2022 Employer Bulletin explained how refunds received from medical benefit providers should be reported for employers reporting Benefits in Kind by Payrolling or the P11D process.

Refunds for medical benefit provided under Optional remuneration arrangements (OpRA), should be dealt with as follows:

• Where the reduced cost of the benefit remains higher than the amount of earnings given up, the reduced cash equivalent of the benefit is the amount charged under the OpRA rules
• Where the reduced cost of the benefit falls below the amount given up, the amount of earnings given up is the amount to be charged under the OpRA arrangements rules

If you need to adjust the value of a benefit provided in 2020-21 or earlier and you:

• Have payrolled the benefit, you can submit an amended end of year return.
• Have reported the benefit using a P11D, you will need to send in a paper P11D form.

If you need to adjust the value for medical benefits provided in 2021-22 and have already payrolled the amount, follow the advice on GOV.UK for correcting the taxable amount. If you have already filed your P11D and P11D(b), follow the above advice for 2020-21.

See Medical benefits and health checks and Salary sacrifice & optional remuneration schemes (OPRA)

Reporting expenses and benefits: company cars

Make sure you are correctly recording the car type, particularly for diesel cars.

• Since 2019-20 Diesel cars which meet Euro 6d standard should be recorded as car type F not car type D.
• If you have, or are reporting diesel cars as car type D, check that you are using the correct car type for the vehicles in question.

See Company cars

Coronavirus (COVID-19) updates and information

Enterprise Management Incentive and Save As You Earn

• The COVID-19 easements ended on 6 April 2022.

See Employment-related securities: What’s New? March 2022 for more details.

Social security coordination with the EU: COVID-19 easement ending

During the pandemic, HMRC disregarded changes to individuals’ work locations caused solely by COVID-related restrictions when deciding whether NICs were due in the UK. This ends easement on 30 June 2022.

• From 1 July 2022, HMRC will consider all changes to work location under the standard social security coordination rules when deciding whether UK social security legislation applies, and UK NICs are due.

Tax updates and changes to guidance

When completing the first FPS for new starters:

• Obtain and enter your employee’s correct address and post code and use their P45 information to record their previous pay, tax and student loan (if applicable).

Only use any tax code or previous pay or tax changes received directly from HMRC.

• If you use the starter checklist to add the employee onto your payroll records and you receive the P45 after you have submitted your first FPS you do not need to update the previous pay, tax, or tax code on your payroll software, only update student loan details (if applicable).

See PAYE: Starter checklist new employee 2022-23

Updated guidance on how tips, gratuities and service charges are taxed

In April 2022, HMRC published an update to the E24 guidance on tips, gratuities, service charges and troncs to reflect the shift towards customers paying tips electronically, including through digital apps.

Making a payment made electronically does not change the basic principles for deciding how tax is to be accounted for and whether a National Insurance liability arises.

• Where the employer collects the tips and pays them to employees, the employer must deduct income tax and NICs from these earnings.
• Where customers pay tips directly to staff, each employee is responsible for declaring these earnings to HMRC who will adjust their tax code to collect the tax due. These payments are not subject to NICs.

See Tips, gratuities and troncs

Sign up now for Making Tax Digital for VAT

Making Tax Digital (MTD) has now been extended to all VAT-registered businesses across the UK, meaning they should now be using software to keep records digitally and submit tax returns to HMRC.

See Making Tax Digital: VAT (subscriber guide)

Election for a separate PAYE scheme: form P350

Employers may elect to have multiple employer PAYE references (schemes) for separate groups of employees, e.g. for wages and salaries or for separate branches of their organisation.

From 6 April 2022 a change has been made to Income Tax (PAYE) Regulation 98 covering ‘Multiple PAYE Schemes’ to allow employers to elect during a tax year.

• Under the new rules an employer must make an election before the beginning of the tax month immediately before the tax month for which the election is to have effect e.g. if you want to make an election that takes effect from 6 May, you have to make the election before 6 April.
• A late election will be treated as if it had been made for the tax month immediately following the tax month for which the election was to have effect.
• Notice of cancellation must be given before the beginning of the tax month for which the election is to be ceased. Cancellation does not prevent the making of a new election for that or a later tax month.
• An election which has not yet come into effect may be cancelled at any time before the beginning of the tax month for which it is to have effect.

Multi-factor authentication used on business tax account

As an additional security feature, HMRC has multi-factor authentication on Government Gateway accounts including the business tax account.

• When logging into your account you will be sent a code by text or voice call to your designated telephone number.
• If you wish to change your phone number or how you receive the code you can do this by logging into your business tax account and using the Manage Account function.
• If you cannot log into your business tax account, but someone else in your business can, they can do this for you.
• If no one can log into your business tax account contact: Online Services Helpdesk: 0300 200 3600

General information and customer support

Employers: make sure your contact details are up to date for The Pensions Regulator

The Pensions Regulator (TPR) writes to you as an employer to keep you up to date with the Auto-enrolment tasks you need to complete and when they need to be done by.

Ensure the Pensions Regulator has the most up-to-date contact information for you (postal address and email) so you can receive the relevant correspondence, by using the Pensions Regulator’s nominate a contact form.

Claiming tax relief on work expenses

The cost of living increase means it’s never been more important for your employees to claim tax relief on work-related expenses.

Some employees can get tax relief on expenses their employer has not reimbursed them for. This includes things like:

• Uniforms and work clothing.
• Buying equipment.
• Professional fees and subscriptions.
• Using their own vehicles for work travel (this does not mean their journey from home to work).
• Working from home.

Employees can check they are eligible by using the eligibility checker. If they qualify they can claim using their Government Gateway account.

There are also other ways to make sure employees keep more cash in their pocket, such as Tax-Free Childcare, Marriage Allowance and Child Benefit. 

See Employee expenses 

Tax-Free Childcare: help for your employees

• For every £8 a parent pays into their Tax-Free Childcare account, the government adds £2.
• Eligible parents with children under 12 could get up to £2,000 per child per year or up to £4,000 for each disabled child under 17.

See Childcare: Employer provision

Getting more information and sending feedback

Make sure you are kept up to date with changes by signing up to receive HMRC email alerts.

You can also follow HMRC on Twitter @HMRCgovuk.

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External link

Employer Bulletin: June 2022