Employer Bulletin: July 2024

HMRC have published their Employer Bulletin for July 2024. We have summarised the key content for you, with links to our detailed guidance on the topics covered.

Changes to PAYE repayments 

• From 31 May 2024, HMRC will no longer automatically issue repayments by cheque to employees who receive a tax calculation letter. Instead, employees must claim their repayments at Tax overpayments and underpayments. 
• Instructions on how to claim will be included in the tax calculation letter, including alternative options for customers who cannot claim their repayment online. 

See Time limits for tax assessments, claims and refunds

PAYE Settlement Agreement (PSA) payment deadline and calculation reminder

• Tax and National Insurance Contributions (NICs) due under a PSA must be paid by 22 October following the end of the tax year to which the PSA applies (or 19 October if you pay by post). Late payments may result in penalties and/or interest being charged.
• Employers must send their calculations to HMRC before making the payment.
  • Calculations can be submitted online via PSA1 calculation form.
  • A calculation must be submitted even if there is nothing to pay.
• Once the PSA1 has been processed HMRC will automatically issue a payslip confirming the amount due and the payment reference number. 

See PAYE Settlement Agreements

Football agents' fees and contracts

• HMRC have issued guidance 'Help with football agents' fees and dual representation contracts'.
• These are guidelines on dealing with fees charged by football agents when a player transfers from one club to another or when a playing contract is negotiated with their current club.
• The new guidelines outline HMRC's views on dual representation contracts:
  • To help all parties understand HMRC's view on issuing that increase or lower Compliance risk.
  • Provide advice on audit trails, evidence and documents that should be retained by the parties.
  • Explain HMRC's view of the Football Association (FA) Football Agent Regulations published in January 2024.
  • Set out any employment reporting obligations.

See Football agents' fees and contracts

Operating payroll: Real-Time Information (RTI) for Off-Payroll Working (IR35)

• Where the IR35 rules apply, the individual is classed as a deemed employee. If you are the deemed employer:
  • You should add the deemed employee to your existing payroll like any other starter.
  • If you prefer you can set up a new payroll specifically for deemed employees.
• Records of all payments, including Income Tax and NICs deducted, should be maintained and reported to HMRC through RTI using a Full Payment Submission.
• When running payroll, the RTI flag (sometimes referred to as the off-payroll worker marker) should be set to show the individual is an off-payroll worker.
• A deemed employer must not make deductions for student or postgraduate loan repayments from payments made to their deemed employees. The deemed employee is responsible for these payments via their own Self Assessment tax return. 

See Off-Payroll Working: PSCs & Private Sector Engagers and See IR35

Payroll Giving

• Payroll Giving allows your employees to support charities and receive tax relief on their whole donation. 
• Tax relief is given to an employee who regularly donates at source by a direct deduction from their salary. The level of tax relief depends on the individual’s marginal rate of tax. 
• If employers do not have a scheme already set up and wish to do so, they should contact an Approved Payroll Giving agency. The agency will provide a contract setting out the details of the scheme, along with all the necessary forms to operate the scheme.

Reporting advances of salary when paid on account of earnings

• Salary advance arrangements allow employees to access part of their earned salary before the normal payday, either directly from the employer or through a third party. These are known as Salary Advance Schemes.
• From 6 April 2024, when certain conditions are met, employers must not report a salary advance to HMRC’s Real-Time Information (RTI) system until the payment of the remainder of the salary instalment. This means HMRC will now only expect one RTI report for each pay period.
• These conditions are:
  
  • The employee’s salary is ordinarily paid at regular intervals of between one week and one month and the employer pays part of the salary in advance. 
  • The salary advance reasonably represents work undertaken or obligations performed by the employee under their contract with the employer and no other relevant payment for this work has been made.
  • The employer makes a regular relevant payment to the employee at the regular payday after the advance payment is made, they should reduce the regular relevant payment by the amount of the salary advance.

See Change to reporting of salary advances

P11D and P11D(b) filing and payment deadlines

• Employers should have reported the amount of Class 1A NICs owed for the tax year ending 5 April 2024 to HMRC by 6 July 2024.
  
  • Failure to do so may result in penalties.
  • Any Class 1A National Insurance owed must reach HMRC by 22 July 2024.
• If there are any errors in P11Ds, employers must now complete the online P11D amendment form to alter the incorrect submissions. 

What you need to file

• If employers paid any benefits or non-exempt expenses or payrolled any benefits: 
  • A P11D(b) must have been filed to report any employer’s Class 1A NICs liability.
  • It should include the total benefits liable to Class 1A NICs even if some or all of them are taxed through the payroll.
  • A P11D must have been submitted for each employee in receipt of benefits and or non-exempt expenses, unless the employer is registered with HMRC online before 6 April 2023 to tax them through payroll.
  • If no registration was made but some or all benefits were taxed through the payroll, a P11D must still be submitted for all benefits that were not payrolled.
• If you have not yet registered online to payroll company benefits, you may wish to do so now for the 2025-26 tax year.

Nothing to declare

• Employers only need to tell HMRC that they do not need to make a return if HMRC has sent an electronic notice to file a P11D(b) or a reminder to file a P11D(b) letter and the employer has not paid any taxable expenses or benefits to employees. 

See Remember to declare 'no Class 1A NICs to pay'

Common mistakes when completing a P11D or P11D(b)

• Do not put ‘6 April 2023’ in the start date and or ‘5 April 2024’ in the end date for company cars, unless they are genuinely the dates your employee received or returned a company car. 
• Submissions of P11D and P11D(b) must be done all together and only one P11D(b) should be used for each scheme, showing the total amount due.
• Check if an ‘adjustments’ section is needed in the P11D(b). 
• Include the approved CO2 emissions figure for a fully electric car. 
• Include the approved zero emissions mileage when reporting a hybrid car with approved CO2 emissions between 1 and 50g/km. 
• For any car changes that an employee has within the Tax Year, a P46 Car form must be submitted.

See P11D forms

Class 1A NICs payment deadline 

• Electronic payments for Class 1A NICs for the tax year which ended 5 April 2024 must be paid by 22 July 2024.
• The payment reference should be the employer's 13-character Accounts Office reference followed by 2413. The reference should have no gaps between the characters.

See National Insurance: Rates

Time to Pay service for PAYE and VAT customers

• The eligibility requirements for VAT and PAYE Time to Pay arrangements have changed and more employers are now eligible. 
• Employers can set up a PAYE payment plan online if they:
  • Have missed the deadline to pay an employer PAYE bill.
  • Are registered for digital services.
  • Owe £50,000 or less.
  • Have debts that are five years old or less.
  • Do not have any other payment plans or debts with HMRC.
  • Have sent any employers’ PAYE submissions and Construction Industry Scheme returns that are due.
• Employers can set up a VAT payment plan online if they:
  • Have missed the deadline to pay a VAT bill.
  • Owe £50,000 or less.
  • Have a debt for an accounting period that started in 2023 or later.
  • Do not have any other payment plans or debts with HMRC.
  • Have filed all your tax returns.
• A VAT payment plan cannot be set up if the employer is in the Cash Accounting Scheme, Annual Accounting Scheme or makes payments on account.

See Time to Pay agreement

Self Assessment threshold change

• HMRC remind us that from 2023-24 the threshold for individuals taxed through PAYE only has increased from £100,000 to £150,000. These individuals will not need to complete a tax return unless they also meet one of the other criteria, for example:
  • Receive any untaxed income over £2,500.
  • Are a partner in a business partnership.
  • Have to pay the High-Income Child Benefit Charge.
  • Are a self-employed individual with a gross income over £1,000.
• From 2024-25 onwards the income threshold for completing a tax return for PAYE-only taxpayers will be removed.

See Do I have to file a tax return?

Spotlight 64: Warning for employment agencies using umbrella companies

• HMRC is aware of some umbrella companies that use employment and recruitment agencies to promote their tax avoidance schemes.
• As a business employers need to be aware of the potential dangers of umbrella companies that operate tax avoidance schemes. Spotlight 64 details potential risks for businesses using non-compliant umbrella companies, these include potential penalties and reputational damage.
• Spotlight 64 also outlines steps businesses can take to protect themselves and their workers.
• If you suspect an umbrella company is not complying with the tax rules, you can report it to HMRC.

See Spotlight 64: Employment agencies using umbrella companies

Reporting profits on a tax-year basis

• From 2023-24 all sole trader and partnership businesses must report their profits on a tax year basis.
• The transitional profit from the previous accounting date in 2022-23 up to 5 April 2024 must be accounted for on the Self Assessment return due by 31 January 2025. This transitional profit will be spread over five years by default including 2023-24.
• Accounting periods ending on 31 March will be treated as equivalent to those ending on 5 April.
• There is no change to the partnership return, form SA800 because all adjustments for transitional profit and overlap relief are made on the individual partners' returns.
• Profits of the 2023-24 tax year can be reduced by any overlap relief which is entered on the 2023-24 Self Assessment return.
• There is an online service to establish the amount of this relief with HMRC.

See, Basis Period reform: At a glance.

Employment-Related Securities (ERS),  end-of-year return deadline.

• The deadline for submission of 2023-24 online ERS returns was 6 July 2024. All returns, including nil returns, must have been submitted by that date to avoid late filing penalties.
  • If you missed the deadline a £100 late filing penalty will be issued.
  • Additional automatic penalties of £300 will be charged if you have not submitted the return within three months and a further £300 will be charged if it is still outstanding within six months. 
  • If you appeal against a late filing penalty, an end-of-year return must still be submitted to prevent further penalties.
• To submit an ERS return you must have registered your scheme on the ERS online service.
• If a scheme has been registered in error, or is no longer operating, the scheme must be ceased online. Agents can't open or close a scheme on behalf of an employer. 
• An ERS scheme needs to be linked to a live employer PAYE scheme. If you are closing your PAYE scheme, you may also need to cease your ERS scheme.

See Employment-Related Securities: Reporting.

External links

HMRC Employer Bulletin July 2024