Guidance

August 2024 issue of the Employer Bulletin

Published 14 August 2024

Introduction

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

PAYE

Tax updates and changes to guidance

General information and customer support

HMRC’s support for customers who need extra help

HMRC’s 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

Employer liabilities and payments viewer — ‘Earlier Year Update’ becomes ‘end of tax year adjustment’

Feedback has been received that Employer liabilities and payments viewer is still using the label ‘Earlier Year Update’ (EYU) for adjustments to previous tax years when this ceased to be a valid submission type for tax years from 2020 to 2021. Therefore:

• year ended 5 April 2019 — EYU or Full Payment Submission (FPS) will be accepted
• year ended 5 April 2020 — EYU or FPS will be accepted
• year ended 5 April 2021 and later years — adjustment to be made by submission of FPS only

When looking in the online account, you will now see new terminology where end of tax year adjustments have been made for 2020 to 2021 or later years. If you are reviewing 2019 to 2020 or earlier years, you will continue to see ‘Earlier Year Update’.

Electronic payment deadline falls on a weekend

In September 2024 the electronic payment deadline falls on Sunday 22 September 2024. To make sure your payment for the month reaches us on time, you need to have funds cleared into HMRC’s account by 20 September 2024, 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 payment is 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.

For more information visit Pay employers’ PAYE.

Student and postgraduate loans

If you receive a student loan or postgraduate loan start notice (SL1/PGL1) or both from HMRC for your employee, it is important that you check and use the correct:

• loan or plan type on the start notice
• start date shown on the notice

This makes sure that the employee does not pay any more or less than they have to.

If the employee’s earnings are:

• below the respective student loan and postgraduate loan thresholds, you should update the employee’s payroll record to show they have a student loan and or postgraduate loan and file the start notice — you do not need to return this to HMRC
• above the respective student loan and postgraduate loan thresholds, and deductions have not been taken, HMRC will send a generic notification service prompt as a reminder — if deductions still have not started, we may contact you directly

Deductions should continue until HMRC tells you to stop.

If you have not received a start notice from HMRC, but your employee tells you they have a student loan, ask them which plan or loan type they have.  If your employee is unsure about the correct plan or loan type they should be repaying, they can check by logging to their student loan online account. 

You should update your payroll software to start deducting and check all future start notices you receive from HMRC to make sure your employee is paying the correct amount.

For more information, read starting student loan and postgraduate loan deductions — checking plan and loan type guidance.

P11D and P11D(b) for tax year 2023 to 2024

P11D and P11D(b) filing and payment deadlines

The deadline for informing us online about any Class 1A National Insurance contributions (NICs) that you owe for the tax year ending 5 April 2024 was on 6 July 2024. If you have still not done this, you need to submit without delay to avoid any further penalties which may be issued.

Any Class 1A National Insurance you owe must have been paid by 22 July 2024.

How to submit P11D and P11D(b)

You must submit your P11D and P11D(b) online. You can use the following quick and easy online methods:

• commercial payroll software
• HMRCs PAYE Online service

You must submit all your P11D and P11D(b) together in one online submission.

What to file 

If you paid any benefits and or non-exempt expenses, or if you payrolled any benefits, you need to file a P11D(b). Include the total benefits liable to Class 1A NICs even if you taxed some or all of them through your employees’ pay.

The P11D(b) is used to report any employer’s Class 1A National Insurance contribution liability.  

You need to submit a P11D for each employee in receipt of benefits and or non-exempt expenses unless you registered with us online before 6 April 2023. If you did not register online but then went on to tax some or all benefits through your payroll, you still must submit a P11D online for all benefits that were not payrolled.

It is important that you complete your P11Ds correctly first time. If you make a mistake, you will need to complete an online P11D amendment form to alter the incorrect submissions. Further information can be found at expenses and benefits for employers.

There are a number of live webinars available covering submitting your P11D and P11D(b). Further guidance on how to complete a P11D and P11D(b) is available.  

Payrolling

If you have not already registered online to payroll your company benefits, you may wish to do so now ahead of the 2025 to 2026 tax year. If you are able to payroll all your benefits, you will no longer need to send any P11Ds. HMRC no longer accepts informal payrolling of benefits.

Nothing to declare

You only need to tell us that you do not need to make a return if we sent you an electronic notice to file a P11D(b) or a reminder to file a P11D(b) letter. You can declare a no return of Class 1A National Insurance contributions.

Common mistakes when completing a P11D or P11D(b)

Some common mistakes to watch out for are:  

• do not put ‘6 April 2023’ in the start date and or ‘5 April 2024’ in the end date for your company cars, unless they are genuinely the dates your employee received or returned a company car
• your submissions of P11D and P11D(b) must be done all together, you are unable to submit over several days — only submit once you have completed all P11Ds and your P11D(b)
• when reporting a fully electric car, make sure you have included the approved CO2 emissions figure when reporting a hybrid car with an approved CO2 emissions figure between 1 and 50g/km, make sure you have included the approved zero emissions mileage
• only send one P11D(b) for each scheme, showing the total amount due — do not send a separate one for employees and directors, as we treat each separate P11D(b) as an amendment to any we have previously received
• check P11D(b) to see if you need to use the ‘adjustments’ section

Company Car tax Calculator

A new version of the Company Car Tax Calculator is available. For any car changes that an employee has within the tax year, a P46 Car form must be submitted.

Tax calculation repayments for PAYE customers

HMRC is changing the way it repays the majority of its PAYE (Pay As You Earn) customers who are eligible for BACS refunds and can claim their repayment online.

Previously, any employees who received a tax calculation letter and did not claim the repayment online would automatically receive a cheque after 21 days. From 31 May 2024 cheques are no longer issued automatically. Customers will need to take an action to receive their repayment.

Customers can claim their repayments at Tax overpayments and underpayments. They will be able to request a cheque through this process if preferred. Instructions on how to claim are in their tax calculation letter. This includes alternative routes for customers who cannot claim their repayment online.

Tax updates and changes to guidance

Supporting employees with changes to the High Income Child Benefit Charge

From 6 April 2024, the threshold for the High Income Child Benefit Charge increased to £60,000, with a taper up to £80,000.

If your employees, or their partners, have incomes between £60,000 and £80,000 it may be in their financial interest to claim Child Benefit. The tax charge is 1% of the Child Benefit award for every £200 of income between £60,000 and £80,000. If an employee’s income is over £80,000 the charge is the same as the Child Benefit they have received.

Your employees may now be interested in claiming Child Benefit or in restarting their payments if they have previously opted out. The easiest way for your employees to get Child Benefit is through the HMRC app or online. New claims are automatically backdated for 3 months, or to the child’s date of birth if later.

Paying the charge for previous tax years

Remind your employees that if they or their partner claimed Child Benefit and the higher earner had an individual income of over £50,000, they may have to pay the tax charge for 2023 to 2024. They can check the online calculator to find out more. If they need to pay the charge, they must register for Self Assessment.

Guidance on the High Income Child Benefit Charge is available.

Expanding the cash basis

From the 2024 to 2025 tax year, the cash basis will become the default way to calculate income and expenses for self-employed people and partnerships who are completing and submitting their Income Tax Self Assessment return.

If you wish to use traditional accruals accounting, or are excluded from using the cash basis, from 2024 to 2025 you will need to opt out of this when submitting your Self Assessment return by ticking the relevant box on the return to confirm you have used traditional accruals accounting. The first return for which this will be required is the 2024 to 2025 return, due by 31 January 2026.

These changes only apply to the cash basis for unincorporated trading income. No changes are being made to the cash basis for property businesses, or to how limited companies work out their profits. 

Cash basis definition

The cash basis is a method of accounting that self-employed people and partnerships can use to calculate trading profits for income tax purposes, as an alternative to traditional accruals accounting. 

The cash basis allows eligible businesses to account for business income and expenses when money is received or paid out. Traditional accruals accounting allows eligible business to account for business income and expenses on the date goods or services are invoiced.

This method reduces the complexity of keeping records, calculating profits, and reporting income to HMRC while still providing an appropriate measure of profits for many businesses.

As well as being the default method of calculating profits, other changes will be made to the cash basis for the 2024 to 2025 tax year onwards:

• the cash basis has been set as the default way of calculating taxable profit, with an opt-out available to use traditional accruals accounting
• the turnover limits of £150,000 and £300,000 have been removed, allowing eligible self-employed people and partnerships of any size to use the cash basis
• loss restrictions have been removed so that cash basis users will be able to set their losses off against other income
• interest restrictions have been removed, allowing cash basis businesses to deduct all their business interest
• people with more than one business are able to choose whether they use the cash basis or traditional accruals accounting for each business they have, rather than having to pick one method for all of their businesses

Further information is available on the cash basis changes from the 2024 to 2025 tax year.

Basis period reform — reporting on a tax year basis

From April 2024, if you are self-employed or in a trading partnership, you will have to report your profits on a tax year basis.

If you do not already do so, you will need to declare your profits from the end of the previous accounting period in 2022 to 2023, up to 5 April 2024. Any additional profit, after overlap relief, will be transitional profit. By default, this transition profit is spread equally over the next 5 years including 2023 to 2024.

 Accounting periods ending on 31 March will now be treated as equivalent to those ending on 5 April.

To help you calculate your overlap relief and transitional profits, watch a video about basis period reform.

Get help with basis period reform (moving to the new tax year basis).

We have recently seen a major increase in requests to provide overlap relief figures and, at present, response times are not as quick as we would like, but we are now clearing the backlog. If you have applied and have not heard, do not contact us, as we expect to have cleared the current backlog in the coming weeks. Help us by only using  our online service to get your overlap relief figure if it is necessary, as it is not intended to be used to check a figure that you already hold.

We have also had some queries about how the Self Assessment return reflects the basis period changes for partnerships. Where such returns are made for a partnership, there are no changes to the partnership return (the SA800). This is because all adjustments for transitional profit and overlap relief are made on the individual partners’ returns.

We have also launched a full package of online interactive guidance showing how to work out your transition profit for these cases. Any figures entered into the interactive guidance do not form part of the return itself, it is there to guide completion of the boxes on the return.

Profits incurred in the 2023 to 2024 tax year can be reduced by any overlap relief which is entered on the 2023 to 2024 Self Assessment return.

Further guidance and support on basis period reform is available.

General information and customer support

Pensions for seasonal temporary staff

If you are an employer taking on extra staff over the summer, you must check if these workers are eligible for automatic enrolment into a workplace pension. 

Employers must individually assess any seasonal or temporary staff every time they pay them. This includes staff with variable hours and pay, whether they are employed for a few days or longer.

Employers who fail to comply with their workplace pensions’ duties may receive a warning notice with a deadline to comply. Those who continue to fail to comply risk a fine.

If you have staff who you know will be working for you for less than three months, you can use postponement to delay assessing those employees. This pauses the duty to assess those staff until the end of the three-month postponement period.

Find out more about automatic enrolment and postponement and employing seasonal or temporary staff on The Pensions Regulator website.

Employer registrations — check when you can expect a reply from HMRC

Once you have registered as an employer with HMRC, it can take up to 30 working days to get your employer PAYE reference number. In many cases it will be quicker. You can check when you can expect a reply from HMRC for a rough estimate.

We will not be able to respond to any telephone queries unless more than 30 working days have passed since the application was made.

Getting your new employees on the right pay

We know how time consuming it can be when taking on new employees and gathering all the information that is needed to make sure they are paid correctly. To make this as quick and easy as possible, there are a few simple tips you can follow to avoid making mistakes during the onboarding process.

1. Gathering the correct personal information from your new employee. It is important you get the right name, date of birth and National Insurance number from your new employees and enter this in the correct format. Double checking these against official documents, such as their passport, helps to make sure the information is correct.

2. Finding the correct starter declaration code and tax code. If your new employee does not have a P45, use the online starter checklist to find the appropriate codes.

3. Using the correct tax code with starter declaration code C. When the starter checklist determines your employee should be on starter declaration code C, use tax code BR. If you are unable to complete the checklist and your employee has no P45, use tax code 0T with starter declaration code C.

More information on taking on new employees can be found in HMRC’s employer help cards.

Get your employees to download the HMRC app for support with their tax and pay.

HTML format of Employer Bulletin

Since September 2020, material published on GOV.UK or other public sector websites must meet accessibility standards. This is so they can be used by as many people as possible, including those with:

• impaired vision

• motor difficulties

• cognitive impairments or learning disabilities

• deafness or impaired hearing

There is now a contents page, with links, which is fully scrollable. Articles have been put into categories under a heading which is within the introduction to make it easier to find the updates and information you are interested in.

The HTML format does allow you (dependent upon your web browser):

• to print off the document should you wish to keep a paper file:
  • select the ‘Print this page’ button underneath the contents and print to your local printer
• to save the document as a PDF:
  • select the ‘Print this page’ button and using the drop-down list on the printer select ‘print to PDF’, which allows you to save as PDF and file electronically
  • on a mobile device you can select more options, then select options to be able to save as PDF

Getting more information and sending feedback

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Send your feedback about this Employer Bulletin or articles you may wish to see, by email to [email protected].