Guidance

March 2024 issue of the Employer Bulletin

Updated 5 April 2024

Introduction

On 6 March 2024, the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, made his Spring Budget.

One of the headline tax measures relevant for employers was: 

Changes to the High Income Child Benefit Charge

The government announced the changes to the High Income Child Benefit Charge, and an increase to the threshold to £60,000 from 6 April 2024, with a taper up to £80,000. The charge will be 1% of the Child Benefit for every £200 of income that exceeds £60,000 and will equal the payment for income that exceeds £80,000.

Your employees may be interested in claiming Child Benefit or restarting Child Benefit payments if they have previously opted out. The charge is tapered, so if they, or their partner, earns between £60,000 and £80,000 it can still be worth their while financially to claim. Claims for Child Benefit can be made in the HMRC app or online and are automatically backdated for 3 months, or the date of birth of the child if later.

New guidance on changes to the High Income Child Benefit Charge has been published.

Information on all the measures announced can be found in Spring Statement 2024.

For an overview of all the tax legislation and rates announced, read the Spring Statement 2024: Overview of tax legislation and rates (OOTLAR).

Also, in this month’s edition of the Employer Bulletin there is an update on another Budget measure; National Insurance contributions, together with other important information for employers 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

Spring Budget — 2024 National Insurance contributions rate changes from 6 April 2024

 We are reminding employers that on 6 March 2024 the Chancellor announced the following National Insurance contribution changes: 

• a cut to the main rate of Class 1 employee National Insurance contributions from 10% to 8% from 6 April 2024

• rates for the self-employed across the UK will also be cut by a further 2 pence on top of the 1 pence cut to 8% announced at Autumn Statement — this means that from April 2024 the main rate of Class 4 National Insurance contributions for the self-employed will now be reduced from 9% to 6%

• the requirement to pay Class 2 will be removed from April 2024, with those who pay voluntarily still being able to do so, as previously announced in Autumn Statement 2023

• the government will consult on the details of the Class 2 reform later this year, as also previously announced in Autumn Statement 2023

You can read more about National Insurance changes in the Spring Budget Personal Tax Factsheet.

We emailed all employers on our database on 6 March 2024 asking them to take steps to prepare for the payroll changes that take effect from 6 April 2024, working with their software providers and IT delivery partners as appropriate. 

We appreciate the efforts employers and their software providers are making to be ready for 6 April 2024. However, we realise the timeline is tight and some employers may not be able to implement the changes to payroll systems in time. 

If employers are unable to make changes to take effect from 6 April 2024, they will charge their employees the incorrect Class 1 National Insurance contributions rate and need to correct this. Further information on fixing problems with running payroll is available.

HMRC’s Basic PAYE Tools will be updated ahead of 6 April 2024.

Paying PAYE

Paying PAYE and payment allocations

We often receive requests for reallocation of payments for PAYE Employers. 

To make sure your payments are allocated correctly when making PAYE payments to HMRC you need to include your 13-character Accounts Office reference. 

If you want to make sure that HMRC allocates your payment to a charge for a particular tax period, you need to add 4 numbers to the end of your Accounts Office reference. These final 4 numbers advise HMRC which month or quarter your payment is for, and the tax year.

The first 2 numbers is the tax year. For the 2024 to 2025 tax year the number is always 25.   The last 2 numbers relate to the tax month or quarter, for example, 01 for April, 02 for May, 03 for June or for Quarter 1.

For the period 6 April to 5 May 2024, the final 4 digits will be 2501.

You need to include all 17 characters without any spaces to make sure your payment is allocated correctly.

Further information on paying PAYE and payment allocations is available.

Variable Direct Debit

In October 2022 we introduced a new Direct Debit option for PAYE. The service enables you to set up a variable Direct Debit instruction, which authorises HMRC to automatically collect payments due from your bank account, based on the amount in your return. This ensures payments are received by HMRC on time and allocated to the correct charge.

The service can be accessed and managed through your PAYE Online service account. 

If you are making payments through the variable Direct Debit, or paying through the online service, you will not need to find the correct references to include with your payment, as the service will work out the numbers for you.

PAYE Settlement Agreement payment

When making a payment for your PAYE Settlement Agreement (PSA) calculation make sure you use your SAFE reference number. This is on the covering letter sent when your PSA was first formalised. If you do not have your covering letter, you will need to contact the HMRC office that formalised your agreement. Do not use your PAYE Accounts Office reference or PAYE reference as this will be incorrectly allocated. 

Once your calculation is processed HMRC will automatically issue a payslip confirming the amount due which also includes your reference number. It is not necessary to wait for your payslip as any amounts paid late may accrue interest. A payment on account will only be allocated once your calculation is processed and you will likely still receive a payslip. 

Further information on paying a PAYE Settlement Agreement is available.

National Minimum Wage

Annual rate increase 

The National Living Wage (NLW) and National Minimum Wage (NMW) are the lowest rate of pay per hour that most workers must be paid by law. It does not matter how many workers you employ, you must pay the correct minimum wage.

The NLW is higher than the NMW, currently workers get this if they are over 23. From 1 April 2024 the NLW will be extended to 21 and 22 year-olds fulfilling a recommendation that the Low Pay Commission made in 2019. 

NMW rates increase on 1 April 2024, further information on the new, current and past rates of NLW and NMW is available. 

To help you to get things right, there is a webinar on Getting ready for the NMW increase.

Common causes of underpayments

Paying the NMW can be more complex than just paying your workers the right rate. Some common causes of underpayments include:

• deductions and payments for items or expenses that are connected with the job

• unpaid working time, for example team handovers between shifts or time spent passing through security checks on entry and exit

• incorrect use of the apprenticeship rates, for example, paying the minimum wage apprentice rate when the worker is not a genuine apprentice or paying the minimum wage apprentice rate before a worker starts their apprenticeship or after it ends

These are just a few of the risks. A useful checklist for employers is available. 

Starting the new tax year — student and postgraduate loans

Student loan plan type and postgraduate loan thresholds and rates from 6 April 2024 are as follows:

• plan 1: £24,990

• plan 2: £27,295

• plan 4: £31,395

• postgraduate loan: £21,000

Deductions for:

• plan type 1, 2 and 4 remain at 9% for any earnings above the respective thresholds

• postgraduate loan remains at 6% for any earnings above the respective threshold

Guidance on the new student and postgraduate loan thresholds will be updated on 6 April 2024.

Notice of changes to PAYE, Real Time Information and Self Assessment returns — technical consultation on draft regulations

Summary 

On 14 March 2024, HMRC published a technical consultation seeking views on draft regulations which will introduce new requirements for employers, company directors and the self-employed to provide improved data through the tax system. Improved data will enable better outcomes for citizens, businesses, and government. HMRC welcomes responses to this technical consultation from taxpayers, businesses, employers, and all interested stakeholders.

Background 

In April 2023 the government published its response to the consultation, Improving the data HMRC collects from its customers. This response confirmed the government’s intention to legislate to require businesses to change the information they provide to HMRC through both Income Tax self-assessment and real-time returns completed by employers. As a result, the following changes will be effective from April 2025: 

• employers will be required to provide more detailed information on employees’ hours paid through Real Time Information PAYE reporting

• shareholders in owner-managed businesses will be required to provide the amount of dividend income received from their own companies separately to other dividend income, and the percentage share they hold in their own companies on their Self Assessment return

• the self-employed will be required to provide information on the start and end dates of self-employment on their Self Assessment return

The Finance Act 2024 on the legislation website, introduced powers to enable the collection of improved data through the tax system. Subsequent regulations will specify the new requirements and bring the provisions into force from April 2025. It is those regulations HMRC has published in draft for technical consultation. Interested stakeholders can email their views on the draft regulations to [email protected].

Investment Zone employer National Insurance contributions relief

The Investment Zone programme is designed to grow the economy, whilst empowering local places and supporting levelling up, by building knowledge-intensive clusters which build on areas’ existing strengths. 

The package of tax reliefs available in designated special tax sites within Investment Zones has been carefully designed to bring forward new investment by reducing the cost of doing business. Local government and research institutions can select from a flexible menu of interventions, including the tax offer, when designing their Investment Zone proposal.

Employer National Insurance contributions is to be included in the wider Investment Zone initiative and a zero rate of secondary Class 1 National Insurance contributions on the earnings of eligible employees up to £25,000 per annum. This will apply to employers with business premises in an Investment Zone special tax site, where the conditions to claim the relief are met. 

As announced at Autumn Statement 2023, the Investment Zone programme has been extended from 5 to 10 years. Each English Investment Zone will be provided with a £160 million envelope over ten years. This can be used flexibly between spending on interventions such as skills, research and development and local infrastructure, dependent on local need, and this single optional offer of tax incentives, scalable based on the number of eligible sites. The National Insurance contributions relief will be available for all new employees employed between the date special tax site designation takes effect and the special tax site’s end date.

The employee must be a new hire whose employment starts on or after 6 April 2022 and before the relevant sunset date. The employee cannot have worked for that employer, or an employer connected to the employer in the previous 24 months. At the start of the qualifying period, the employer must reasonably expect that the employee will spend a minimum 60% of their working time in the Investment Zone special tax site. The relief will apply for 36 months per eligible employee.

The zero-rate of secondary employer National Insurance contributions for new employees working in the Investment Zone special tax site will apply to their earnings above the National Insurance contributions secondary threshold up to and including the Investment Zone upper secondary threshold, which is equivalent to the Freeport upper secondary threshold. 

Guidance will be available for employers to self-assess eligibility to claim this relief in April 2024.

Further information on Investment Zone special tax sites with enhanced tax and National Insurance contributions reliefs and Investment Zones policy prospectus is available. 

Reporting expenses and benefits for the tax year ending 5 April 2024

All P11D and P11D(b) forms must be filed online. We no longer accept paper P11D and P11D(b) forms. We recommend you file using one of the following methods:

• HMRC’s PAYE Online service

• commercial payroll software

HMRC’s PAYE Online service is free and will allow submissions of up to 500 employees. All P11D forms and the accompanying P11D(b) form must be submitted online at the same time. The online service does not have a test facility.  To help you submit online, you will be able to register for the ‘submitting forms P11D and P11D(b) online’ webinar, dates will be available nearer the time. 

The deadline for reporting P11D expenses and benefits in kind and P11D(b) Class 1A National Insurance contributions is 6 July 2024.

If you make a mistake and need to submit an amendment

HMRC no longer accepts any paper amendments. If you make a mistake and need to submit an amendment, use the ‘correct an error’ link on the expenses and benefits for employers guidance.

Helping you to get it right first time

If you make a mistake or send in your form late, your employees could pay the wrong amount of tax and you could end up with a penalty. 

You need to submit a P11D(b) form if:  

• you have submitted any P11D forms 

• you have paid any employees’ expenses or benefits through your payroll

• HMRC has asked you to file a P11D(b) form, by sending you a notification to do so

Your P11D(b) form tells HMRC how much employers’ Class 1A National Insurance contributions you need to pay on all the expenses and benefits you have provided to your employees through your payroll, as well as any you have reported to HMRC on a P11D form. 

Nothing to declare

If HMRC has asked you to submit a P11D(b) form and you have nothing to declare, you can tell us you do not owe any employers’ Class 1A National Insurance contributions by completing a no return of Class 1A National Insurance contributions form. Only use this declaration if HMRC has asked you to submit a P11D(b) and you have nothing to declare.

Paying your Class 1A National Insurance contributions

There is a specific reference you need to use to make your Class 1A National Insurance contributions payment. For the 2023 to 2024 tax year this is your normal Accounts Office reference plus the numbers 2413 at the end. Do not leave a space between any of the numbers. 

This is an example of the correct format, but use your own reference number — 123PA001234562413. 

If you are paying at a bank or sending a cheque, you must use the correct payment slip, it is pre-printed with the reference in the correct format . If you do not use the right payment slip, or if you use an incorrect reference, we will not know you have paid your Class 1A charge and may send payment reminders and default notices until your payment is allocated correctly. More information is available on how to pay. 

For those employers payrolling benefits in kind

You may still have a Class 1A National Insurance contributions liability and you will still need to submit a P11D(b) form to tell us how much employer Class 1A National Insurance contributions you owe. You will also need to submit online P11D forms to show any benefits you paid that you did not payroll. You can find more information on payrolling your employees benefits and expenses. 

Those employers who have yet to join payrolling for 2024 to 2025 can register now to payroll your expenses and benefits from 6 April 2024. You need to register before the start of the tax year, if you register on or after 6 April 2024, you will be unable to start to payroll until 6 April 2025.

You will no longer need to submit a P11D form for each employee for whom you payroll benefits. Payrolling is quicker and easier. 

Informal payrolling 

We no longer accept informal payrolling arrangements. You must register to payroll your expenses and benefits.

If you have missed the deadline to register for 2024 to 2025 you will be unable to payroll until the 2025 to 2026 tax year and must revert to online filing of your P11D forms for the 2023 to 2024 reporting year.

Company car tax calculator

HMRC has developed a new car and fuel benefit calculator to replace the old calculator. The old calculator will be decommissioned from 6 April 2024, when the links will no longer work.

The new calculator will be fully accessible, have feedback routes and will be monitored to ensure continuous improvement.

Expansion of PAYE benefits in kind to authorised agents 

From May 2024, agents will be able to register to use the payrolling benefits and expenses online service.

Provided the agent has the correct permission, they can use the payrolling benefits in kind (BiK) service to register or remove benefits and expenses to be payrolled in the next tax year. The benefit and expenses covered include:

• mileage and motoring

• private medical

• relocation expenses

Agents will be able to register ready for payrolling from the start of the 2025 to 2026 tax year.

Mandating the payrolling of benefits in kind from April 2026

As set out in the Financial Secretary to the Treasury’s tax simplification update on 16 January 2024, the government is expanding the current payrolling process for the reporting and payment of Income Tax and Class 1A National Insurance contributions on benefits in kind (BiKs). This will mean that the payrolling of BiKs will be mandated from 6 April 2026. Further details on the simplification statement on the parliament.uk website, outlining the government’s plans is available. 

Payrolling the Income Tax due on benefits in kind is currently available to employers on a voluntary basis, with those who do not wish to payroll still able to file form P11D at the end of the year. Class 1A National Insurance contributions cannot currently be payrolled so a P11D(b) form still needs to be submitted at the end of the year. In light of the recent announcement HMRC encourages anyone who is able to begin payrolling voluntarily to do so in preparation. Agents will also be able to payroll benefits on behalf of employers from the end of April 2024.

HMRC is engaging with stakeholders to discuss our proposals to inform design and delivery decisions. Draft legislation will be published later in the year as part of the usual tax legislation process. HMRC will also work with industry experts to produce guidance, which will be made available in advance of 2026. 

If you wish to provide feedback relating to the mandation of payroll software to report benefits you can do so by emailing [email protected]. 

How this will affect employers 

If you provide BiKs to your employees, Income Tax and Class 1A National Insurance contributions will have to be reported and paid in real time through payroll software from 6 April 2026. The 2025 to 2026 tax year will be the last year that we will accept P11Ds and P11D(b)s for annual reporting of BiKs in most cases. 

HMRC will help businesses to prepare for the transition by providing guidance in advance of 2026.

PAYE tax calculator

HMRC is introducing a new calculator that will replace the existing PAYE tax calculator. The existing calculator will only be available until 5 April 2024, when the current tax year ends. 

The new PAYE tax calculator will be available on the HMRC tools and calculators from 6 April 2024. 

The new calculator will be fully accessible, have feedback routes and will be monitored to ensure continuous improvement. 

Company cars — classification of double cab pickups for capital allowances and benefit in kind purposes

HMRC updated guidance on the tax treatment of double cab pickups (DCPUs) on Monday 12 February following a 2020 Court of Appeal judgment. The guidance had confirmed that from 1 July 2024 DCPUs with a payload of one tonne or more would be treated as cars rather than goods vehicles for both capital allowances and benefit in kind purposes.

This guidance has now been withdrawn following the Government’s update on double cab pickups to legislate to ensure that DCPU vehicles continue to be treated as goods vehicles. 

Whilst the government consults on the draft legislation DCPUs with a payload of one tonne or more will continue to be treated as goods vehicles rather than cars. The legislation will be introduced in the next available Finance Bill.

Tax updates and changes to guidance

Plant and machinery allowances

HMRC has published a decision tool to help companies check if they can claim the 100% full expensing capital allowance or the 50% allowance for special rate expenditure. These allowances are for qualifying expenditure on plant or machinery.

Only companies can claim these allowances. They are for qualifying expenditure on new and unused plant or machinery incurred on or after the 1 April 2023.

The tool is available in the HMRC customer guidance. This helps companies find out if expenditure on new assets may qualify and calculates how much they may be able to claim. 

HMRC has also published guidance on disposing of plant or machinery when you have claimed one of these allowances.

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. 

HMRC has been working on increasing awareness of this, also known as basis period reform. HMRC has written to unrepresented customers in February 2024 to provide information and signposting to a range of support and releasing a YouTube video to help explain the changes.

Further guidance on Income Tax: basis period reform is available.

Construction Industry Scheme

Construction Industry Scheme reform

At Autumn Statement 2023, in the Summary of Responses to the Construction Industry Scheme (CIS) reform consultation, several changes were announced that will be introduced to the CIS from 6 April 2024. These include:

• adding compliance with VAT obligations to the Gross Payment Status (GPS) compliance test, with corresponding exceptions to VAT compliance obligations

• the first review of a GPS holder’s compliance history will also be brought forward from 12 months after application to 6

• expanding the grounds that HMRC can immediately cancel GPS in cases of fraud involving VAT, Income Tax Self Assessment, Corporation Tax Self Assessment and PAYE

• removing most payments from landlords to tenants from the scope of the CIS

• introducing a digital form for CIS subcontractor registrations and GPS applications

From 6 April 2024, telephone applications for CIS subcontractor registrations and GPS applications will no longer be available apart from for those who are digitally excluded. Print and post forms will remain in place until the new digital form is mandated, which is expected later in 2024.

The digital form will not, at this time be available to non-resident subcontractors that are sole traders and partnerships, who will continue to use the print and post option.

For more information of the CIS reform changes, please see the Agent Update: Issue 118.

CIS Repayments for limited company subcontractors 

We are approaching our busiest time of the year for processing repayment claims for limited company subcontractors, which follows the end of the PAYE reporting period in April 2024. 

Most limited company subcontractors can request a CIS repayment online, using the claim a refund of construction industry scheme deduction if you’re a limited company form. The claim a repayment online form enables you to request a repayment, without having to wait on the phone or write in.

To enable HMRC to respond to queries from customers who are most in need of our support, you will no longer be able to request a CIS repayment by telephone. If you wish to claim a refund for CIS deductions suffered in the current tax year, or during a tax year earlier than 2018 to 2019, you will need to send your claim to HMRC by post. Any customers who call to request a CIS repayment will be directed to use our online claim form, or to send their request by post if they are unable to claim online. 

Tax updates and changes to guidance

Claiming tax relief on work related expenses — don’t get caught out by bad tax advice

You and your employees might be able to claim tax relief for certain work-related costs. You can check if you are eligible to claim anything quickly and easily with HMRC’s tax relief for employees online tool.

Work-related costs employees may be eligible to claim include: 

• repairing and cleaning uniforms and work clothing

• buying work-related equipment

• professional fees and subscriptions 

• use of own vehicle for work travel, excluding journeys from home to work 

• travel and overnight expenses, where it has not already been reimbursed

While you may be eligible, keep in mind that some ‘tax refund companies’ might offer to make expense claims on behalf of employees just so they can claim a commission. If it turns out the individual is not eligible to claim, HMRC will have to claim the expenses back, this can leave individuals out of pocket. 

This is why HMRC’s new ‘Don’t Get Caught Out’ campaign is helping individuals recognise the signs of bad tax advice. It also encourages taxpayers to check if they are eligible for expenses before claiming. 

To help protect your employees, we have put together a pack of communication resources for claiming work-related tax relief. This includes intranet messages and staff posters which we encourage you to share with your employees to help them not get caught out by bad tax advice.

Raising Standards in the Tax Advice market — strengthening the regulatory framework and improving registration consultation

As announced at Spring Budget 2024, the government has launched a consultation on raising standards in the tax advice market. The consultation seeks views on ways to strengthen the regulatory framework and improve registration.

The consultation covers and asks questions about:

• potential approaches to raising standards

• whether the government should introduce a requirement for paid tax practitioners to be a member of a recognised professional body

• how professional bodies and the government can work together to raise standards of tax practitioners

• who should be included in any future requirements

• mandating registration with HMRC for tax practitioners who wish to interact with HMRC on behalf of their clients

Do not miss out on the chance to provide your views on the consultation on raising standards in the tax advice market: strengthening the regulatory framework and improving registration. 

Responding is easy, you can email your views to [email protected].

The consultation closes on 29 May 2024.

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, this includes 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].