Guidance

December 2022 issue of the Employer Bulletin

Published 7 December 2022

Introduction

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

PAYE

Your employees may be eligible for tax relief on their work related expenses

Reduction in the rate of National Insurance contributions from 6 November 2022 — updated guidance

Payrolling expenses and benefits for the 2023 to 2024 tax year

Electronic payment deadline falls on a weekend

Employer PAYE new recurring Direct Debit functionality

Tax updates and changes to guidance

Plastic Packaging Tax — check if your business needs to register

Company car benefits — miscalculation resolved

Changes to company car tax rates from April 2025

Working through an umbrella company

If you have deferred VAT outstanding, act now to avoid a penalty

Ukrainian arrivals paying tax in the UK if they work for an employer based in Ukraine

General information and customer support

HMRC is now using card readers to take payments

Make sure you stay on top of your workplace pension duties

The Administrative Burden Advisory Board (ABAB) — Tell ABAB report 2021 to 2022

Construction Industry Scheme — requests for payment and deduction statements

Interactive P2 (notice of coding) guidance — helping customers get it right

HMRC’s support for customers who need extra help

HMRC’s principles of support for customers who need extra help sets 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

Your employees may be eligible for tax relief on their work related expenses

Some of your employees may be able to get tax relief on expenses if you have not already reimbursed them. 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

Anyone can check if they are eligible to claim on GOV.UK and if they are, they can set up a Government Gateway user ID to access their personal tax account, if they do not already have one and claim online.

There are companies who will make a claim on an individual’s behalf. Their fees can be up to 50% of the refund and may also include an administration charge. These companies usually advertise on social media and online, and the information individuals need to give to these companies is the same as if they apply directly to HMRC. The benefit of applying to HMRC through GOV.UK is that individuals get to keep all the money they’re entitled to.

We have a list of things to look out for when individuals are choosing a tax agent.

You can help your employees by making sure your internal guidance and website is up to date and encourage them to claim tax relief on work related expenses via GOV.UK.

When reviewing your internal guidance and website:

• refer to the official HMRC guidance on GOV.UK
• promote the check what flat rate expenses you can claim tax relief on guidance on GOV.UK to employees
• promote claiming Income Tax relief for your employment expenses on GOV.UK — refunds claimed online are usually quicker, meaning the employees will get their money back sooner, it’s eco-friendly and free
• do not make reference to taking printed or written claim forms to your local tax office, as this facility no longer exists

If your employee is submitting a postal claim HMRC only accepts claims made using the official form P87.

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

Individuals can check what financial support is available and you can help make sure they do not miss out.

Reduction in the rate of National Insurance contributions from 6 November 2022 — updated guidance

Guidance has been updated to reflect the National Insurance contributions rate change that we told you about in the October 2022 Employer Bulletin.

We have also updated the fix problems with running payroll guidance. This advises you what to do if you are unable to charge the correct rate in National Insurance contributions for the periods from 6 November 2022.

We reminded employers that the National Insurance contributions rate would be reduced by 1.25 percentage points from 6 November 2022 for employees, employers and the self-employed for the rest of the 2022 to 2023 tax year. The reduction covered Class 1 (both employee and employer), Class 1A, Class 1B and Class 4 (self-employed) National Insurance contributions.

We also asked employers to remove the temporary generic message on payslips which explained the April 2022 National Insurance contributions uplift. We took the opportunity to also request employers make sure they are using the latest version of their payroll software.

In most cases, employers will correct any overpaid National Insurance contributions and a revised Full Payment Submission can then be submitted to make corrections.

HMRC’s Basic PAYE Tools has been updated to account for National Insurance contributions from 6 November 2022. You should make sure you are using Basic PAYE Tools version 22.2 (or later), this can be downloaded from GOV.UK.

We continue to work closely with payroll software developers on these changes and you should contact your software provider with any payroll queries in the first instance.

Payrolling expenses and benefits for the 2023 to 2024 tax year

You can register now to payroll your benefits from 6 April 2023.

You will no longer need to submit a P11D for each employee for whom you payroll benefits, payrolling is now quicker and easier. If you are a large employer, this will save paper and be better for the environment.

You can find out more on payrolling and reporting expenses and benefits in kind on GOV.UK.

Informal payrolling

If you already have an informal agreement with HMRC to payroll benefits for the 2022 to 2023 tax year, you can continue to submit P11Ds marked ‘Payrolled’. However, you should plan to formalise this agreement as soon as possible. HMRC may no longer accept new informal arrangements.

If you have had an informal arrangement in place you must register now to payroll your benefits.

Electronic payment deadline falls on a weekend

The 22 January 2023 electronic payment deadline is a Sunday. To make sure your payment for January reaches us on time, you need to have cleared funds in HMRC’s account on or before 20 January 2023, unless you are able to arrange a Faster Payment.

Remember it’s your responsibility to make sure your payments are made on time and if your payment is late, you may be charged a penalty.

Contact your bank or building society well in advance of making your payment, to check your single transaction daily value limits and cut off times. You can then make sure you know when to initiate your payment so we receive it on time.

Find out more about paying PAYE electronically.

Employer PAYE new recurring Direct Debit functionality

The due date for payment of PAYE liabilities is the 22nd of the month for monthly payers or the 22nd of the appropriate month each quarter for quarterly payers.

Employers now have the functionality to set up recurring Direct Debits which will cover these liabilities on an ongoing basis.

Once set up, the Direct Debit collection process can only commence and conclude on a bank working day.

Initially you will receive a secure message to your inbox within your business tax account showing the Direct Debit amount. This is called the advance notification and it will be issued on the 20th or the next working day if the 20th of the month is not a working day.

Collection from the bank will happen on the 3rd working day after the advance notification is issued therefore. The collection will always be after the 22nd of the month.

As the due date for payment is the 22nd of the month, there may be instances where the charges within the online account are showing as overdue and interest charges may be showing. Once the Direct Debit has been collected, our financial systems will automatically update and remove any interest charges for the short period between the 22nd and the date the payment was received by HMRC.

For example, in December 2022:

• the advanced notification will be issued on 20 December 2022
• the Direct Debit will commence collection on 21 December 2022
• money will be collected from the bank on 23 December 2022
• interest for late payment will be removed by 24 December 2022

Tax updates and changes to guidance

Plastic Packaging Tax — check if your business needs to register

Plastic Packaging Tax was introduced on 1 April 2022. If your business manufactures or imports 10 or more tonnes of plastic packaging within a 12 month period, you must register for Plastic Packaging Tax, even if your packaging contains 30% or more recycled plastic.

Read more about Plastic Packaging Tax.

HMRC has produced the following resources to support businesses, outlining:

• definitions of finished components to help manufacturers and importers decide when they need to register for Plastic Packaging tax
• examples of packaging in and out of scope of Plastic Packaging Tax

Watch recordings of our latest Plastic Packaging Tax webinars.

Company car benefits — miscalculation resolved

Following the processing of P11Ds and the reconciliations for the 2021 to 2022 tax year, an issue was identified that impacted customers with a company car having a date of registration of 6 April 2020 or later.

In these instances, a higher CO2 percentage rate was charged than should have been. We have worked with our IT suppliers to correct this issue and recovery work has been completed. All those customers who received an incorrect calculation for the 2021 to 2022 tax year will have received an updated calculation in October 2022. This issue only impacted the 2021 to 2022 submissions, and no employer action was required.

Changes to company car tax rates from April 2025

Company car tax is an Income Tax charge and an employer National Insurance contributions charge. These charges are due if you provide your employee with a company car that is available for private use.

Currently, the company car tax rates are set until the 2024 to 2025 tax year. The new company car tax rates announced at the Autumn Statement, will come into effect from 6 April 2025, 6 April 2026 and 6 April 2027 respectively.

Company car tax rates for zero emission vehicles and ultra-low emission vehicles, emitting less than 75g of CO2 per kilometre, will increase in:

• 2025 to 2026 by 1 percentage point
• 2026 to 2027 by a further 1 percentage point
• 2027 to 2028 by a further 1 percentage point, up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars

Rates for all other vehicle bands will be increased by 1 percentage point for the 2025 to 2026 tax year up to a maximum appropriate percentage of 37%, these rates will then be frozen for tax years 2026 to 2027 and 2027 to 2028.

We have published details of the new company car tax rates.

The new rates will only affect employees who are provided with a company car that is available for private use. The reporting requirements to HMRC will remain the same and you will not be required to do anything differently. The existing guidance around car benefit calculations in the Employment Income Manual will continue to apply.

Working through an umbrella company

HMRC has been working on providing updated guidance for umbrella company workers.

The guidance is intended to help workers understand how they will be engaged, how their pay is made up and what employment rights and tax obligations they have when employed by an umbrella company.

In addition to the updated guidance, the Department for Business, Energy & Industrial Strategy has also produced key information documents for agency workers paid through umbrella companies. This is an important part of the process in helping umbrella company workers understand their rights.

For more information read the updated working through an umbrella company guidance.

If you have deferred VAT outstanding, act now to avoid a penalty

Businesses may be charged a 5% penalty and or interest if they have deferred VAT and have not yet paid.

Anyone struggling to pay deferred VAT should contact us as soon as possible. We can look at manageable payments according to individual circumstances.

Businesses that deferred VAT payments due between 20 March 2020 and 30 June 2020 had the option to:

• pay in full on or before 31 March 2021
• join the online VAT deferral new payment scheme on or before 21 June 2021, to spread payments of deferred VAT over smaller, interest free instalments
• contact HMRC, to make an arrangement to pay on or before 30 June 2021

For those customers who do not contact us, whose payments are still outstanding and with no arrangement in place, penalties could apply.

Read more information on deferred VAT and the penalty charge.

Ukrainian arrivals paying tax in the UK if they work for an employer based in Ukraine

HMRC recently published guidance about paying taxes and National Insurance contributions in the UK if you work for an employer based in Ukraine.

The guidance explains what tax residence is, which country the employee will pay taxes in and what they need to do to meet their tax obligations.

General information and customer support

HMRC is now using card readers to take payments

HMRC is making it easier for customers to make payments during face to face visits.

From 31 October 2022, all HMRC Officers who visit customers about debt will have card readers available to take payment at the customers premises, allowing them to make their payment immediately. These customers will no longer have to call the HMRC helplines, reducing calls gives HMRC more capacity to support customers with more complex enquiries.

Card payments can be used to make payment in full or part payment as part of a Time to Pay arrangement.

We understand that customers will want to be sure that a collector is legitimate. Find out how to confirm the identity of HMRC staff.

Make sure you stay on top of your workplace pension duties

The Pensions Regulator is warning employers to make sure they are complying fully with their ongoing automatic enrolment duties, after inspections found a number of errors. The warning follows a series of in-depth compliance checks of more than 20 large employers across the UK.

Read more about your ongoing automatic enrolment duties on The Pension Regulators website.

Key errors include using incorrect earnings thresholds which put staff at risk of not receiving the pension contributions they are due.

Read about earnings thresholds on The Pensions Regulators website.

Correcting these mistakes can be costly for you. You may need to make backdated payments for staff receiving incorrect contributions, and errors can also lead to enforcement action which can include financial penalties.

The Pensions Regulator monitors all employers, big and small to make sure staff receive the pensions they are due. Make sure you stay on top of your workplace pension duties, if you do not, The Pensions Regulator will take enforcement action, including issuing a fine.

The Administrative Burden Advisory Board (ABAB) — Tell ABAB Report 2021 to 2022

On 20 October 2022 we published the Tell ABAB Report 2021 to 2022.

This Tell ABAB report is based on an annual survey and a key way for the Administrative Burden Advisory Board and HMRC to gain insight from small businesses. This year’s survey was conducted in April and May 2022, and we achieved over 3,000 responses. 68% of responses were from businesses and 32% identified themselves as tax agents.

The Administrative Burden Advisory Board is made up of 12 members with a wide range of relevant and current business knowledge and expertise. It is independent, representing a cross section of businesses and professions, offering constructive challenge and support to HMRC by championing the views and concerns impacting the small business community.

You may wish to share the report with colleagues and if you would like to comment on this report or help ABAB with their work email advisoryboard.adminburden@hmrc.gov.uk

Construction Industry Scheme — requests for payment and deduction statements

From 1 December 2022 we are changing the way we deal with requests for payment and deduction statements from subcontractors, their tax agents and representatives in the Construction Industry Scheme.

This means we will only deal with one Construction Industry Scheme payment and deduction statement request per customer, any further requests for information will be refused.

Before you request a payment and deduction statement from HMRC you need to:

• try and get the information directly from your clients or their contractors
• ask clients or contractors to send you copies from their records

Obtaining this information from your clients or contractors should be built into your routine processes. These best practices will support correct information management and efficiency.

Any additional requests for missing Construction Industry Scheme payment and deduction statements will be considered. You will need to demonstrate that you’ve requested information from the contractor but have not been able to get it, for instance because the contractor has stopped trading.

In these circumstances you should write to HMRC:

PT Operations
HM Revenue and Customs
BX9 1BX

Provide the following information in your letter:

• your name and address
• your client’s name, address and Unique Taxpayer Reference
• the name and address of the contractors
• the contractor’s tax reference — if you know it
• the dates of the payments or the tax months when the contractor paid you or your client
• confirmation that the contractor cannot or will not provide the documentation

Interactive P2 (notice of coding) guidance — helping customers get it right

PAYE notice of coding, also known as a P2 gives taxpayers an explanation of what their current tax code is and the reason as to why they have that tax code.

Customers receive a P2 notice of coding when their tax code changes, this can be for a number of reasons, when customers:

• start to get income from an additional job or a pension
• get taxable state benefits
• claim marriage allowance
• claim expenses they get tax relief on
• or their employer tell us they have started or stopped getting benefits from their job

New interactive guidance has been produced to support customers. It will allow them to select the correct guidance according to their needs and understand what has changed and what, if anything, they need to do.

Read more information on updating your tax code.

HTML format of Employer Bulletins

Since September 2020, documents 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

The contents page with the links to articles is now down the left hand side, and the page 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 Page’ button and print to your local printer
• to save the document as a PDF:
  • select the ‘Print Page’ print button and using the drop-down list on the printer select ‘print to pdf’, which would allow you to save as PDF and file electronically
  • on a mobile device select more options, then select options to be able to save as PDF

Getting more information and sending feedback

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

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Send your feedback about this Employer Bulletin or articles you may wish to see by email to alison.brown1@hmrc.gov.uk.