Guidance

February 2024 issue of the Employer Bulletin

Updated 16 February 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

Taxed award schemes

Third party companies may be engaged to provide non-cash incentive awards such as benefits or non-cash vouchers to employees on behalf of their employer.

Tax and Class 1A National Insurance is due on any such awards. If you are a provider of such awards, you should use a taxed award scheme (TAS) to make a payment to HMRC which covers the tax liability due on awards you make.

Employees must report the award on their tax return. They must be provided with the grossed-up value of the award and the tax paid on it so they can do this. It is unlikely they will have to pay any further tax if a TAS covers their award, unless they are liable to pay tax at a higher rate and the TAS only covers the basic rate.

The Incentive Award Unit deals with all aspects of a TAS, including the valuation of awards and the type of contractual arrangement. Further details on how to contact the Incentive Award Unit can be found here.

A TAS for awards given in the 2023 to 2024 tax year must be agreed by 6 July 2024.

2024 National Insurance contributions rate changes

At the Autumn Statement on 22 November 2023, the government announced the National Insurance changes starting to take effect from January 2024. This was featured in the December Employer Bulletin.

HMRC is reminding employers of the main changes:

• a cut to the main rate of Class 1 employee National Insurance contributions from 12% to 10% from 6 January 2024
• a cut to the main rate of Class 4 self-employed National Insurance contributions from 9% to 8% from 6 April 2024
• removal of liability to pay Class 2 self-employed National Insurance contributions from 6 April 2024
• the National Insurance contributions relief for employers who hire former members of the UK regular armed forces has been extended to the 2024 to 2025 tax year

In addition, we can also now confirm that the married women’s reduced rate of National Insurance contributions was cut by 2 percentage points from 5.85% to 3.85% from 6 January 2024.

It may be helpful to reiterate that the blended rate of 11.5% applies for Class 1 National Insurance contributions for 2023 to 2024 for directors.

We previously asked employers to take steps to prepare for the payroll changes from 6 January 2024, working with their software providers and IT delivery partners as appropriate.

We appreciate the efforts made by employers and their software providers to be ready for 6 January 2024.  Many have been able to implement the changes in time. However, we realise the timeline was tight and some employers may not have implemented the changes to payroll systems on time.

If employers have been unable to make changes to take effect from 6 January 2024, they will have charged their employees the incorrect Class 1 National Insurance contributions rate and need to correct this. Details on how to fix problems with running payroll are available.

You can download the HMRC Basic PAYE Tool (BPT), which was updated on 6 January 2024.

The updated National Insurance contributions rates are available.

We also have an online tool for customers to estimate how they are affected by the main Class 1 employee rate change.

Basic PAYE Tools — new release

An update to the Basic PAYE Tools (BPT) will be released at the end of March to support the 2024 to 2025 tax year. It is important that you update and use version 24.0 from 6 April 2024. To update or check for updates you should select ‘Check now’ in the update section of settings in the top right-hand corner of the tool. It is also recommended that you should set the automatic update to ‘Yes’.

As a new customer, before you can use BPT to run your payroll, you must have registered for online PAYE as instructed in your new employer letter.

Further information and help on how to download BPT can be found here.

Reducing the risk of your employee paying too much student loans

HMRC will send a student or postgraduate loan, or both start notices either online or by post if your employee is due to repay.

It is important that you check and use the correct:

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

This helps your employee pay the right amount at the right time.

You should continue to take deductions until HMRC tells you to stop.

If your employee’s earnings are above the respective student loan and postgraduate loan thresholds and you do not take deductions, HMRC will send you a generic notification service prompt as a reminder. If deductions still have not started, we may contact you directly.

If your employee’s earnings are below the respective student loan and postgraduate loan thresholds, you should:

• update your employee’s payroll record to show they have a student loan or postgraduate loan
• file the start notice

More information on student and postgraduate loan deductions and generic notification service messages is available.

End of year reporting

It is time to prepare for making your last Full Payment Submission (FPS) or Employer Payment Summary (EPS) of the year.

Your last FPS or EPS of the year, up to and including 5 April 2024, needs to include an indicator that you are making the final submission. This tells us you have sent us everything you expected to send, and we can finalise our records for you and your employees.

Some commercial payroll software will not let you put the indicator on an FPS. If that is the case, send your last FPS and then send an EPS with the indicator ticked. You can also send an EPS with the indicator ticked if you forgot to put the indicator on your last FPS submission for the tax year.

You also need to prepare to give your employees a P60 if they are in your employment on 5 April 2024. This information must be provided to the employee by 31 May 2024.

If you are not going to pay anyone again this tax year, remember to send an EPS with the indicator ticked to show you did not pay anyone in the final pay period and it is the final submission. You have until 19 April 2024 to do this. If you have not filed by 11 April 2024, you will receive a reminder notification from the Generic Notification Service.

Employers’ payment booklet no longer available

Most employers now make their PAYE payments online, but a small number still use a printed booklet. If you are one of them you need to know that this is changing. Employers will no longer receive or be able to request a replacement payment booklet to make PAYE payments at a bank or building society, or send with a cheque in the post.

If as an employer you still have a current payment booklet, you can continue to use it at a bank or building society or include with a cheque in the post until the 5 April 2024.

From 6 April 2024, you can either pay online or send us a cheque by post and write the reference number on the back of the cheque.

Paying online is the quickest and most secure way to make sure your payment is received and processed.

We are writing to employers who previously received a payment booklet from us to let them know about these changes.

You can also find more information on ways to pay at Pay employers’ PAYE.

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

Informal payrolling   

From 6 April 2023 HMRC ceased to accept new informal arrangements. If you have had one of these informal arrangements in place, you must register now to payroll your expenses and benefits for 2024 to 2025. 

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

Those employers payrolling expenses and benefits in kind may still have a Class 1A National Insurance contributions liability and will therefore still need to:

• submit online a P11D(b) to tell us how much employer Class 1A National Insurance contributions you owe
• submit online a P11D to show any expenses and benefits you paid that you did not payroll

Instead of giving your employees a P11D, you need to give them a letter explaining what expenses and benefits you have payrolled.

Further information on payrolling and reporting expenses and benefits in kind is available.

For those employers who do not yet payroll, the deadline for reporting any P11D expenses and benefits in kind provided in the 2023 to 2024 tax year online is 6 July 2024. Late submission may result in a penalty. HMRC charge penalties on a monthly basis and issue penalty notices each quarter until you do file your return.   

HMRC no longer accepts paper P11D and P11D(b) forms, this includes lists. 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.

If you make a mistake and need to submit an amendment 

HMRC no longer accepts paper amendments. If you make a mistake, refer to guidance on reporting and paying expenses and benefits for employers and use the online correction forms to submit your amended P11D and P11D(b). online correction forms to submit your amended P11D and P11D(b).

Tax updates and changes to guidance

Basis period reform

HMRC is continuing to raise awareness for the basis period reform changes from April 2024. We will be releasing a YouTube video in early 2024 to help you, if you are affected, highlighting what further support is available.

We are also sending out letters in the first quarter of 2024 to our unrepresented customers, giving you information on the basis period reform changes and signposting to the further support available to you.

There are no changes currently planned to the SA800 for partnerships as a result of basis period reform. Partnerships will continue to fill out the SA800 in the same way they do at present.

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

Changes to Scottish Income tax from 6 April 2024

The Scottish Government have announced changes to Scottish Income Tax, which will take place from 6 April 2024 including the introduction of a new tax band, Advanced rate.

For further details on those changes, please refer to the Scottish Income Tax 2024 to 2025 factsheet published by the Scottish Government.

HMRC has engaged with payroll software providers for the updating of payroll software products for 2024 to 2025 to make sure Scottish Income Tax is calculated and deducted correctly from the start of the new tax year.

Further guidance will be published ahead of the new tax year.

Termination payments — the correct route to obtain clearance where there may be uncertainty of the correct tax treatment

HMRC is aligning its approach to providing advance assurance on certain termination payment enquiries. 

HMRC guidance committed HMRC to giving a binding answer if you made enquiries on termination cases involving:  

• the disability and injury compensation exception
• the foreign service exception
• how the £30,000 threshold applies to payments made by the third party and by the employer
• non-cash provisions

HMRC will no longer give a binding answer on these cases, outside the normal Non-Statutory Clearance process, for example, where there is a genuine point of uncertainty on the correct treatment.

If you or your advisor have a genuine point of uncertainty on the Tax and National Insurance treatment of a termination payment, you should use the Non-Statutory Clearance Service. 

Previously HMRC guidance advised HMRC would assist customers if they required an explanation of how certain Statements of Practice and Extra Statutory Concessions operated within the context of a termination case. These are: 

• SP2/81: contributions made to a pension scheme as part of termination arrangements
• SP10/81: the meaning of disability
• SP13/91: voluntary payments on retirement made before 6 April 2006
• SP1/94: clearance procedure for redundancy schemes
• ESC A10: lump sums from overseas pension schemes
• ESC A81: legal expenses in termination settlements

Queries on these should now be dealt with in the same way, through the Non-Statutory Clearance Service.

EIM12800 Termination payments and benefits — contents provides comprehensive information to establish the Tax and National Insurance treatment of a termination payment.

HMRC`s current position on handling termination payment enquiries can be found at EIM12820 — Termination payments and benefits.

Simplifying the reporting of Income Tax and National Insurance contributions on benefits in kind  

On 16 January 2024 the government announced that it will mandate employers to report and collect Income Tax and Class 1A National Insurance contributions on employment benefits through payroll software from 6 April 2026. This means that the 2025 to 2026 tax year will be the last year that employers will be able to file P11Ds and P11D(b)s with HMRC in most cases. From this date, tax on employment benefits will be collected in real time and not through tax codes in arrears. Class 1A National Insurance contributions will also be collected in real time for each pay period rather than at the end of the year.

The measure itself is not intended to increase taxes for anyone. By building simpler digital interfaces we want to make it quicker and easier for employers to report their benefits in kind.

HMRC will engage with stakeholders to discuss our proposals to inform design and delivery decisions, and 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 6 April 2026.

The plans are currently in development and HMRC will welcome stakeholder views on delivery proposals ahead of their implementation. General feedback and suggestions relating to the proposals can be submitted to the mailbox policyemploymentbenefitsexpenses@hmrc.gov.uk. We may not be able to respond to all suggestions but will consider them.

General information and customer support

Upcoming changes to Paternity Leave and Pay

HM Government is making changes to the way Paternity Leave and Pay can be claimed and taken, which will make it more flexible for fathers and partners to access. These changes will come into effect for fathers and partners from 6 April 2024 however, employees can start informing their employers from the 8 March 2024 of the dates they are going to take for their child born on or after 6 April 2024.

These changes will allow fathers and partners to take their leave in non-consecutive blocks. Currently, only one block of leave can be taken, which can be either one or two weeks. The changes will remove this barrier by enabling fathers to take two non-consecutive weeks of leave. 

It will also allow fathers and partners to take their leave and pay at any point in the first year after the birth or adoption of their child. This gives fathers and partners more flexibility to take their Paternity Leave at a time that works for their family.  

This will shorten the notice period that fathers and partners are required to give their employers for each period of leave. The new measure will require an employee to give only four weeks’ notice prior to each period of leave. This means that they can decide when to take their leave at shorter notice to accommodate the changing needs of their families.

Guidance for employers on how to reclaim statutory payments if an employee takes Statutory Paternity Pay and Leave early, before 6 April, due to early or premature birth

Fathers and partners will be eligible to claim Statutory Paternity Pay and Leave under the new rules if their baby’s expected date of birth is after 6 April 2024. 

They will also be able to claim their Statutory Paternity Pay and Leave under the new rules if the child is born early and before this date. Fathers or partners can begin taking Statutory Paternity Pay and Leave as soon as their baby is born. This means that fathers and partners will be able to take two non-consecutive weeks of leave before 6 April for babies before who were expected after 7 April.

Transition period before PAYE software is updated

HMRC’s Basic PAYE Tool (BPT) will be updated with the new Paternity Pay and Leave terms by 6 April 2024. 

Employers of fathers or partners whose babies are born early may choose to take Statutory Paternity Pay and Leave before this date and before the PAYE software has been updated. This means some employers may need to claim repayment for Statutory Paternity Pay (SPP) paid under the new rules, but before the BPT has been updated.

What this means for employers

Employers should identify employees who have given or will give notice of their intent to claim Statutory Paternity Pay and Leave, and whose babies have an expected week of birth after 6 April 2024. If no employees meet those conditions by that date, you will not need to consider the following transitional guidance. 

Transitional guidance on reclaiming ‘new rules’ Statutory Paternity payments before 6 April 2024

 If your employee took one block of Statutory Paternity Pay and Leave before 6 April 2024 you will be able to claim SPP repayment for one consecutive block of Statutory Paternity Pay and Leave taken. A block can be one or two weeks. Employers can reclaim payment through their payroll software or as they normally would. 

If your employee took two, non-consecutive blocks of Statutory Paternity Pay and Leave before 6 April 2024 you will only be able to claim repayment for one block before 6 April 2024. Employers will be able to claim repayment for the second SPP block by this date, when the PAYE system has been updated.

Small to medium businesses can claim payment for SPP costs in advance. If your business paid £45,000 or less in Class 1 National Insurance, ignoring any reductions like Employment Allowance in the last complete tax year, and you cannot afford to make statutory payments, you can apply for HMRC to pay you in advance. You can apply up to 4 weeks before you want the first payment. 

Further guidance on reclaiming SPP payments is available.

Help for Households

Help with the cost of living is available to millions of households. As an employer, we are asking you to share this information with your employees.

Help for Households offers over 40 schemes of support. There is help with childcare costs, travel costs and more. There is also additional information on how to save money on energy bills.

If your employees live in Scotland, Wales or Northern Ireland there may be different or additional help available.

Visit our Help for Households campaign toolkit for suggested messaging, social media assets and logos to help you share on social media, in newsletters and on websites.

Help your workers steer clear of tax avoidance

If you work with contractors, we would advise you to tell them about our ‘Tax avoidance — don’t get caught out’ campaign.  

We have plenty of support on offer for your workers to:

• recognise what tax avoidance is by spotting the warning signs
• get help to leave a tax avoidance scheme
• report a suspicious scheme

We also publish details of tax avoidance schemes and their promoters to steer clear of. This is not a complete list. There may be others that we cannot currently publish. Remember, HMRC never approves tax avoidance schemes for use.

We encourage you to share our supportive campaign resources to help us protect your workers from tax avoidance, including sharing and liking our posts on your relevant social media channels such as Facebook, LinkedIn, and X (Twitter).

Electronic sales suppression — HMRC clamps down on major till fraud

Electronic sales suppression (ESS) is where a business deliberately manipulates their till systems to hide or reduce the true value or amount of sales. This can be done by misusing built in till functions or installing software specifically designed to suppress sales.

Misusing a till system reduces the recorded turnover of the business and the amount of tax a business should be paying, whilst providing what appears to be an accurate and complete record, this is tax fraud. Business owners and employers should take responsibility to protect themselves from being involved with ESS and avoid potential civil or criminal investigations.

HMRC uses third party information including bank account and transactional data from online platforms and merchant acquirers to check against what has been returned by a customer. We are giving businesses, employers and their agents the opportunity to voluntarily come forward and disclose their undeclared ESS sales using HMRC’s disclosure facility, which will reduce any potential financial penalties.

In December 2023 HMRC conducted unannounced visits to businesses across the UK as part of our continued till fraud investigations. This builds on an extensive investigation and intelligence operation into ESS, which started in November 2022.

HMRC will continue to contact and target customers throughout 2024. If customers do not come forward, HMRC may issue an assessment of what we believe the business owes including interest and penalties or open an investigation, that could result in criminal convictions. Further information on ESS is available.

HMRC is encouraging anyone to report information regarding ESS or any other form of tax fraud to us online.

National Cyber Security Centre offers phishing scam training

Phishing was the most common cyber attack affecting UK businesses in 2023, according to the Department for Science, Innovation and Technology.

To deal with this growing problem, the National Cyber Security Centre (NCSC) has produced an e-learning employee training package, Staying Safe Online: Top Tips for Staff.

According to the NCSC, phishing emails are getting harder to spot, so it is more important than ever that employees are aware of the risks. The training package is designed for a non-technical audience who might have little or no knowledge of cyber security. The pack is free and takes less than 30 minutes to complete.

The training explains why cyber security is important and covers three key areas:

• defending yourself against phishing
• using strong passwords
• securing your devices

For more information on cyber security for sole traders and small business owners visit the NCSC’s page on Small and Medium Organisations and the NCSC’s Small Business Guide.

To help HMRC fight cyber crime, forward suspicious texts claiming to be from HMRC to 60599, emails to phishing@hmrc.gov.uk and report tax scam phone calls to HMRC.  

If you would like to stay updated on the latest information, services and resources from the NCSC for small and medium businesses, you can sign up to NCSC’s Small Organisation Newsletter.

Claiming tax relief on employee expenses

You and your employees may be able to claim tax relief on work-related expenses. Making a claim online takes minutes and guarantees that you get 100% of the money you are entitled to. 

Use the online tool to check eligibility and get a full list of work expenses that can be claimed, including:

• uniforms and work clothing
• buying work-related equipment
• professional fees, union memberships, and subscriptions
• using their own vehicle for work travel, excluding journey from home to work

Find out more about how to make a work-related expense claim. There is also communication resources for claiming tax relief to share with your employees.

New Convention on social security coordination with Iceland, Liechtenstein and Norway

Those moving between the UK and Iceland, Liechtenstein or Norway, can now benefit from the new Convention on social security coordination that came into force on 1 January 2024.

The Convention supports business and trade by protecting the social security position of cross-border workers, ensuring that employees and their employers, as well as the self-employed, are only liable to pay social security contributions in one country at a time. It will also allow access to an uprated UK state pension and reciprocal healthcare arrangements.

Individuals going to work in Iceland, Liechtenstein or Norway should continue to follow the guidance.

Retained firefighters

Retained firefighters are a category of part-time firefighters that were previously not allowed to join the firefighters pension schemes.

The House of Lords decided in Matthews v Kent and Medway Towns Fire Authority 2006 that retained firefighters had been unlawfully discriminated against in relation to the terms and conditions compared to regular firefighters and retained firefighters had to be given equal treatment with regards to pension rights.

As a result, retained firefighters can convert their membership and join the Fire Authorities Schemes from 6 April 2000 to 5 April 2016. The individuals National Insurance record will be amended to show they were contracted out in the relevant Fire Authorities Scheme and appropriate adjustments will be paid to the employer and the customer.

HMRC have previously contacted all Fire Authorities in England, Wales and Northern Ireland asking for information in relation to National Insurance refunds for retrospective entry into the pension scheme.

Information required by HMRC

Firefighter authority schemes need to apply to register and obtain a verified Contracted out Election Certificate to allow the membership into their scheme. Without the correct registration and certificates customer records will not be altered by HMRC.

Fire Authorities need to supply the start and end date of every customers retrospective period of membership. Without the correct information customer records will not be altered by HMRC.

Fire Authorities also need to provide the employers bank account details and not their members. HMRC will write to members direct requesting their bank account details when processing their refund. Without the employer’s bank details, customers records will not be amended by HMRC.

HMRC will not action cases if all information is not supplied.

This issue has been a lengthy process and an end date has been set of 5 April 2024.

All Fire Authority schemes have received information bespoke to them and must reply accordingly. Complete information must be supplied by 5 April 2024, any information supplied after this date will not be progressed or chased.

Any queries are to be directed to wmbc.policeandfiresectorpbg@hmrc.gov.uk with the subject heading ‘Retained Firefighter — Urgent’.

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

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

You can also follow us on X (Twitter) @HMRCgovuk.

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