Guidance

October 2023 issue of the Employer Bulletin

Updated 16 October 2023

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

Electric charging of company cars and vans at residential properties

HMRC has published amended guidance on Employment Income Manual EIM23900 and National Insurance Manual NIM0664 about a change in interpretation regarding home charging of electric company cars. Section 239 ITEPA 2003 provides an exemption on payments and benefits provided in connection with company cars and vans . This legislative provision therefore exempts aspects such as vehicle repairs, insurance, and Vehicle Excise Duty.

HMRC previously maintained that the reimbursement of costs in relation to charging a company car or van at a residential property was not caught by this exemption.

Following a review of our position, HMRC now accepts reimbursing part of a domestic energy bill, which is used to charge a company car or van, will fall within the exemption provided by section 239 ITEPA 2003.

This means that no separate charge to tax under the benefits code will arise where an employer reimburses the employee for the cost of electricity to charge their company car or van at home. The exemption will however only apply providing it can be demonstrated that the electricity was used to charge the company car or van.  Employers will need to make sure that any reimbursement made towards the cost of electricity relates solely to the charging of their company car or van.

Electronic payment deadline falls on a weekend

In October 2023 the electronic payment deadline falls on Sunday 22 October. To make sure your payment for the month reaches us on time, you need to have funds cleared into HMRC’s account by 20 October 2023, unless you are able to arrange a Faster Payment.

It is your responsibility to make sure your payments are made on time and if 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.

Paying your PAYE Settlement Agreement

A PAYE Settlement Agreement (PSA) allows you to make one annual payment to cover all the tax and National Insurance due on small or irregular taxable expenses or benefits for your employees.

Any electronic payments for a PSA for the tax year ended 5 April 2023 must clear into HMRC’s account by 22 October 2023. If your payment is received late you may have to pay interest and a late payment penalty.

To pay, you will need to use the PSA reference number, for example — XA123456789012, from the payslip we sent to you. If you do not have this, contact HMRC’s employers helpline for advice.

Do not use your PAYE Accounts Office reference, for example — 123PA12345678, to make your PSA payment. Payments received with your PAYE Accounts Office reference are allocated to your normal PAYE account and you will continue to receive reminders for the PSA even though you have paid.

Correcting payroll mistakes for an earlier tax year

From April 2019 HMRC changed the way in which employers can correct payroll mistakes for an earlier tax year.

If you reported the wrong pay or deductions

To correct a mistake made in the current tax year, update the year to date figures in your next regular Full Payment Submission (FPS).

Submit another FPS with the correct year to date figures if you reported the wrong pay or deductions for the following tax years:

• 2020 to 2021
• 2021 to 2022
• 2022 to 2023

If you reported the wrong pay or deductions in the 2018 to 2019 and 2019 to 2020 tax year, you can correct this by submitting an Earlier Year Update (EYU) or a further FPS with the correct year to date figures.

If you reported the wrong pay or deductions in the 2017 to 2018 send an EYU showing the difference between what you originally reported and the correct figure. You can only use an EYU for tax years when you were reporting online in real time.

If your payroll software cannot send an EYU, you can use HMRC’s Basic PAYE Tools.

The rules are different if you find a mistake in your final FPS of the year.

Correct an employee’s student loan repayments

What you need to do depends on when you made the mistake.

Information on errors deducting student loan or postgraduate loan repayments is available.

Correct an employee’s National Insurance deductions

What you need to do depends on when you made the mistake.

If the mistake was in the 2023 to 2024 tax year

Repay or deduct the balance from your employee. Update the year to date figures to the corrected amount in your next regular Full Payment Submission (FPS) or send an additional FPS.

If you deducted too little, you cannot recover more than the employee’s National Insurance contribution due that month.

Example

You deducted £100 too little in January. In February, your software calculates an £80 National Insurance deduction, which means you can recover up to £80 towards the underpayment that month (a £160 deduction in total). Recover the remaining £20 in another month.

If the mistake was in the tax years between 6 April 2020 and 5 April 2023

Send an FPS with the amount you should have deducted if the mistake was in the following tax years:

• 2020 to 2021
• 2021 to 2022
• 2022 to 2023

You will need to write to HMRC if both the following apply:

• the difference is negative because you deducted or reported too much National Insurance
• you still owe your employee a refund, for example, because they have left your employment

In the letter you will need to include:

• the reference ‘Overpaid NI contributions’
• your employee’s name, date of birth and National Insurance number
• why you overpaid National Insurance contributions
• which tax years you overpaid in
• how much National Insurance you overpaid
• why you are unable to make the payment to the employee

For a claim for one employee, send the letter to:

HM Revenue and Customs
National Insurance Contributions and Employer Office
BX9 1AN

For a claim for more than one employee, send the letter to:

HM Revenue and Customs
National Insurance Contributions and Employer Office
BX9 1BX

If the mistake was in the 2018 to 2019 and 2019 to 2020 tax years

Send an FPS with the correct year to date National Insurance if:

• your payroll software will let you submit an FPS
• you can pay any National Insurance refunds you owe

If you cannot use an FPS, send an Earlier Year Update (EYU) with the difference between:

• the amount of National Insurance you originally deducted
• the correct amount you should have deducted

If the difference is negative (because you deducted or reported too much National Insurance), you also need to set the ‘NIC refund indicator’ to:

• ‘Yes’ if you have refunded your employee or no refund was due
• ‘No’ if you still owe your employee a refund (for example, because they have left your employment)

If the mistake was in the 2017 to 2018 tax year

Send an EYU with the difference between:

• the amount of National Insurance you originally deducted
• the correct amount you should have deducted

If the difference is negative (because you deducted or reported too much National Insurance), you also need to set the ‘NIC refund indicator’ to:

• ‘Yes’ if you have refunded your employee or no refund was due
• ‘No’ if you still owe your employee a refund (for example, because they have left your employment)

If there is an underpayment

If you deducted too little National Insurance, pay HMRC the underpayment straight away. You can then recover the amount from your employee by making deductions from their pay.

You cannot recover more than the amount of National Insurance the employee owes in a month (so the employee pays no more than double their normal contribution). Carry over the difference to later months — you can only make deductions in the tax year when you made the mistake and the year after.

Guidance on what to do if you have made a mistake in your FPS or Employer Payment Summary and correcting payroll errors has recently been updated.

Reporting PAYE information in real time when payments are made early at Christmas

In 2019 we introduced a permanent easement on reporting PAYE information in real time. We are aware some employers pay their employees earlier than usual over the Christmas period. This can be for a number of reasons, for example, during the Christmas period the business may close, meaning workers need to be paid earlier than normal.

If you do pay early over the Christmas period, please report your normal or contractual payday as the payment date on your Full Payment Submission (FPS) and ensure that the FPS is submitted on or before this date.

For example, if you pay on Friday 15 December 2023 but the normal or contractual payment date is Friday 29 December 2023, you will need to report the payment date on the FPS as 29 December 2023 and ensure the submission is sent on or before 29 December 2023.

This will help to protect your employees’ eligibility for Universal Credit, as reporting the payday as the payment date may affect current and future entitlements.

The overriding PAYE reporting obligation for employers is unaffected by this exception and remains that you must report payments on or before the date the employee is paid.

Tax updates and changes to guidance

Online charge calculator for disposals of some capital allowances assets

HMRC has published an online tool to help work out balancing charges for the disposal of certain plant or machinery.

The tool can only be used for assets on which a company has claimed the super-deduction or the 50% special rate (SR) first-year allowance. It checks which relief the company claimed and gathers necessary facts to work out the balancing charge.

The super-deduction and SR allowance were only available to companies for expenditure incurred in the period 1 April 2021 to 31 March 2023.

Apply the new Alcohol Duty rates and check the new reliefs when submitting your return this month

In the August edition of Employer Bulletin we made you aware of the new Alcohol Duty rates and reliefs, which we introduced on 1 August 2023.

If you are a producer, importer or reseller of alcoholic products, you need to be aware of the new Alcohol Duty structure, so you can accurately account for Alcohol Duty in your return.

Before submitting your Alcohol Duty return this month, make sure you apply the new rates and check if you can take advantage of the new reliefs.

Changes to Alcohol Duty introduced on 1 August 2023:

A new, simpler Alcohol Duty system

The new system standardised the duty bands for all types of alcoholic products, with new duty rates based on alcohol by volume (ABV) for all products.

Small Producer Relief

A duty relief extended to small producers of all alcoholic products under 8.5% ABV.

Reduced rates for draught products

Also known as Draught Relief. A lower rate of duty for draught alcoholic products under 8.5% ABV, which are packaged in containers of at least 20 litres, and designed to connect to a qualifying system for dispensing individual drinks.

Temporary arrangements for producers or importers of wine

A temporary method of working out duty on some wine products, this will last for 18 months, from 1 August 2023 until 1 February 2025. This allows businesses to use an ‘assumed strength’ of 12.5% ABV when working out the duty owed on wines between 11.5% and 14.5% ABV.

Further resources

Keep up to date with what has changed for Alcohol Duty. This is also available in Welsh.

Watch a recorded webinar about the new Alcohol Duty structure and rates.

If you are a small producer of alcoholic products, find out how much Small Producer Relief you can get.

Overlap Relief — preparing for the new tax year basis

On 11 September 2023, the online application for submitting requests for details about Overlap Relief was launched.

If you are a sole trader or partnership, have an accounting date other than 31 March or 5 April, and are affected by the move to the new tax year basis, you may need to find out the details of your Overlap Relief. You will need to do this ahead of submitting returns for the 2023 to 2024 transitional year. Businesses that have Overlap Relief which they should have used in the past but did not, may also use this in the 2023 to 2024 tax year.

Overlap Relief information can only be provided if these figures are recorded in HMRC systems, taken from information submitted by taxpayers as part of previous tax returns. If this information has not been submitted in tax returns, HMRC will not be able to provide it. However, in these circumstances, it may be possible to provide historic profit figures, to allow Overlap Relief to be recalculated.

When preparing to fill out the online form for details about Overlap Relief, make sure that you have the following information:

• customer name
• Unique Taxpayer Reference Number (UTR) or National Insurance number
• name or description of business, or both

• whether the business is a sole trader or part of a partnership

• if the business is part of a partnership, the partnership’s UTR
• date of commencement of the self-employed business, or date of commencement as a partner in a partnership (if not known, then the tax year of commencement)
• the most recent period end date up to which the business used to report its profit or loss
• years the accounting period changed, if applicable

You can find out more guidance on Overlap Relief and basis period reform and access the online application.

General information and customer support

UK signs Convention on Social Security Coordination with Iceland, Liechtenstein and Norway

The UK and the European Economic Area (EEA) European Free Trade Association (EFTA) states of Iceland, Liechtenstein and Norway signed a Convention on Social Security Coordination on 30 June 2023. The agreements benefit citizens of the UK and the EEA EFTA countries.

It supports business and trade by:

• protecting the social security position of cross-border workers
• making sure employees and their employers, as well as the self-employed, are only liable to pay social security contributions in one state at a time
• ensuring access to an uprated UK state pension and to reciprocal healthcare arrangements

Details on the Convention on Social Security Coordination between Iceland, Liechtenstein, Norway and the UK are available.

Different parliamentary procedures are required to give this Convention legal effect in each State, and each State needs to be ready to implement it. To allow time for this to happen, we anticipate the Convention will be first brought into force and apply between the UK, Iceland and Liechtenstein later this year, and then extend to Norway in 2024. We will let you know when the start dates have been confirmed. In the meantime, you can read guidance for individuals going to work in Iceland, Liechtenstein or Norway.

Art market participants online learning guide

An art market participant (AMP) is defined in the Money Laundering Regulations as a firm or sole practitioner who by way of business trades in or acts as an intermediary. This in the sale or purchase of, works of art and the value of the transaction, or a series of linked transactions, amounts to 10,000 euros or more. It can also be the operator of a freeport when it, or any other firm or sole practitioner, by way of business, stores works of art in the freeport and the value of the works of art stored for a person, or a series of linked persons, amounts to 10,000 euros or more.

HMRC has launched an online learning guide for art market participants to help businesses find out about:

• money laundering regulations
• telling HMRC you want to register and paying your fees
• risks and how to deal with them
• your responsibilities
• customer due diligence
• identifying and reporting suspicious activity
• training staff
• record keeping

Pay by bank account enhancements

Following recent improvements to the service, some customers who are logged in to their HMRC online account through the Government Gateway and paying HMRC by ‘pay by bank account’ are now able to schedule a payment to be made in the future.

Employers’ PAYE and related regimes are now live. Customers who wish to set up a payment for a future date can do so for:

• employers PAYE
• PAYE Settlement Agreement
• PAYE late payment or filing penalty
• class 1A National Insurance Contributions

A future dated payment cannot be set up beyond the due date of the tax owed.

You can access the service by logging in to your HMRC online account or going to paying HMRC and choosing the ‘pay by bank account’ option.

The Administrative Burden Advisory Board Tell ABAB Report 2023

The Administrative Burden Advisory Board (ABAB) published their 2022 to 2023 Tell ABAB survey report on 19 September 2023.

The report details the responses to April’s Tell ABAB Survey, which this year had a record 7,500 responses. In previous years, responses have averaged around 3,000.

ABAB is passionate about listening to and understanding the needs of the small business community. Board members come from a range of businesses and professions, and their goal is to support HMRC to make the tax system quicker and simpler for small businesses.

We encourage you to share the report with colleagues. If you would like to comment on the report, or help ABAB with their work, please contact advisoryboard.adminburden@hmrc.gov.uk.

Getting your new starter’s National Insurance number just got quicker

If your new starters are unsure where to find their National Insurance number, the quickest way to do so is by using the HMRC app or pay online.

Within minutes they can access their number, and get their National Insurance number confirmation letter if this is needed.

For future access, they can also add their National Insurance number to their Apple or Google wallet.

Helping customers spot and get out of tax avoidance

Take a look at our ‘Tax avoidance — don’t get caught out’ campaign.

We are running it to help contractors:

• spot the warning signs of tax avoidance
• get support to leave schemes
• report suspicious companies

You can help us to protect your workers by:

• sharing our campaign messages
• telling them about our interactive risk checker tool
• signposting them to our supportive guides, this includes personal stories from contractors who want to help other people learn from their mistakes

You can also find published details of tax avoidance schemes and their promoters to steer clear of. This is not a complete list of all tax avoidance schemes currently being marketed. There may be other schemes, promoters, enablers and suppliers that HMRC cannot publish information about at this time.

Do not forget to spread the word by sharing or liking HMRC’s posts on Facebook, LinkedIn and X (Twitter).

If a contractor thinks they may be caught up in a tax avoidance scheme, encourage them to get in touch with us as quickly as possible. We can help them get out of the scheme and back on track.

Fit note — new guidance for employers

We are pleased to share recently relaunched fit note guidance, designed to facilitate and enhance the health and work conversation with your employees, and how you can discuss workplace modifications to support them to stay in, or return to work.

We have also created an employer’s checklist to highlight key points to support the discussion between you and your employee after they have been issued with a fit note by an eligible healthcare professional, such as a registered:

• Doctor
• Nurse
• Occupational Therapist
• Physiotherapist
• Pharmacist

Group Income Protection Policies

In August 2022 HMRC corrected its advice on the treatment of Group Income Protection (GIP) policies and their interaction with salary sacrifice schemes. This followed the issuing of incorrect advice in October 2019.

EIM06474 shows the correct taxation position and agreed transitional arrangements if this incorrect advice had been relied on.

In some cases, there may be an impact on an individual’s entitlement to contributory benefits including state pension if they or their employer relied on the incorrect advice given in October 2019. This is because they may have received, or will receive under the transitional arrangements, income from a GIP policy not fully subjected to National Insurance contributions, as it would have been under the correct taxation position.

Whether there is an impact will depend on other income or National Insurance credits an individual has received in the year. HMRC has considered this issue and concluded that due to this, any such impact should be looked at on a case by case basis.

HMRC therefore urges individuals to check their personal tax account or their National Insurance record for years where they have benefited from GIP policies to see whether there is a shortfall in their National Insurance record. If there is they should contact HMRC if:

• they made contributions to a GIP policy by way of salary sacrifice
• they received sick pay from their employer under that GIP policy and that sick pay was not fully subjected to National Insurance contributions

HMRC will look at each case individually at that point and if required rectify the shortfall to mitigate impact on any contributory benefit entitlement.

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 Twitter @HMRCgovuk.

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