Guidance

October 2024 issue of the Employer Bulletin

Updated 24 October 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 

HMRCs support for customers who need extra help 

HMRCs 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 

Guidance for employers on Real Time Information reporting obligations for payments made early at Christmas 

Some employers need to pay their employees earlier than usual in December. This can be for several reasons, such as businesses closing during the festive period and needing to pay workers earlier than normal. This is to remind you of the permanent easement on reporting RTI (Real Time Information) that applies during this time. 

If you do pay early over the Christmas period, you must report your normal or contractual payment date on your Full Payment Submission (FPS). 

For example: if you pay on 20 December but your normal payment date is 31 December, please report the payment date as 31 December. In this example the FPS would need to be sent on or before 31 December. 

Doing this will help to protect your employees’ eligibility for income-based benefits such as Universal Credit, as an early payment could affect current and future entitlements. 

Register as an employer — online process 

At the end of September 2024, as part of a gradual process of modernising our systems, we updated some of the links and options available on GOV.UK as part of the online employer registration process. These updates will only affect a small number of digital pathways — including those used by charities. Most customers will not notice any difference.  

The updates will not affect the ability of any employer or payroll agent to register for a PAYE scheme and obtain a PAYE reference number, but frequent users of the process may notice minor changes to some of the options available. In some cases, applicants may be prompted to call the Employer Helpline when previously they did not need to do so.  

We estimate that the changes will affect less than 5% of online registrations. The digital pathway for limited companies with 1 to 9 directors, which is by far the most common form of employer registration, is completely unaffected. 

How salary sacrifice affects National Minimum Wage  

The National Minimum Wage is the lowest rate of pay per hour that most workers must be paid by law. The National Minimum Wage rules also apply to the rate referred to as the National Living Wage. It does not matter how many workers you employ, you must pay the correct minimum wage rates. Salary sacrifice schemes are one of the common causes of National Minimum Wage underpayments.  

From 28 October 2024, HMRC will be presenting a series of live webinars to help employers understand how salary sacrifice schemes affect the National Minimum Wage. A salary sacrifice is a general term used to describe an arrangement where a worker gives up their contractual entitlement to a portion of their salary, in exchange for some form of benefit.   

Register to attend a webinar for help getting National Minimum Wage right. There will also be an opportunity to ask questions to our National Minimum Wage experts.  

If the reduced contractual pay takes workers rates below National Minimum Wage rates, your workers will be underpaid. Employers must ensure that salary sacrifice arrangements do not take their workers’ pay below the National Minimum Wage. 

For deductions that are not salary sacrifices, meaning there is no contractual change to workers’ pay, then the usual National Minimum Wage deduction rules apply instead. For example, if the employer has own use and benefit.  

If you operate salary sacrifice schemes, you need to check the new reduced pay does not take workers’ pay below National Minimum Wage for all time worked in every pay reference period.

Making your PAYE Settlement Agreement payment 

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 2024 must clear into HMRCs account by 22 October 2024. 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, please contact the Employer 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.  

PAYE charge queries

Each month, HMRC creates a PAYE charge for all employers and pension providers, using the information HMRC holds for that month. A small number of customers contact our Employer Helpline to tell us there is a difference between the amount of PAYE they believe is due and the amount HMRC records show as being due. In most cases, these discrepancies are explained and put right very quickly.  

Since the implementation of Real Time Information, HMRC has developed IT solutions to help analyse and resolve such issues. These work well, resolving the majority of discrepancies.  

However, some cases do need closer examination, and these are referred to the Charge Resolution Team. These take longer to work through, and the team may need to contact you to discuss your account. If necessary, they will work with you to identify the cause of the discrepancy and explain how it can be put right.   

Investigations have shown that some of the discrepancies are caused by duplicate employment records. This is when an extra employment record for one of your employees is created by mistake on HMRC’s systems, repeating an existing live or ceased employment record.  

This can affect:  

• your employer charges in respect of tax, National Insurance and Student Loan repayments, leading to unnecessary debt collection activity 

• incorrect employee tax codes being issued, resulting in the incorrect deduction of PAYE tax, National Insurance contributions, Student Loan repayments, Universal Credit processes and Tax Credits renewals 

Avoiding duplicate employments  

Different payroll solutions are capable of different processes and allow employers to have different levels of control around the information they can add or update. You should check with your software provider on the process available.  

You can help to avoid the creation of duplicate employments, where you are able to, by following these recommendations. 

When an employee starts  

Make sure the starter notification and first Full Payment Submission (FPS) include accurate personal details of the employee to avoid the need for further updates on a subsequent FPS to their name, date of birth or gender. Always try to provide consistent information. For example, if the first FPS for a new employee contains the name William Smith, make sure that name is on every subsequent submission rather than Bill or W Smith. Similarly, if you report the name as Bill, use that name on every submission.  

Only include the start date and starter declaration on the first FPS for a new employee, you should not show the start date on any subsequent FPS. 

Changes to start dates do not need reporting to HMRC, but should be recorded on your payroll system if required. 

Payroll ID changes 

Each employee should have a unique payroll ID, often known as employee number or employee payroll number. This will most likely appear on their payslip. If you have an employee working for you in more than one job, and those are on a different payroll within the same PAYE scheme, then it is important that the employee numbers or employee payroll numbers are different.  

HMRC is aware that payroll software can generate the employee numbers and therefore it is important that you understand what your software payroll ID generation process is.  

Where you are able to, you should make sure that unique employee numbers or employee payroll numbers are used within your PAYE employer scheme. 

If the employee has more than one employment with you, each employment should have a different employee number or employee payroll number. This includes: 

• more than one employment at the same time 

• where an employee leaves and is re-employed — in which case a different employee number or employee payroll number should be used and you should start their year-to-date information again as 0.00; do not re-use a previous employee number or employee payroll number 

If your software automatically generates employee numbers or employee payroll numbers and cannot be over-ridden, the previous ID should be entered into the ‘OLD’ field and the new ID into the ‘NEW’ field. 

Only set the Payroll ID change indicator when reporting payroll ID changes and make sure both the ‘OLD’ and ‘NEW’ fields are completed. You do not need to include the original start date. 

Further guidance can be found on finding payroll software including changing your payroll software provider.  

Where you are unsure if the previous software included a payroll ID, always set the Payroll ID change indicator when reporting your new payroll ID.  

When or after an employee leaves 

If an employee leaves:  

• you do not need to report changes to leaving dates to HMRC, but should update your own records if required 

• you should not submit a FPS after one has already been submitted with a leaving date, unless it is a correction or Payment after Leaving 

• Payments after Leaving and corrections made after leaving must include the original date of leaving which was included on the FPS that was submitted when the employee left 

• you should only set the Payment after Leaving indicator if you have issued a P45 to your employee and have made a subsequent payment  

• you should not submit a duplicate or identical FPS reporting a Payment after Leaving unless you have received a rejection notification for the original 

General issues 

Only set the ‘Occupational Pension’ indicator or complete the ‘Annual Amount of Occupational Pension’ if you are paying a pension. Leave the field blank — do not enter 0.00. 

For any employee who is paid infrequently, set the ‘Irregular Payment Pattern’ indicator. 

Preventing payment allocation issues using reference numbers for early and late payments 

You need to add 4 extra numbers to your 13-character accounts office reference number if you are making: 

• an early payment — before the 6th of the tax month or quarter the payment is due 

• a late payment — on or after the 5th of the tax month after the payment was due 

The four numbers you need to add to the end of your 13-character accounts office reference are made up of the last two numbers of the tax year your payment is for, for example, the current tax year 2024 to 2025 would be 25, plus the month of the tax year your payment is for.

Tax Year month	Reference number
6 April to 5 May 2024	2501
6 May to 5 June 2024	2502
6 June to 5 July 2024	2503
6 July to 5 August 2024	2504
6 August to 5 September 2024	2505
6 September to 5 October 2024	2506
6 October to 5 November 2024	2507
6 November to 5 December 2024	2508
6 December to 5 January 2025	2509
6 January to 5 February 2025	2510
6 February to 5 March 2025	2511
6 March to 5 April 2025	2512

If you are making an early or late payment online, by telephone bank transfer or by cheque you need to update the reference number every time you make an early or late payment.  

If you are making payment 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. 

Further information on paying employers’ PAYE is available.

Employers PAYE — variable direct debit 

In 2022, HMRC introduced a new recurring variable Direct Debit payment plan for PAYE. HMRC encourage all employers to adopt this payment method, as it is a more efficient and secure way to make payments. The variable Direct Debit lets you pay your balance on time each month. You will not have to check whether HMRC has received your payment for your latest PAYE return charges, and it will make sure that your payments are allocated correctly through automatically including your payment references.  

How to set up the variable Direct Debit for PAYE 

You can set up a Direct Debit through pay employers’ PAYE or directly through your HMRC online service account. You will need PAYE enrolment to do this.  

When logged into your HMRC online account, click on the link to ‘see all upcoming PAYE payments’. From this screen, you should see a link to ‘set up a Direct Debit’. Select this link and follow the instructions on screen to verify your details. 

Once you have set up the Direct Debit successfully, you will receive an on-screen confirmation that your Direct Debit instruction has been received, and the date from which HMRC will collect payments. The ‘Set up a Direct Debit’ link will then enable you to view, amend or if necessary, cancel the Direct Debit.  

At least three working days before the collection date, you will receive a secure notification to your verified email address which confirms the amount HMRC will collect and when. 

Notice of change to effective date of new data requirements on employees’ hours 

From March to May 2024 the previous government consulted on two draft statutory instruments — the Income Tax (Pay As You Earn) (Amendment) Regulations 2024 and the Income Tax (Additional Information to be included in Returns) Regulations 2024 — with a view to improving the data collected through the tax system. The draft regulations set out new requirements for businesses to change the information they provide to HMRC through both Income Tax self-assessment (ITSA) and PAYE (Pay As You Earn) real-time returns.  

These regulations and new requirements were intended to take effect from April 2025. However, owing to the delay caused by the General Election and the lead-in time required to prepare for implementation, employers will now not be required to start providing more detailed employees’ hours data through PAYE Real Time Information returns until April 2026 at the earliest.   

We will provide a further update on these proposals and timelines for implementing the changes in due course. 

Employer PAYE and Construction Industry Scheme repayments 

HMRC is developing improvements to support online claims for repayment.  

Currently, you can submit a repayment claim online for Construction Industry Scheme (CIS) deductions suffered, at claim a refund of Construction Industry Scheme deductions if you’re a limited company or an agent.  

HMRC is making improvements to the online claim form which will enable you to upload evidence for your CIS repayment claim when requested by HMRC. When you have submitted your claim, you will be directed to the online tool to find out when to expect a reply from HMRC.  

HMRC is also introducing an online claim form for PAYE repayments. Before you request a PAYE repayment, follow the guidance at you paid HMRC the wrong amount and work out why you overpaid. If you overpaid because you made an error when paying HMRC, or you made a duplicate payment, you should balance your account by paying less in your next PAYE bill. 

We will provide further updates when these improvements have been introduced.

Tax updates and changes to guidance 

Basis period reform — reporting on a tax year basis 

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

If you do not already do so, you will need to declare your profits from the end of the previous accounting period in 2022 to 2023 up to 5 April 2024. Any additional profit, after overlap relief, will be transitional profit. By default, this transition profit is spread equally over the next 5 years including 2023 to 2024. Accounting periods ending on 31 March will now be treated as equivalent to those ending on 5 April. 

To help you calculate your overlap relief and transitional profits, HMRC recently published a video on basis period reform.

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

If you are completing a paper tax return, you must submit it by midnight 31 October 2024. If you are still awaiting a response in request for your overlap relief figure for a paper return, file your return using provisional figures and amend this when you have received the correct figure. 

We have recently seen service delays due to a major increase in requests to provide overlap relief. Do not contact us directly as we expect to have cleared the current backlog in the coming weeks. If you have applied and have not heard back, you can now check when you can expect a reply from HMRC.  Do not use the online form to ‘check’ a figure that you already hold, and there is no requirement to use the service before filing a return. 

We have also launched online guidance on how to work out your basis period reform transition profit. Any figures entered into the interactive guidance do not form part of the return itself — it is there to guide completion of the boxes on the return. 

Profits incurred in the 2023 to 2024 tax year can be reduced by any overlap relief which is entered on the 2023 to 2024 Self-Assessment return. You can use our online service to get your Overlap Relief figure.  

Further guidance on basis period reform is available. 

Guidelines for Compliance — help to avoid errors in claims for plant and machinery allowances 

HMRC has published Guidelines for Compliance to help avoid errors in claims for plant and machinery allowances. 

They set out common areas of error in claims. We are sharing this information to help you to get your claims right and manage the risk of when a claim may be inaccurate.  

Guidelines for Compliance offer HMRCs view on complex, widely misunderstood or novel risks that can occur across tax regimes. 

General information and customer support 

Guidelines for Compliance — help with VAT compliance controls 

HMRC has published Guidelines for Compliance — Help with VAT compliance controls — GfC8 for UK VAT registered businesses who use invoice accounting — where they generally account for VAT when invoices are issued and received.  

The guidelines are designed to help you understand our expectations as you plan, carry out, and review the accounting and compliance processes that make sure VAT is accurately declared by your business. This includes setting out good practices for declaring employee expenses in relation to VAT.  

The guidelines are a practical product, designed to help you:  

• make informed decisions and consider if you have sufficient controls within your VAT systems and processes  

• reflect the complexity and scale of your own business 

• identify compliance risks and enable you to develop a robust strategy to reduce those risks  

They are not intended to be exhaustive or expected to apply equally to all businesses. You should read them alongside HMRCs existing guidance.  

Guidelines for Compliance are part of HMRCs ongoing commitment to publishing practical guidance to support customers. They can help you better understand what HMRC considers to be good practice. They can clarify our view in complex, widely misunderstood or new areas of the tax system. Further information on Guidelines for Compliance, including our other publications is available. 

The Administrative Burden Advisory Board — Tell ABAB Report 2024 

The Administrative Burden Advisory Board (ABAB) published their annual Tell ABAB Report 2024 on 25 September 2024.

The report provides a commentary around the responses to this year’s Tell ABAB Survey, which gathers small business views and experiences of engaging with HMRC across a range of our services.

This year had a record 10,052 completed  responses, up 34% from the 7,500 responses to the 2023 survey.  

ABAB is passionate about listening to and understanding the needs of the small business community. ABAB 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.  

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

Improving data capture of business tax identifiers on the RTI Full Payment Submissions 

The HMRC Unique Customer Record programme is a building block needed to deliver the vision of a trusted and modern tax administration. “People and businesses are to be able to pay the right tax as they live their lives and go about their business. It should be easy for people to pay any tax due, and for most people the calculation and payment of tax should be effortless. For most businesses, tax should be straightforward and hard to get wrong.”  

A unique customer record will benefit our customers’ tax affairs by: 

• driving a more personalised, data driven approach to tax administration 

• providing better support for our customers’ tax affairs 

This is because the unique customer record carries all of a customer’s key information, including the: 

• taxes and services they are enrolled for 

• money they owe to HMRC 

• money HMRC owes them

HMRC is continually looking to improve the quality of the data we receive and hold and employers can help with this by inputting accurate information and completing all the relevant boxes when they complete a Full Payment Submission. 

For employers registered for payroll taxes and depending on their business type, one of the following data items may be entered before submission (if you have one):

• Self Assessment (SA) unique taxpayer reference (UTR)  for sole proprietors or partnerships
• Corporation Tax (COTAX) reference for customer registered for Corporation Tax for example limited companies

We are asking employers who have an SA UTR or COTAX reference to complete those fields.

You should be able to find these boxes on the employer details section of your payroll software. 

If you do not have a COTAX reference or Self Assessment unique taxpayer reference, once received, enter this in the employer details section of your payroll software. This will update on our systems the next time the Full Payment Submission is sent.  

By providing this data it will help us to increase data collection rates of customer identifiers that will support all HMRC customers (individual or business) to see and manage the taxes and services you are enrolled for in one place and manage your affairs with us more easily online. 

Help us protect workers from getting caught out by tax avoidance 

Our tax avoidance ‘don’t get caught out’ campaign helps contractors spot the signs of bad tax advice and understand their pay arrangements so they do not get unexpected tax bills.   

HMRC is asking you to share this information with your workers to help protect them from tax avoidance. This information, which includes personal stories, a short video, online guidance and interactive tools. 

YouTube video.

Contractors will find the support they need and learn how to: 

• recognise what tax avoidance is 

• get help to get out of a tax avoidance scheme 

• report a tax avoidance scheme   

Details of tax avoidance schemes and their promoters to steer clear of are also published. 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 across your newsletters and websites. Including sharing and liking our posts on social media channels such as Facebook, LinkedIn and X (Twitter). 

Helping your employees prepare for retirement 

The HMRC app has features that can help people prepare for their retirement.  

Your employees can use the app to check their State Pension Forecast, allowing them to: 

• see their State Pension age 

• view their forecast State Pension amounts based on potential contributions 

• view how much their State Pension would currently be worth, based on National Insurance contributions to date  

The app can also be used to check their National Insurance contribution years, and view any gaps in their record, including how many weeks they have paid and how much they need to pay for it to become a full qualifying year.  

If they have any National Insurance gap years, they may be able to make voluntary payments online, or through the HMRC app.  

If your employees do not already use the free HMRC app, you can suggest they download it today to take control of their money and tax. 

HTML format of Employer Bulletin 

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

• impaired vision 

• motor difficulties 

• cognitive impairments or learning disabilities 

• deafness or impaired hearing 

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

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

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

Getting more information and sending feedback 

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 sean.connolly@hmrc.gov.uk.