Tag: HMRC; employment tax; P11D; national insurance

Employment Tax Briefing – Spring 2024

Posted on by Katie Trower

As the current tax year draws to a close, we look towards April and the challenges which the new year will present.

We are starting to see a rise in HMRC activity, specifically concerning off-payroll working (OPW) arrangements. Whilst we are seeing many decisions announced by the courts on cases concerning TV presenters, there is also an

The Finance Act 2024, which gained Royal Assent in late February, includes the legislation that allows the correct off-set of any ‘other taxes’ against the PAYE Income Tax and National Insurance liabilities due under the off-payroll working legislation (commonly referred to as IR35 or the intermediaries legislation). looks at how the provisions can be applied in resolving disputes with HMRC.

In other news, sadly, the question of termination payments is something we are discussing with clients on a more regular basis. However, HMRC has recently announced it will no longer provide employers with advance assurance on the tax treatment of termination and redundancy payments. My colleague, Dinesh Pancholi, Senior Manager, summarises some of the key points which need to be considered to help ensure payments can be made tax efficient.

In January 2024, the Government announced the mandatory payrolling of benefits in kind (BiK), with effect from April 2026. Employers will need to carefully plan who they will transition over to the new regime and bid farewell to the annual submission of P11D forms. Joanne Hennessy, Senior Manager, provides some initial thoughts on an area which will evolve over the next 24 months.

As part of the Spring Budget 2024, the Chancellor Jeremy Hunt announced a further 2% reduction in employees’ National Insurance contributions (NICs) which will come into effect from April 2024. However, there was no change to the amount of National Insurance (NI) employers will be required to pay, which remains at 13.8%. Employers should consider the use of pension salary sacrifice arrangements both to help promote pensions saving and to help make their salary budgets stretch that bit further. We provide an overview of the key points which need to be considered when putting a pension salary sacrifice arrangement in place.

Finally, we include an employment tax calendar, providing some key reminders for the coming year.

I hope you find the articles of interest. Please do not hesitate to contact me, or any member of the Employment Tax team, should you have any points you wish to raise with us.

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Government announces the mandatory payrolling of benefits from April 2026

Posted on by Katie Trower

Current position

Currently, employers are required to report the benefits in kind they provide to their employees on a form P11D, which needs to be submitted to HMRC by 6 July each year, following the end of the tax year. However, employers can voluntarily payroll the benefits they provide to employees with two exceptions:

  • Interest free loans including director’s overdrawn loan accounts; and
  • Employer provided living accommodation.

Under the current ‘voluntary’ approach, employers are required to register online with HMRC (before the beginning of the tax year in which payrolling is going to first apply), stating what benefits are going to be subjected to payrolling and the employees to whom this will relate. For example, this could be whether it will apply to an employee at a particular location. Where payrolling of benefits is applied, the Income Tax due is collected in ‘real time’ through the payroll, based on their taxable value, which may be estimated. However, HMRC will no longer make any adjustments to the employee’s PAYE code number.

Even though forms P11D will no longer be submitted to HMRC, there is still the need to file a form P11D(b), summarising the value of the benefits provided and to pay the Class 1A National Insurance by 19 July (21 July where payment is made via BACS). By 1 June following the end of the tax year, employers are required to provide employees with a statement of the taxable benefits provided during the year.

Mandatory payrolling of benefits from April 2026

Whilst we are waiting for the draft legislation, which is due to be published later this year, we are aware that advanced planning will help manage everyone’s expectations. Based on experiences where clients voluntarily payrolled benefits, employers will need to consider the following:

  • Determining the nature of the benefits you will provide.
  • The changes that need to be made to your processes.
  • The changes that need to be made to your policies and procedures.
  • How information is shared with employees.
  • The impact on staff retention and recruitment.

It is important that you plan to ensure you will meet the challenge of moving across to payrolling of benefits without any significant disruption to the business.

Please contact Nick Bustin, Employment Tax Director, to discuss matters further.

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