HMRC have issued the Agent Update for April/May 2020. We have summarised the key content for you with links to our detailed guidance on the topics covered.
COVID-19
HMRC have published updated guidance for employers, businesses and employees. More information can be found on the Coronavirus Business Support page.
See our COVID-19 zone
Off-payroll working rules: reform delayed until 2021
The government has delayed reforms to the off-payroll working rules (IR35) in the private sector to 6 April 2021 in response to COVID-19.
- This is a deferral and not a cancellation.
- Contractors working through their own limited company providing services to non-public sector organisations continue to be responsible for operating the existing off-payroll working rules. This includes deciding whether they are employed or self-employed for tax purposes for each contract and deducting the relevant tax and NICs.
- Contractors who work through their own limited company can continue to have their invoices paid gross of Income Tax and NICs by clients and agencies.
From 6 April 2020, organisations may notice some additional functionality in their payrolling software – the ‘off-payroll worker subject to the rules’ indicator in Pay As You Earn (PAYE) Real-time Information (RTI).
- Organisations in the private sector should not use this indicator and should not use payrolling software to make payments to a contractor's own limited company.
- Agencies should only use this software for contracts where services are provided to public authorities and fall inside the off-payroll working rules.
Public authorities
- The delay means planned changes to the rules which would have affected the public sector, with regards to status determination statements and having a status disagreement process in place, are also deferred until April 2021.
- From 11 May 2020 for contracts falling inside the off-payroll working rules, public authorities or agencies paying a contractor’s company must use the PAYE RTI ‘off-payroll worker subject to the rules’ indicator in payroll software.
See COVID-19: IR35 & off-payroll working.
Independent review of the loan charge: new guidance published
The Government’s response to the Independent Loan Charge Review led to several changes. Some disguised remuneration loans that were previously subject to the loan charge will now no longer be within the rules.
HMRC have published draft legislation and a draft scheme to refund certain voluntary payments (voluntary restitution) made on or after 16 March 2016 as part of a settlement with HMRC, for loans made in unprotected years.
If your clients are due a refund of voluntary restitution under a disguised remuneration settlement, HMRC will write to them to invite them to make a claim after the Finance Bill has had Royal Assent, expected to be in summer 2020, subject to any delays caused by COVID-19. HMRC cannot process refund claims until the legislation has been enacted.
Anyone in the process of settling their disguised remuneration scheme can continue working with HMRC to bring their settlement to a conclusion.
See Disguised remuneration loan charge (subscriber guide)
Tax avoidance promoters targeting returning NHS workers
HMRC have published Spotlight 54 to warn those returning to the NHS against signing up to these arrangements.
See COVID-19: Spotlight 54: Tax avoidance promoters targeting returning NHS workers.
Problems paying tax because of COVID-19
HMRC say if your clients are concerned about being able to pay their loan charge or disguised remuneration settlement because of COVID-19, or any other reason they can agree instalment arrangements with them on a case-by-case basis and to contact them to discuss this.
Construction Industry Scheme (CIS): filing dates and refunds
Limited company subcontractors can off-set CIS deductions against tax and NIC payments due for their employees and CIS deductions from their subcontractors, on a monthly or quarterly basis.
- They must show this on their monthly Employer Payment Summary (EPS) return.
- At the end of the tax year, any CIS deductions that cannot be offset may be refunded or set against any Corporation Tax or VAT due. Refunds cannot be processed until 24 April. It can take 40 working days for repayments to be made.
- A repayment can be claimed online if the company has a Government Gateway user ID and password. If a repayment is to be made to an agent or other nominated representative, the claim must be made by post including a completed R38 form.
See CIS: Contractors and Subcontractors
Company car changes: Ultra-Low Emission Vehicles (ULEV) and Worldwide Harmonised Light Vehicle Test Procedure (WLTP)
For company car tax purposes from April 2020:
- New cars first registered from 6 April 2020 will use CO2 emission figures based on WLTP.
- Cars registered prior to 6 April 2020 will use CO2 emission figures based on the current testing regime, New European Driving Cycle (NEDC).
- There will be no change to the way your client currently reports their Company car tax data, but they may need to provide additional information.
- A new zero-emission mileage field will be shown on the form P46 (car). If a car has a CO2 emission figure of 1-50g/km you will need to know the car’s zero-emission mileage.
- For paper P46 (car) submissions your client will need to ensure they complete the latest version as historic copies may not include the new zero-emission mileage field.
See Company cars.
Official Rate of Interest for the 2020-21 tax year
- The Official Rate of Interest (ORI) used to calculate the Income Tax charge on the benefit of employment-related loans and the taxable benefit of some employer-provided living accommodation is decreasing from 2.50 to 2.25% for the 2020-21 tax year. The average Interest rate for the tax year 2019-20 is 2.50%.
- If employers provide employment-related loans or living accommodation for their employees, they need to note the new rate to use when calculating the value of any benefit for 2020-21.
Parental bereavement leave and pay
On 6 April 2020, the government introduced a new entitlement of two weeks’ paid leave for parents employed in Great Britain whose child dies, or baby is stillborn after 24 weeks’ pregnancy on or after 6 April 2020. The legislation, approved by the Houses of Parliament on 3 March, sets out the main provisions of the new entitlement, including:
- A broad definition of a ‘bereaved parent’ which captures a range of ‘parental’ relationships.
- The ability to take the two weeks together or separately, within a 56-week period.
- Minimal notice requirements in order to take parental bereavement leave.
- A flexible notice period and minimal evidence requirements for statutory bereavement pay.
Claiming Employment Allowance from April 2020
Before anyone claims Employment Allowance (EA), they must check they are still eligible.
- EA will still be claimed through Employer Payment Summary. Claims will not renew so a new claim is required each year.
- From 6 April 2020 EA can only be claimed if the total (secondary) Class 1 NICs liability is below £100,000 in the tax year before the year of claim.
- EA will be de minimis state aid and contribute to the total aid allowed under the business sector de minimis state aid cap in the relevant three-year period. If a claimant’s business has received/been allocated other de minimis state aid, they must ensure they have space under their business sector ceiling to receive the full EA available.
See Employment allowance.
Scottish Income Tax
- Following Parliamentary approval, updated Scottish Income Tax thresholds become operative from 11 May 2020.
- Changes required to tax coding calculations to implement the updated thresholds will be issued as a standard daily P6 coding notice, not a P6B, as previously stated, from 11 May 2020. These are to be operated in the next payroll run.
Reminder: Changes to the Short Term Business Visitors (STBVs) special arrangement under Regulation 141
- The special arrangement under Regulation 141 ended on 5 April 2020 and the new Appendix 8 arrangement started on 6 April 2020. This means the UK workday limit for an STBV coming to the UK has increased to 60 workdays.
- Changes to PAYE 81950 have been published, along with an application form for employers to join the new Appendix 8 arrangement. Due to COVID-19 the deadline of 6 April 2020 to return application forms has been extended. A new deadline date will be confirmed shortly.
- For the 2019-20 tax year, the filing and payment dates for the special arrangement are 19 April for filing and 22 April for payment in 2020.
- From the 2020-21 tax year, the filing and payment dates will change to 31 May.
Student Loan & Postgraduate Loan (PGL) thresholds and rates
The thresholds and rates from 6 April 2020 are:
- Student Loan Plan 1 – £19,390.
- Student Loan Plan 2 – £26,575. Plan 1 and Plan 2 repayments are calculated at 9% of the income above the threshold.
- Postgraduate Loan (PGL) – £21,000. PGL repayments are calculated at 6% of the income above the threshold.
- Your employee may be liable to repay a Plan 1 or Plan 2 loan at the same time as a PGL. If so, they’ll be due to repay 15% of the amount they earn over the thresholds.
Student and Postgraduate Loan Self Assessment (SA)
Taxpayers who complete a SA tax return should record their student loan plan type and or PGL information on their 2019-20 SA tax return. They will have their deductions calculated against the correct threshold for their student loan plan type and or PGL.
Capital Gains Tax: Payment for property disposals
From 6 April 2020, UK residents must report and pay any Capital Gains Tax (CGT) due on gains on the disposal of a UK residential property to HMRC within 30 days of completion of the disposal.
- Non-UK residents must also report any disposals of UK property or land and if there is tax due, pay their CGT liability within 30 days of completion of the disposal.
- HMRC have launched its new online service to allow customers to do this but some elements of the service won’t be fully implemented until early May. Until then, you won’t be able to amend returns or send additional ones for the same person and if someone is acting as a capacitor for someone else the service won’t open for them until May.
- In the summer further enhancements will be added including automated repayment requests.
See CGT: Payment of tax.
Stamp Duty: new process for share transactions
- HMRC have put temporary measures in place for processing Stamp Duty share transfers and can only process documents submitted by email and where Stamp Duty is paid electronically.
- If you have already posted documents, you should resubmit them by email.
Class 1A liabilities payable on Termination Awards and Sporting Testimonials and Sporting Testimonial Payments come into effect from 6 April
Termination payments
From 6 April 2020, there is a new Class 1A NICs liability on non-contractual 'cash' (or cash equivalent) taxable termination payments over a £30,000 threshold, which have not already incurred a Class 1 NICs liability as earnings.
This new liability will be:
- Chargeable on the employer and payable at the same Class 1A NICs percentage rate (currently 13.8%) that applies to existing Class 1A NICs liabilities on Benefits in Kind (BIKs).
- Not be payable and reported via the annual P11D(b) payment/reporting process. It will be paid and reported through the PAYE/Real-Time Information (RTI) process.
- The existing P11D(b) reporting process will be retained for employers reporting Class 1A NICs arising on BIKs.
Sporting testimonials
From 6 April 2020, any non-contractual and non-customary sporting testimonial payments which exceed £100,000 paid to a sportsperson by a testimonial committee will incur a Class 1A NICs liability chargeable on the sporting testimonial committee.
- Cash sporting testimonials payments will be paid and reported through the PAYE/RTI process.
See Termination, redundancy and leaving payments (from 6 April 2018).
PAYE reporting expenses and Benefits in Kind for the tax year ending 5 April 2020
The deadline for reporting any expenses and Benefits in Kind is 6 July 2020.
- If you’re an Authorised Agent registered with the PAYE for Agents online service you can do this online. If you can’t do it online, use the official forms P11D and P11D(b).
- You’ll need to complete form P11D(b), if your client has a Class 1A National Insurance contribution liability because they payroll their expenses and benefits and form P11D to declare any non-payrolled expenses or benefits.
See P11D: Reporting benefits and expenses.
Making Tax Digital: Improving digital communications
HMRC recently announced that they will stop automatically sending physical Self Assessment returns.
See HMRC to stop sending paper tax returns
Corporation Tax
Non-resident company landlords and Corporation Tax Unique Tax Reference Agent Authority 64-8.
On 6 April 2020, the profits or UK property income from UK property businesses of non-resident company landlords were brought within the scope of Corporation Tax.
- HMRC have written to most companies to let them know their Corporation Tax Unique Tax Reference (CT UTR) but some letters have been delayed. As the existing 64-8 agent authority does not extend to CT, HMRC cannot provide the company’s CT UTR to their agent. HMRC expect all letters to be received by 30 June 2020 and ask that unless your client needs to file a CT return before that date you do not contact HMRC.
- Should you need to file a CT return by 30 June 2020, or your client’s letter does not arrive by 30 June, send HMRC a new signed 64-8 form for Corporation Tax, with a covering letter quoting the SA UTR but leaving blank the space for the UTR on the new 64-8. HMRC aim to deal with your requests within cour weeks. Bulk applications may be made.
See Non-resident landlord scheme.
Corporation Tax rate: impact on quarterly instalments
At Budget 2020, the Chancellor announced that CT rate would remain at 19% on 1 April 2020.
- The change in rate will affect quarterly payers with accounting periods straddling 1 April 2020 who have made instalment payments calculated by reference to the 17% rate from 1 April. These payments may now be insufficient and incur interest charges.
- Affected businesses should review their quarterly instalments and correct any inadequate payments as soon as possible. They may find that their forecast CT liability is less than previously expected due to the impacts of COVID-19. If payments made to date are now considered excessive, businesses may make a claim for a repayment of the excess.
See Corporation Tax instalment payments
HMRC Charter consultation
HMRC have opened a public consultation on HMRC’s Charter and would like your feedback. You can email your views to
Raising standards in the tax advice market call for evidence, have your say
The government has launched a call for evidence on raising standards in the tax advice market. This opened on 19 March and closes on 28 August. Details can be found here. You can email your views to:
Government support for businesses
Government has recently launched a new Business Support campaign at www.businesssupport.gov.uk.
Removal of fax facility (or removal of fax numbers for Corporation Tax and Inheritance Tax)
HMRC had intended to stop accepting faxes from 1 May 2020. Due to the current situation, they cannot process anything received via fax. Please instead send any correspondence to the address published on the GOV.UK contact page or, if you’re replying to the HMRC address shown on the correspondence you have received.
Agent toolkits: Annual refresh
HMRC have updated the following toolkits for 2020:
- Director’s Loan Account
- Capital Allowances for plant and machinery
- Private and personal expenditure
- Income Tax Losses
- Property Rental Tax
Tax Disputes
Is your client in dispute with HMRC over an appealable tax decision? HMRC offer an Alternative Dispute Resolution (ADR) service where HMRC hopes to resolve your tax dispute within 120 days.
Consultations
You can check the status of tax policy consultations on gov.uk.
The Pensions Regulator Automatic enrolment: qualifying earnings thresholds increased
On 6 April 2020, workplace pensions earnings thresholds changed. The lower threshold of qualifying earnings increased to £6,240, but the upper threshold and the earnings trigger remained the same, at £50,000 and £10,000 respectively.
See Auto-enrolment earnings thresholds.
Contact & HMRC service
- HMRC working with Tax Agents Blog. This provides another channel to communicate about consultations, news and updates and the rollout of new digital services for agents.
- Complain to HMRC: to make a complaint against HMRC on behalf of your client you must be appointed as their tax advisor.
- Email alerts for employers. Agents should encourage employers to register for email alerts to be notified about coding changes and information published on Government Web pages.
- Where’s my reply? Find out when you can expect to get a reply from HMRC to a query or request you have made.
- You can check the latest updates to HMRC manuals or subscribe to an automatic notification of change.
- Future online downtime. HMRC provide information about planned downtime which will affect the availability of online services.
- Staying safe online. HMRC continuously monitors systems and customer records to guard against fraudulent activity, providing regular updates on scams they are aware of.
- Phishing emails and bogus contact: a new type of phishing scam regarding ‘Tax Returns’, which is being circulated in high volumes, has been added.
- Online training material and useful resources for tax agents and advisers: HMRC videos on YouTube, online learning modules and live and pre-recorded webinars are available for tax agents and advisers providing you with free help, learning and support on topical subjects.
Other content
Other recent publications
- Spotlights
- Employer Bulletins
- Trust and Estates newsletters
- National Insurance Services to Pensions Industry: countdown bulletins
- Pension schemes newsletter
- Revenue and Customs briefs
Cybersecurity
The update also includes a section “50 questions to ask your IT provider” and some guidance on cybersecurity.
External Link