Employer Bulletin: April 2021

Coronavirus Job Retention Scheme (CJRS) 

• The UK Government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021.
• For periods in July 2021, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50.
• In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875.
• You will need to continue to pay your furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month.
  • This means, for periods between July and September, you will need to fund the difference between this and the CJRS grants yourself.
  • You can also top up wages above 80% if you wish, but you are not required to do so.
• You must continue to pay the associated Employer National Insurance Contributions and pension contributions on subsidised furlough pay from your own funds.
• There is detailed guidance to help you claim through the CJRS and key deadlines you need to be aware of:
  • March 2021 claims must be submitted no later than Wednesday 14 April 2021.
  • April 2021 claims must be submitted no later than Friday 14 May 2021.

CJRS eligibility from May 2021

• For periods from 1 May 2021 onwards, you will be able to claim for eligible employees who were employed by you and on your PAYE payroll on 2 March 2021.
• This means you must have made a PAYE Real-Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying of earnings for that employee.
• You and your employees do not need to have benefited from the scheme before to make a claim, as long as you meet the eligibility criteria.

See COVID-19: Coronavirus Job Retention Scheme (CJRS) from 1 November 2020

A new one-off £500 payment to support working households receiving tax credits

• Do any of your employees receive Tax Credits?
  • They may be eligible for a one-off payment of £500 to support their household through the COVID-19 pandemic.
• The new one-off payment is being introduced to provide extra support for working households as the temporary increase in Working Tax Credit of £1,045 a year, introduced at the start of the pandemic, will end as planned on 5 April 2021.
  • Telling your employees about this payment will help protect them from scams and prepare them for changes to their regular Tax Credits payments.
• HMRC will automatically make the payment by 23 April 2021.
• HMRC will contact claimants by text message or letter to confirm they will receive the payment.
  • Your employees do not need to contact HMRC or apply for this payment.
• Your employees may be eligible if, on 2 March 2021, they were getting either:
  • Working Tax Credit.
  • Child Tax Credit and were eligible for Working Tax Credit but their income was too high to get Working Tax Credit payments.
• The one-off payment will not affect any other benefits, such as Housing Benefit or Universal Credit, that your employees may receive.
• Your employees do not need to pay Income Tax or National Insurance on the amount of this one-off payment or declare it as income for Self Assessment tax returns if they complete one.

Internationally mobile workers: extended filing dates due to Coronavirus

• HMRC has extended the end of year payroll reporting deadline for customers with Internationally Mobile workers.
  • The announcement applies to businesses that operate modified payroll reporting for employees coming to or leaving the UK under the procedures known as Appendices 4, 7A, 7B and 8.
  • The original filing deadline for the 2019-20 returns under Appendices 7a and 7b was 31 March 2021.
  • The original filing deadline for the 2019-20 returns under Appendices 4 and 8 was 31 May 2021.
• The deadline for returns and payments, where appropriate, has now been extended to 30 June 2021.

Change to amending PAYE Pay Settlement Agreements for Coronavirus items

• If you have additional items to add to a PAYE Settlement Agreement (PSA), HMRC issue a new P626.
• For 2020-21, if the additional items relate to Coronavirus only, a new P626 is not required.
  • HMRC will add an appendix to the existing enduring agreement.
• To add Coronavirus related items, such as taxi fares or car parking for staff who needed to work in the office, or computer equipment to allow staff to work from home to your existing PSA please email: This email address is being protected from spambots. You need JavaScript enabled to view it.

See PAYE Settlement Agreements

£20 million SME Brexit Support Fund opens for applications

• Smaller businesses can apply for grants of up to £2,000 to help them adapt to new customs and tax rules when trading with the EU.
• The £20 million SME Brexit Support Fund enables traders to access practical support, including training for new customs, rules of origin and VAT processes.
• Small and medium-sized businesses that trade solely with the EU, and are therefore new to importing and exporting processes, are encouraged to apply for the grants.
  • To be eligible, businesses must import or export goods between Great Britain and the EU or move goods between Great Britain and Northern Ireland.

See SME Brexit Support Fund opens applications

On 23 March 2021, the government published a command paper titled ‘Tax Policies and Consultations (Spring 2021)’, which set out a range of tax-related announcements including publication of consultations, discussion documents and calls for evidence.

Tax administration framework review

• The government has published a call for evidence on the tax administration framework, covering the core legislation, processes and guidance which underpin obligations for HMRC, taxpayers, agents and third parties.
• The call for evidence runs until 13 July and will explore how to make tax more straightforward to pay and harder to get wrong, improve people’s experience of the tax system and build and maintain trust between HMRC and taxpayers.
• You can share your views at: Call for evidence: the tax administration framework: supporting a 21st century tax system

See Call for Evidence: Tax Administration Framework

Timely Tax Payments

• In November 2020, the government announced its interest in exploring more regular payment of tax, based on current year liability.
• It has published a Call for Evidence on ‘Timely Payment’ to open a dialogue and begin to explore the opportunities and challenges of spreading out the payment of Income Tax under Self Assessment and Corporation Tax for small businesses.
  • This is not a commitment to change the payment timings.
• The call for evidence will run for 16 weeks and applies UK wide.
• You can share your views at: Call for evidence: timely payment

See Call for evidence: Timely payment

Raising standards in the tax advice market

• HMRC's consultation on Professional indemnity insurance and defining tax advice is now open.
• As part of the consultation, HMRC would like to hear your thoughts on:
  • What checks do you carry out when engaging a tax adviser? Do you check whether they are insured?
  • Your experience (if any) of making claims or complaints against a tax adviser for bad advice that you may have received.
• The government’s ambition is for HMRC to share information about the adviser with the client digitally.
• You can email your views to This email address is being protected from spambots. You need JavaScript enabled to view it..
• The consultation closes on 15 June 2021.

See Consultation: Raising standards in the tax advice market

Reducing Inheritance Tax (IHT) reporting requirements

• Following recommendations by the Office of Tax Simplification, the government will reduce administrative burdens for IHT.
• From 1 January 2022, over 90% of non-taxpaying estates will no longer have to complete IHT forms for deaths when probate or confirmation is required.
• The current temporary provision for those dealing with a trust or estate to provide an IHT return without physical signatures will be made permanent.

See Chancellor responds to the first OTS report on Inheritance Tax

Clamping down on promoters of tax avoidance

• As announced in November 2020, the government is publishing a consultation on a package of measures to clamp down on promoters of tax avoidance.
• Proposals include ensuring HMRC can protect its position by:
  • Securing or freezing a promoter’s assets so that the penalties they are liable for are paid.
  • Tackling offshore promoters and the UK entities that support them.
  • Closing down companies that promote avoidance schemes and disqualifying their directors.
  • Supporting taxpayers to identify and exit avoidance schemes.
• HMRC is also publishing draft technical guidance on the package of measures being legislated for in Finance Bill 2021.
• You can share your views at: Clamping down on promoters of tax avoidance

Transfer pricing documentation

• The government has published a consultation on whether to update the requirements for businesses to maintain transfer pricing documentation.
• The consultation will examine whether businesses in scope of country-by-country reporting should be required to maintain a master file and local file and whether all businesses within the scope of UK transfer pricing legislation should be required to report specific information on cross border transactions with connected parties.
• You can share your views at: Transfer pricing documentation

Securitisation tax rules

• The government has published a consultation to explore options to clarify and update elements of the rules that determine the taxation of securitisations and of transactions involving insurance-linked securities.
• Reform would modernise the tax regime to reflect the developing market, enhancing the competitiveness of the UK financial sector.
• You can share your views at: Reform of the taxation of securitisation companies

Correcting your payroll from April 2021

• HMRC advised in Employer Bulletin 88 that from April 2021 the Earlier Year Update (EYU) will no longer be a valid submission type to make amendments to the tax year ending 5 April 2021.
• HMRC have been asked to clarify a couple of points regarding the submission of a further Full Payment Submission (FPS) to correct earlier years’ payroll data.

Late reporting reason

• ‘Late Reporting Reason H’ should be used on all FPS submissions which correct earlier payroll data.
• This brings the process in line with submissions received on or before 19 April.

The payment date that should be shown

• As the format of the FPS is not changing, it should be completed to include the latest payroll information, for example, payment date, monetary values and leaving date and so on.
• As the FPS will be an adjustment to the pay in that tax year the payment date should be equal to, or later than, the last payment date reported in that year to ensure HMRC's records are updated.
• For example:
  • An individual is in employment all year and the final FPS for the year is submitted on 30 March 2019, with a payment date of 30 March 2019.
  • It is then identified in June 2019 that an error occurred in their Month 11 FPS. The FPS should include the final pay date of 30 March 2019 (as the latest pay date in that tax year) and amended monetary values.

Correcting employee National Insurance Contributions

• From April 2021 if you need to correct an employee or employees National Insurance contributions for 2020-21 and future years which involves a negative amount, but you are unable to refund your employee/employees (for example because they’ve left your employment) you should submit the FPS and then write to HMRC to adjust your charge and refund your employees.
• When writing to HMRC, you will need to tell them:
  • The subject: Overpaid Employee National Insurance Contributions.
  • Your Employer name, address and PAYE reference number.
  • The name, date of birth and National Insurance number of the employee/employees concerned.
  • The tax year of the overpayment.
  • How much National Insurance was overpaid/needs refunding.
  • Why the overpayment occurred.
  • Why you are unable to make the refund.
• If you need to correct one employee’s National Insurance contributions, please write to HMRC at:

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

• If you need to correct more than one employee’s National Insurance contributions, please write to HMRC at:

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

• HMRC will contact you when the refund and adjustment have been made and the adjustment will also be reflected on your Business Tax Account.
• The process for correcting years earlier than the 2020-21 tax year outlined in Employer Bulletin 88 has not changed.

Correcting Seasonal Worker payroll using Basic PAYE Tools

• From April 2021 you will need to include the ‘irregular payment’ indicator on all submissions for any Seasonal Workers on your payroll.
• This will ensure that any future correction you need to make using a further Year to Date Full Payment Submission is reported correctly.
• If you did not use the ‘irregular payment’ indicator on your earlier submission and need to make a correction, you should answer ‘yes’ to the question ‘Do you wish to submit this correction immediately?’ which can be found on the ‘Add an Employee Payment’ screen, within the ‘Other Details’ section.

How to pay employers’ PAYE

PAYE: paying HMRC

• If an incorrect payment reference is used, HMRC cannot tell where to allocate payment and an automatic late payment tax penalty will apply.

What reference do I use?

• If you pay on time you need to use the 13-digit Accounts Office reference number.
  • This can be found on the letter HMRC sent when you first registered as an employer.
  • This should not contain any special characters for example /, - or *

Early or late payments

• If you pay 14 days or more before/after the 22nd of the month you need to add a suffix to explain to HMRC which period, the payment relates to.
• Add four numbers to the end of your 13-digit reference number to tell HMRC what year and month the payment relates to:
  • Two extra digits for the tax year (e.g. ‘21’ for 2020-21, ‘22’ for 2021-22).
  • Two extra digits for the month (e.g. ‘01’ for month 1 from 6 April to 5 May).
• Find out more information and guidance on how to pay employers’ PAYE.

Electronic payment deadline falls on a weekend

• In May 2021 the electronic payment deadline of the 22nd of the month falls on a Saturday.
• To make sure your payment for that month reaches HMRC on time, you need to have cleared funds in HMRC’s account by the 21st of the month unless you are able to arrange a Faster Payment.
  • It is your responsibility to make sure your payments are made on time and if your payment is late, you may be charged a penalty.
  • So that you know what date to initiate your payment and make sure HMRC have it on time, you need to speak to your bank/building society well in advance of making your payment to check single transaction, daily value limits and cut off times.
• Find out more about paying HMRC electronically.

Check out the updated guide on calculating the minimum wage

• An updated version of the calculating the minimum wage guide for employers is now live.
• The guide is now easier to navigate and includes information on the types of workers who are eligible, payments and deductions, salaried hours work and unpaid work.
• HMRC have also added example calculations for common errors that employers sometimes make, and you’ll find links to the new rates.
• You can also use the new employer’s checklist at the end of the guide, a helpful tool to check for the common National Minimum Wage risks.

See National Living Wage rates /National Minimum Wages rates

Student and Postgraduate Loans: thresholds and rates from 6 April 2021, loan types and starter checklist

Student and Postgraduate Loans thresholds and rates from 6 April 2021

• The thresholds for Plan 1, Plan 2 and Plan 4 student loans from 6th April 2021 are:
  • Plan 1: £19,895
  • Plan 2: £27,295
  • Plan 4: £25,000
• Student Loan deductions will continue to be calculated at 9% on earnings above Plan 1, Plan 2 or Plan 4 thresholds.
• The Postgraduate Loan threshold will remain at £21,000.
  • Earnings above £21,000 will continue to be calculated at 6%.

Scottish Student Loans

• The Scottish Government announced in 2018 that they would introduce a new plan for Scottish student loan borrowers known as Plan 4 from 6 April 2021.
  • This change will impact employers across the UK, not only those located in Scotland.
  • It will apply to employers who have employees paying back their loan from Student Award Agency for Scotland (SAAS).
• You will have been notified by a student loan start notice, SL1 for all affected employees.
  • If you do not act on these SL1’s employees will over-repay their student loan.
• More information on Plan 4 can be found in Employer Bulletin Issue 88.

Starter Checklist: Student and Postgraduate Loan

• To help you establish what student and/or postgraduate loan your new employee may have, ask them to complete the student and postgraduate loan section of the starter checklist.
  • Once completed the checklist should then tell you which loan and or plan type to use.
• If your employee does not know their loan and/or plan type, further information on repaying their student loan is available.
  • This will allow you to start taking the correct loan deductions immediately.
• Operating the incorrect plan or loan type could result in your employee having deductions taken that aren’t due.
• The student loan page of the starter checklist has been updated to include Plan 4.

See PAYE: Starter checklist new employee 2021-22

Student and Postgraduate Loan Generic Notification Service (GNS) Messages

• It is important that you check the HMRC Online Services for GNS messages.
• HMRC send GNS messages as a reminder to:
  • Take deductions.
  • Stop taking deductions.
  • Use the correct plan or loan type.
  • Not take student loan or postgraduate loan deductions for employments subject to the off-payroll working rules.

Reporting Expenses and Benefits for tax year ending 5 April 2021

For those employers Payrolling Benefits in Kind

• You may still have a Class 1A NIC liability and you’ll still need to send a P11D(b) to tell HMRC how much Employer Class 1A NICs you owe.
• You’ll also need to send a P11D to show any benefits you paid that you didn’t payroll.
• Instead of giving your employees a P11D, you need to give them a letter explaining what you’ve payrolled.
• You can find more information on payrolling your employees' benefits and expenses.

For those employers who have yet to join payrolling: Join for 2022-23

• Register now to payroll your benefits from 6 April 2022.
• You will no longer need to submit P11D for each employee for whom you payroll benefits.
  • Payrolling is quicker and easier.
• If you are a large employer, this may save paper and will be much better for the environment.
• If you have had an informal arrangement in place you must register now.
• You can find more information on Payrolling and Reporting Expenses and Benefits In Kind, on GOV.UK.

Informally payrolling

• If you already had an informal agreement with HMRC to payroll benefits for 2020-21, you can continue to submit P11Ds marked ‘Payrolled’.
• You should plan to formalise this agreement as soon as possible.
• HMRC may no longer accept new informal arrangements.

See Payrolling of benefits

For those employers on the Legacy P11D Process

• The deadline for reporting any legacy P11D Expenses and Benefits In Kind is 6 July 2021.
• You need to do this for each employee you’ve provided with expenses or benefits.

How to report

• Please note, HMRC considered the submission of these on paper to be generally unacceptable. HMRC are maintaining a paper process for those who cannot yet file online and have not yet moved to payrolling.
• You can use any of the following digital, quick and easy methods:
  • Commercial payroll software
  • HMRC’s PAYE Online service
  • HMRC’s Online End of Year Expenses and Benefits service
• Online filing is quicker and easier. It’s also more secure and the software can tell you straight away if you have made any common errors.
• If you cannot use any of the above use HMRC's official legacy forms P11D and P11D(b).
• If your report is late, your employees could pay the wrong amount tax and be out of pocket.

Helping you to get it right first time

• If you make a mistake or send in your form late, your employees could pay the wrong amount of tax and you could end up with a penalty, so it’s important that you get it right.
• You’ll need to submit a P11D(b) form online if:
  • You’ve submitted any legacy P11D forms.
  • You’ve paid any employees’ expenses or benefits through your payroll.
  • HMRC has asked you to file a P11D(b): either by sending you a P11D(b) form or an email notification to file a P11D(b).
• Your P11D(b) tells HMRC how much employers’ Class 1A NICs you need to pay on all the expenses and benefits you’ve provided to your employees through your payroll as well as any you have reported to HMRC on a legacy P11D.

Nothing to declare

• If HMRC has asked you to submit a P11D(b) and you have nothing to declare, you can tell HMRC you do not owe any employers’ Class 1A NICs by completing a declaration ‘No return of Class 1A National Insurance contributions’.
• Only use this declaration if HMRC has asked you to submit a P11D(b) and you have nothing to declare.

Legacy P11D lists

• In exceptional circumstances where you have to file legacy P11Ds on paper and do so as a list you must use the following format:
  • Use Arial font size 11 or larger (when printed).
  • Sort it by employee, not benefit type.
  • Include your employer reference.
  • Include the employee’s correct name and National Insurance Number (NINO).
  • Put each employee’s expenses and benefits on the same line: HMRC can’t accept separate lists for each benefit for example.
  • Include the letter codes from the P11D next to each benefit: these are shown in the dark blue boxes to the left of each section on the P11D.
  • It’s important to note that if you do not provide the information in the correct format the list may be returned to you. If it’s returned late, you may receive a penalty.

Paying your Class 1A NICs

• There’s a special reference you need to use to make your Class 1A payment.
  • This is your normal Accounts Office reference plus the numerals 2113 at the end.
  • Don’t leave a space between any of the numbers.
• This is an example of the correct format, but please use your own reference number: 123PA001234562113
• If you are paying at a bank or sending a cheque, you must use the correct payment slip, it’s pre-printed with the reference in the format above.
  • If you don’t use the right payslip or if you use an incorrect reference, HMRC won’t know you’ve paid your Class 1A charge and may send payment reminders and default notices until your payment is allocated correctly.
• More information on how to pay.

Working Sheets

• Use the working sheets available on how to complete your P11D and P11D(b) to help you reduce errors.
• You do not need to send HMRC your working sheets.

P9 Notice of Coding

• In Employer Bulletin 88 HMRC advised that further information would be made available once all rates and thresholds have been approved by the respective administrations.
• The UK, Scottish and Welsh Parliaments have now approved Income Tax rates and thresholds.
• No later recoding exercise is necessary.

Employers’ use of National Insurance contributions category ‘M’: Generic Notification Service (GNS) Message

• HMRC would like to raise awareness of National Insurance contributions (NICs) category ‘M’.
• From April, HMRC will start using GNS messages to contact you if data suggests you need to check the use of the NIC category ‘M’ for your employees.
  • Introduced in 2015-16, category ‘M’ grants a reduction on Employer’s Class 1 secondary NICs for employees who are under the age of 21.
  • Guidance on Employer’s National Insurance contributions for under 21s.
  • HMRC wants to help employers to apply category M correctly.
• From April, HMRC will use the Real-Time Information (RTI) portal to issue GNS messages when data suggests a category ‘M’ error has occurred.
  • This will encourage employers to complete extra checks and make any necessary corrections.
• When employees reach 21, NICs category ‘M’ can no longer apply: employers will need to assign a new NICs category.
  • This may be assigning the standard category ‘A’ or another, depending on the status of the employee.
• This action will assist taxpayers to pay the right National Insurance at the right time.
  • Guidance on National Insurance Contributions categories is available.
  • Guidance on payroll errors and corrections and how to fix problems with running your payroll.
  • Further information about GNS messages is on page 12 of Employer Bulletin Issue 86.

National Insurance holiday for employers of veterans

• As advised in Employers Bulletin 88, from April 2021, employers that hire former members of the UK regular armed forces during the first year of their civilian employment will be eligible for a zero-rate of secondary NICs for up to 12 months: a potential £5,000 saving.
• To find out if you qualify, guidance on what to do if you hire a veteran from April 2021 is available on GOV.UK.

See Employers NIC holiday for employers of veterans

Construction Industry Scheme changes

Legislative changes to tackle CIS abuse

Deemed Contractor Status

• Section 59 (1) (l) of the Finance Act 2004 provides that some businesses, public bodies and other concerns whose business activities fall outside of the scope of the Construction Industry Scheme, are still deemed contractors if they spend above a certain amount on construction operations.
  • For current guidance see section CISR12050-Deemed Contractors, of the Construction Industry Reform Manual.
• From 6 April 2021 new regulations will mean a business needs to regularly review its construction operations spend over a rolling 12-month period.
  • When spend exceeds £3million within the previous 12 months, the business needs to register and operate the Construction Industry Scheme.

Materials

• Section 61 (1) of the Finance Act 2004 provides ‘the direct cost to any other person of materials’ may be deducted from a CIS payment.
• Having received queries from taxpayers on this subject, new regulations will take effect from 6 April 2021 to clarify it is only the sub-contractor who directly purchases the materials and incurs the cost that may claim the Construction Industry Scheme deductions.
• HMRC are in the process of amending guidance to make the position clear for taxpayers.

False registration penalty

• From April 2021, the scope of Section 72 Finance Act 2004 penalties will also apply to individuals or companies who are able to exercise influence or control over a person who is registering for the CIS.
• This will include agents, directors, company secretaries, or anyone HMRC believes is in a position to exercise influence and control over the business and/or the person making the CIS registration.
• Such persons will be liable to a penalty in two circumstances, either:
  • Where they themselves make a false statement or furnish a false document for the purpose of enabling another individual or business to be registered.
  • Where they encourage an individual or business to make a false statement or furnish a false document for the purpose of enabling themselves to be registered for the CIS.

HMRC CIS set-off amendment

• New legislation from 6 April 2021 will allow HMRC to amend errors or omissions relating to the CIS deduction incurred figure claimed on a customer’s Employer Payment Summary (EPS) return and to prevent certain taxpayers from making further similar claims within a particular tax year, where taxpayers do not provide evidence of eligibility/and or evidence of sums deducted and do not correct their EPS at HMRC’s request.
  • HMRC will contact the customer to provide evidence of CIS deductions incurred within a 14-day timeframe of HMRC’s initial contact.
  • The customer will have the opportunity to explain to HMRC the circumstances around any unverified claim being made.
  • If HMRC does not hear from a customer or when asked, the customer does not amend the CIS deduction figure on the EPS, within a 14-day timeframe, it will amend the CIS deduction figure claimed to the verifiable figure supported by any evidence held by or provided to HMRC.
  • This could increase employer liabilities to tax and National Insurance.
  • Customers will also be prevented from submitting any further CIS claims for the remainder of that tax year.
• An HMRC decision to amend a claim can be reversed or altered should genuine evidence be found.
  • HMRC decisions to amend set-off claims and to prevent further set-off claims will be subject to the usual review and appeal process unless the customer is receiving gross payment status or is not a company.
• You can find out more information on changes to tackle Construction Industry Scheme abuse.

See CIS: Contractors and Subcontractors

The Off-Payroll Working rules (IR35) have changed

• The Off-Payroll Working rules changed on 6 April 2021.
• If you haven’t already prepared, HMRC are continuing to provide support to help you, find out which assistance is best suited to you and how to access it.
  • HMRC's help includes webinars, with new dates up to May 2021, and working with trade and representative bodies.
  • You may also be offered the opportunity to attend a workshop or a one-to-one advice call if you need further support.
• Over the last few months, HMRC have also published an issue briefing, explaining how they are committed to taking a supportive approach to help you to comply with your responsibilities under the rules and setting out how they will intervene where customers deliberately do not comply.
• You may also find useful HMRC's question and answer posts on social media for agencies, contractors, and on HMRC's compliance approach.
• You need to make changes if you have not already prepared and you are:
  • A medium or large-sized non-public sector organisation that engages contractors who work through their own limited company or another intermediary.
  • A public sector organisation (of any size) which engages contractors who work through their own limited company or other intermediary.
  • An employment agency (of any size) which supplies such contractors.
• If you are a small non-public sector organisation you are not affected by the changes, but you may be asked by contractors or agencies to confirm that your organisation qualifies as ‘small’.
  • Where this is the case, the contractor’s own company or another intermediary will remain responsible for determining if the Off-Payroll Working rules apply.
• The new rules need to be considered for all payments made on or after 6 April, for all work carried out on or after 6 April.

See IR35: Off-Payroll Working and Personal Service Company (PSC) tax

Guidance updates

• HMRC are continuing to enhance their detailed and technical guidance (ESM10000) based on stakeholder feedback.
• An update in March included:
  • New guidance on technical changes announced at the Budget to ensure the scope of intermediaries included in the rules was always as intended and a new Targeted Anti-Avoidance Rule (TAAR) to prevent artificial schemes.
  • Updates to existing guidance to reflect two further technical changes to improve the operation of the rules.
    • The first change allows an intermediary to confirm if one of the conditions for an intermediary is met, where the worker has not done so.
    • The second change extends the consequences of providing fraudulent information to include any UK-based party in the labour supply chain. None of these changes affects engagements that were already within the scope of the rules.
  • Updates to existing pages in response to stakeholder feedback and HMRC's education and support, which includes further details on when a Status Determination Statement (SDS) should be issued, what constitutes reasonable care, payroll processes and calculating statutory payment entitlements.
  • Various smaller changes to clarify sections of the guidance, based on ongoing feedback.

Help your contractors

• HMRC know that some organisations may be changing the way they are engaging contractors.
• If you have done this, HMRC recognise it is a business decision and many of the arrangements you use will be commercial choices that will be fully compliant with tax law.
• However, you and your contractors should be aware of structures that are artificial, contrived arrangements that claim to avoid the application of the Off-Payroll Working rules or result in customers paying less tax than is due.
• HMRC's guidance and support can help to make sure your contractors are not caught out by tax avoidance schemes, and please share this with your contractors if you are changing the way you engage contractors.

Off-Payroll changes to RTI payroll and Self Assessment

• The Off-Payroll Working rules changed on 6 April 2021.
• If you are engaging or supplying contractors through their own limited company or other intermediary and the engagement is inside the Off-Payroll (IR35) rules, there are some changes to payroll and self-assessment which you and your contractors may need to know.
• The new rules need to be considered for all payments made on or after 6 April, for work carried out on or after 6 April.

Payroll software changes

• If an engagement is inside the Off-Payroll (IR35) rules, and you are responsible for deducting Income Tax and National Insurance Contributions (NICs), you will need to use the ‘off-payroll worker subject to the rules’ indicator in PAYE RTI.
  • The name of this indicator may be reflected differently in your software.
• You may have seen this functionality in PAYE RTI since April 2020 and it has been mandatory for the public sector since 11 May 2020.
• It became mandatory for non-public sector engagements on 6 April 2021 and should not be used before this date.
• The indicator is not to be used by contractors themselves, or their own limited company, in any circumstance.
  • This indicator is only to be used by public sector organisations, medium or large-sized non-public sector organisations, or agencies, who are deducting Income Tax and NICs as part of the Off-Payroll Working rules.
• If you have used this indicator incorrectly, please make sure this is corrected urgently on a corrective Full Payment Submission for the relevant period.

Self Assessment for contractors with Student Loans and Post Graduate Loan Borrowers

• Contractors working through their own limited company will still need to complete self-assessments if they are inside the Off-Payroll Working rules and are in repayment of a student loan or a post-graduate Loan.
• Where an engagement is inside the rules, and the contractor is in repayment of a student or post-graduate loan, HMRC have made self-assessment easier.
  • These individuals should automatically be registered to complete a Self Assessment return and this return will have a new OPW box pre-populated to indicate the return relates to an off-payroll worker.
  • If they think this has not happened, they should register for self-assessment.
• You may wish to share this information with contractors whose engagements are inside the Off-Payroll Working rules.
• This will not be the case for contractors who need to continue to operate the Off-Payroll Working rules because they are providing services to small non-public sector organisation.

Support for off-payroll changes

• The article ‘The Off-Payroll Working rules (IR35) have changed’ and sets out wider support available on the rules, which can also be found on HMRC's help and support page.

VAT reverse charge on construction and building services

• VAT-registered construction businesses should note that this reverse charge came in on 1 March 2021.
  • A Revenue and Customs Brief was issued in June 2020, giving more information.
• Every VAT-registered construction business will have received an individual letter in January (further to letters in February and September 2020), advising them to check if they might be liable for the reverse charge.
  • If they are liable, they now need to apply these rules in future.
• Further information on the scope of the reverse charge and how it operates for building and construction services.
• The key aspects are:
• • It applies to standard and reduced-rated supplies of building and construction services made to VAT registered businesses, who in turn also make onward supplies of those building and construction services.
  • The contractor is responsible for paying the output VAT due rather than the sub-contractor and can continue to reclaim this amount as input tax.
  • Scope of supplies affected is closely aligned to the supplies required to be reported under the Construction Industry Scheme but does not include supplies of staff or workers for use by the customer.
  • Legislation introduces the concept of ‘end users’ and ‘intermediary suppliers’.
    • This covers businesses or groups of associated businesses that do not make supplies of building and construction services to third parties and as such are excluded from the scope of the reverse charge if they receive such supplies.
    • Examples include landlords, tenants, property developers and public bodies who are deemed contractors for CIS purposes.
    • In order to be treated as end users and intermediary suppliers, the customer needs to notify the supplier in writing. This can be done by correspondence or as part of terms and conditions.
    • There is more detail in the technical guidance.
• HMRC has been running webinars for businesses and they can register here. If no dates are showing as available, a webinar recording can be accessed here.
• A guide for contractors and subcontractors with more information is available.

See CIS: Construction Industry reverse charge

Capital Allowances: Extension of First-Year Allowances, business cars and lease rental restrictions

In Employer Bulletin Issue 87, HMRC advised about the reduction to CO2 thresholds used for capital allowances for cars and the extension of first-year allowances for cars, zero-emission goods vehicles and equipment for gas refuelling from April 2021. There is new information below on business cars and lease rental restrictions.

Business Cars

• You can already claim Capital Allowances on cars you buy and use in your business.
  • This means that for certain cars you can deduct all of the value from the profits of the tax period in which you purchased it through claiming a first-year allowance, otherwise tax relief for the value is spread over the profits of multiple tax periods through claiming writing-down allowances.
• If the car is not a battery-electric vehicle, the first-year allowance and the level of writing down allowance (either at the main or special rates) are determined by the level of the car’s CO2 emissions at the time it was bought for use in the business.
• The emission thresholds used to determine the level of allowance available have been reduced over time and are being reduced again from April 2021.
  • These changes will apply to cars purchased on or after either 1 or 6 April 2021 as follows.
  • When claiming a writing-down allowance, the main and special rates apply from 1 April 2021 for limited companies and 6 April 2021 for sole traders and partners. The first-year allowance rate applies from 1 April 2021 for all businesses.
• Find more information on business cars and emission threshold rates.

Lease Rental Restriction

• For businesses that hire or lease their cars, tax relief is limited for higher emitting vehicles.
• For cars hired through leases from April 2021, the CO2 emission threshold has reduced from 110 g/km to 50g/km in line with the reduction to the threshold of the main rate of capital allowances for business cars.
• The lease rental restriction amounts to 15% of the hire costs of the car, which for cars leased from April 2021, will mean that the relief available for cars with CO2 emissions exceeding 50g/km will be limited to 85% of those hire costs.
  • Cars with CO2 emissions of 50g/km or below will be available for 100% relief on hire costs.
• Cars hired through leases that started before either 1 April 2021 for Corporation Tax purposes or 6 April 2021 for Income Tax purposes, will remain subject to the previous thresholds.
• See BIM47714 for more information.

See Motor expenses (self-employed)

Zero-rating of van benefit charge for zero-emission vans

• Following the announcement at Budget 2020, the government has legislated in Finance Bill 2021 to reduce the van benefit charge to zero for vans that produce zero carbon emissions.
• The change will have effect on and after 6 April 2021.

See Van Benefit Charges

Optional Remuneration Arrangements (OPRA): end of transitional provisions

• If you offer your employees cash allowances, flexible benefit packages with a cash option or salary sacrifice in return for a Benefit In Kind (BIK), the rules for these types of BIKs changed on 6 April 2017.
• • All BIKs are now valued at the higher of the cash given up or the value under the traditional rules.
  • All previously non-taxable BIKs are now taxable, valued on the cash given up.
  • Cars with emissions of 75g CO2 /km or less, pensions, pension advice, childcare and Cycle to Work are unaffected.
• Arrangements entered on or before 5 April 2017 kept their previous tax treatment until the earlier of a renewal or variation of the arrangement.
  • Most pre-6 April 2017 BIKs moved into the new rules on 6 April 2018.
• Salary sacrifice arrangements entered before 6 April 2017, where the benefit is the provision of a car with emissions of more than 75g CO2/km, living accommodation or school fees move into the new rules on 6 April 2021.
• As of 6 April 2021, HMRC will no longer provide clearances on salary sacrifice arrangements as there is no material uncertainty.

See Salary sacrifice & optional remuneration schemes (OPRA)

Employer-provided living accommodation: removal of concession for ‘Representative Occupiers’

• HMRC announced in March 2020 that the treatment of individuals provided with living accommodation as ‘representative occupiers’ had been identified as an Extra Statutory Concession (ESC) and the government decided to withdraw the ESC with effect from 6 April 2021.
• If you provide accommodation to your employees under this concession you must make the necessary contractual changes now.
• A ‘representative occupier’ relates to posts that existed before 6 April 1977 where an employee:
  • Resides in living accommodation provided rent-free by the employer.
  • Who, as a condition of the contract of employment, is required to reside in that particular living accommodation and is not allowed to reside anywhere else.
  • Occupies the house for the purpose of the employer, the nature of the employment being such that the employee is reasonably required to reside in it for the better and more effective performance of the duties.
• The representative occupier ESC does not extend to retired employees under Employer-Financed Retirement Benefit Schemes (EFRBS) legislation.
• If you have provided living accommodation to a retired employee under the representative occupier ESC, the prescribed or responsible person (Employment Income Manual) must report this benefit to HMRC by 7 July following the end of the tax year.

See Accommodation benefit

Employers providing medical benefits

• Employers who report medical benefits through payrolling Benefits In Kind (BIKs), or the legacy P11D process, may find that the 2020-21 taxable value has changed.
• HMRC have been made aware that some medical providers may make refunds to employers if services were not provided as originally specified.
• The reportable value of the BIKs is the cost less any refund related to that year, regardless of when it is received.
  • For employers on payrolling BIKs, you may need to adjust the taxable value by way of an amended FPS, and the correct value on the P11D(b) submission.
  • For employers on the legacy P11D process, to ensure that your employees are not overtaxed, please make sure you have any discussions with your provider before the P11D deadline and report the correct taxable value on P11D submissions and on the P11D(b).

See Medical benefits and health checks

Messages for employers who operate a childcare voucher scheme: your employees may wish to reduce their childcare voucher contributions

• Since the start of the Coronavirus pandemic, many employees have been working from home and have used less paid childcare due to after and before school club and nursery closures.
  • Existing users of the childcare voucher scheme have unspent childcare vouchers in their voucher accounts.
  • Many parents continue to pay into their voucher accounts as their contributions are automatically transferred from their salaries, which can lead to a large stockpile of vouchers.
• Can you remind your employees that they can reduce their contribution by speaking with you and agreeing to a new lower amount (both the employer and employee must consent)?
  • Contributions can be increased again later when required and varying the amount will not affect eligibility to the scheme, provided that the normal conditions of the scheme are met.
• If your employees receive childcare vouchers via salary sacrifice, they may wish to check they aren’t better off financially on Tax-Free Childcare (TFC).
  • Tax-Free Childcare (TFC) supports eligible working parents with the costs of childcare across the UK.
  • For every £8 paid into a childcare account, the government contributes an extra £2, up to £2,000 per child (under 12 years old) per year, and £4,000 for children (under 17 years old) who are disabled.
  • Some families who currently use childcare vouchers could be better off on TFC. 

See Tax-free childcare or childcare vouchers?

Help your employees understand their Child Benefit entitlements

• Do any of your employees have a total income of over £50,000?
  • They may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’ if they or their partner get Child Benefit.
• Telling your employees about the High Income Child Benefit Charge may help them to understand their obligations and avoid facing a penalty.
• Employees earning over £50,000 should:
• • Check their annual income either on their P60 or their personal tax account.
  • Include any taxable benefits, for example, medical insurance, company car or accommodation in their income.
  • Use the child benefit tax calculator to work out how much they may have to pay
• Child Benefit remains a universal benefit. It is important for parents to fill in the Child Benefit claim form, so, they do not miss out on National Insurance credits, which help to build entitlement to their State Pension.
  • It will also help their children get a National Insurance number automatically when they turn 16.
• Parents can decide to opt out of getting Child Benefit payments so they won’t have to pay the charge but will still receive the National Insurance credits.
• If parents are unable to register their child’s birth because of Coronavirus, they can still get Child Benefit, and this can be backdated for three months.
  • First-time parents will need to fill in the Child Benefit claim form and send it to the Child Benefit Office.
  • If they haven’t registered the birth, they should add a note with their claim to let HMRC know.
• Child Benefit payments will increase from 12 April 2021 to a weekly rate of £21.15 for the first child and £14.00 for each additional child.

See High-Income Child Benefit Tax Charge

Tax Credits Renewal

• For your employees who may be in receipt of Tax Credits, can you help HMRC raise awareness of deductions they are able to make when reporting their income, as this will help them receive their full entitlement and avoid being underpaid.
• From 6 April 2021, HMRC will be contacting Tax Credits customers to ask them to finalise and renew their Tax Credits award.
• When finalising Tax Credits awards for the 2020-21 tax year (6 April 2020 to 5 April 2021), HMRC need to establish Tax Credits customers’ gross earnings for that year.
  • Customers may be underpaid tax credits if they do not account for allowable deductions when reporting their employed income.
• In calculating earnings from employment, customers need to work out their total gross pay received in the tax year.
• They can then make allowable deductions from their gross pay, which includes:
• • Up to £100 per week received for Statutory Maternity Pay, Paternity Pay, Parental Bereavement, Shared Parental leave and Adoption pay.
  • Pension Contributions made to an HMRC registered scheme paid out of net income including any tax relief due on the contributions.
  • Work expenses not reimbursed by an employer.
  • Donations to charity made using gift aid.
• Tax Credits customers must renew by the date shown on their renewal pack. For most people, the date is 31 July 2021.
• Your employees can find out how to work out their wages, self-employment income and other income for Tax Credits purposes including further details of allowable deductions from employment income.

Senior leaders talk about the Charter

• HMRC launched their new Charter on 5 November 2020 after a full and open consultation.
• HMRC's Charter sets out the service and standard of behaviour you can expect from HMRC.
• It explains how HMRC will get things right, make it easy for their customers, be fair, responsive and aware of their personal situations.
• A YouTube video is available. 

Get help from HMRC if you need extra support

• HMRC's principles of support for customers who need extra help were published on GOV.UK in November 2020, alongside the new HMRC Charter.
• The principles set out HMRC's commitment to provide support to customers who need extra help who may have:
• • A disability or mental health condition.
  • Difficulties in their personal circumstances, such as a bereavement or separation.
  • Financial difficulties or may be undergoing compliance checks which are causing them stress and worry.
• The Extra Support Team have the appropriate skills, knowledge and empathy to provide support.
  • They also signpost customers to voluntary and community sector organisations that can provide specialist help.
• HMRC's support service has been expanded across the department and into compliance.
  • These steps go some way in addressing concerns that customers undergoing a compliance check might have extra support needs.
• Taxpayers can tell HMRC they would like extra support or HMRC may identify their need from customer calls and letters.
• Find out how to get help and the extra support available on GOV.UK.

National Cyber Security Centre launches new Cyber Security Newsletter for small organisations

• The National Cyber Security Centre (NCSC) has launched its new Small Organisation newsletter to support small and micro-organisations with their cyber security.
  • This follows the launch of the NCSC’s Cyber Aware campaign last month, which offers practical steps to help small and micro-organisations better protect themselves online.
• Every month, the newsletter will highlight a particular cyber-related topic and will offer advice and link to help organisations implement basic security controls.
  • This will range from data protection, password management to identifying malicious activity and responding to a cyber incident.
  • Each edition will also include the latest threat reports, NCSC news and upcoming events.
• Keep up to date with cyber-related issues and sign up to the newsletter.

The Official Rate of Interest reduced for the 2021-22 tax year

• The Official Rate of Interest (ORI), which is used to calculate the Income Tax charge on the benefit of employment related loans and the taxable benefit of some employer-provided living accommodation, has changed.
• In March 2021 HMRC announced that the ORI is decreasing from 2.25 to 2.00 percent for the 2021-22 tax year.
• How will this affect you? If you provide employment related loans or living accommodation to your employees, you will need to note the reduction in the interest rate you use when you calculate the value of any benefit for 2021-22.

See Official rate of interest

External link

Employer Bulletin: April 2021