Employer Bulletin: October 2021

HMRC have published their Employer Bulletin for October 2021. We have summarised the key content for you, with links to our detailed guidance on the topics covered.

PAYE

Tax changes for health and social care

• From April 2022 National Insurance Contributions (NICs) will increase by 1.25% for one year for employees, employers and the self-employed.
• From April 2023, a new Health and Social Care Levy of 1.25% will be introduced for those who pay all Class 1, Class 1A and 1B, and Class 4 NICs.
• The levy will apply to anyone over State Pension age who is employed or self-employed with profits above £9,568.
• From 2023 to 2024, levy contributions will appear as a separate item on payslips.
• Self-employed individuals who pay NICs through Self Assessment must report the rate increase on their 2022-2023 tax returns and the levy on their 2023 to 2024 tax returns.

From April 2022 the rate of Income Tax on dividend income will increase by 1.25%.

See Increases to National Insurance Rates and Dividend tax (subscriber guide)

Business Tax Account and Pay As You Earn (PAYE) for employers

• Once you are registered for PAYE for employers you can add this to your Business Tax Account.
• You should regularly review your Business Tax Account to ensure the information HMRC hold about you is correct. Check your tax position and payment history, check notices such as student loan notifications, view or change your tax agent and change your details.

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

• There has been a relaxation on reporting PAYE information in real-time since 2019.
• If you pay your employees early over the Christmas period, you should report your normal (or contractual) payday as the payment date on your Full Payment Submission (FPS) and ensure that the FPS is submitted on or before this date.
• For example, if you pay on 17 December 2021 but the normal payment date is 31 December 2021, report the payment date on the FPS as 31 December and ensure the submission is sent on or before 31 December 2021.

See RTI: Real-Time Information for PAYE

Universal Credit and the importance of correct on time Full Payment Submission (FPS) reporting

• You need to send the FPS on or before your employees’ payday and enter the usual date that you pay your employees, even if you pay them earlier or later, to avoid the issue of double monthly earnings in one Universal Credit assessment period.
• Legislation in force from 16 November 2020 means that for cases affected by this issue, monthly earnings will be reallocated to another assessment period so that only one set of earnings will be taken into account rather than two when determining available allowances.
• The change follows a Court of Appeal judgment concerning employees who receive two calendar monthly payments of earnings in one Universal Credit monthly assessment period, none in another and who lose out on the work allowance.
• The situation for people paid weekly, fortnightly or four-weekly is different and moving a payment would just move the issue to a different assessment period.

Off-Payroll Working rules (IR35)

• HMRC drew attention in the August 2021 Employer Bulletin to guidance on ‘contracted out services’ and ‘statement of works.’ Anyone engaging contractors working through their own limited company via one of these contracts should ensure they are applying the rules correctly.
• If you work in the oil and gas, or banking and finance sector, you may receive a letter from HMRC asking you to contact them to confirm you are applying the rules correctly.

See Off-Payroll Working: PSCs & Private Sector Engagers

Student loans: Occupational Pension and Off-Payroll Working rules FPS Indicators

Student loan deductions are not due on:

• Occupational pension scheme payments.
• Payments that are subject to the Off-Payroll Working rules

If you have selected the occupational pension or Off-Payroll Working rules indicator by mistake for clients who are subject to student loan deductions, you should unselect it immediately.

Student loan refunds

• Due to the COVID-19 situation, HMRC are writing to employees asking them to call or write with their bank account details to allow refunds to be processed for previous tax years.
• If your employee has any concerns about this letter tell them to call the HMRC Income Tax general enquiry helpline on 0300 2003300.

Making your PAYE Settlement Agreement (PSA) payment

• Electronic payments for a PSA for the tax year ended 5 April 2021 must clear into the HMRC bank account by 22 October 2021. Late payments may incur interest and/or penalty charges.
• To pay your PSA you must use the PSA reference number from the payslip sent to you, for example, XA123456789012. If you do not have this, contact the office dealing with your application.
• Do not use your PAYE Accounts Office reference. Payments received with this reference are allocated to your normal PAYE account, you will keep receiving reminders for the PSA even though you have paid.

PAYE Settlement Agreements (PSA): PSA1 form

• HMRC reminds employers who use PAYE Settlement Agreements (PSA) that their PSA calculations are now due and that the correct method of reporting is form PSA1. The PSA1 forms and guidance are available online.

See PAYE Settlement Agreement

Reporting benefits and expenses digitally

HMRC is encouraging employers to consider payrolling the expenses and benefits they pay to staff.

• The advantages are that employers will no longer need to submit multiple P11Ds and employees will be more likely to pay the correct tax due on their benefits during the tax year.
• You must register with HMRC before the start of the tax year to payroll benefits and expenses.
• If you are still submitting P11D and P11D(b) paper forms, consider submitting online using commercial software or HMRC PAYE Online service.

See Payrolling of benefits

UK transition

• The UK and Switzerland signed a Convention on Social Security Coordination in September 2021 which ensures cross-border workers and their employers are only liable to pay social security contributions in one state at a time.
• The agreement will be available later in 2021. For now, follow the guidance.

Coronavirus (COVID-19) updates and information

Coronavirus Job Retention Scheme

Final Coronavirus Job Retention Scheme (CJRS) claims for September must be submitted by Thursday 14 October 2021.

• If you have not submitted your claim by the deadline, but believe that you have a reasonable excuse, check if you can make a late claim.
• If you’ve claimed too much you must notify HMRC and repay the money by the latest of whichever date applies below:
  • 90 days from receiving the money you’re not entitled to.
  • 90 days from the point circumstances changed so that you were no longer entitled to keep the grant.
  • If you made a mistake in your claim that means you received too little money, you’ll need to amend your claim within 28 calendar days after the month the claim relates to.
  • The final deadline to amend claims for September is Thursday 28 October 2021.

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

Support available for employees if you are unable to bring them back to work

• There is support available for employees through the JobHelp website, which includes the Kickstart scheme and other Plan for Jobs support measures.
• Normal redundancy rules and protections apply to furloughed employees.

Support available to help your business grow

If you’re looking to grow your business, the government Help to Grow scheme offers management and digital programmes to help you learn new skills and reach more customers.

See Budget 2021: Help to Grow

Tax updates and changes to guidance

VAT reverse charge for construction and building services

The reverse charge rules came in on 1 March 2021.

• They introduce the concept of ‘end users’ and ‘intermediary suppliers’. These are businesses that do not make supplies of building and construction services to third parties who can be excluded from the scope of the reverse charge e.g. landlords, tenants, property developers, public bodies who are deemed contractors for CIS purposes.
• 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.

See CIS: Construction Industry reverse charge

Voluntary disclosures: PAYE liability involving offshore matters

• Guidance on how to make a voluntary disclosure to HMRC has been updated.
• It includes details on how lost tax involving an offshore matter or offshore transfer can affect the number of years that should be disclosed to HMRC. It applies to Income Tax (including PAYE), capital gains or Inheritance Tax.

This Employer bulletin focuses on how the update affects employers, provides some relevant 'offshore' examples that would result in a PAYE liability and contact details at HMRC for disclosing inaccuracies.

See Time limits for assessment: offshore, Worldwide Disclosure Facility and Offshore income toolkit

HMRC publishes new guidance for businesses using temporary workers

• HMRC is encouraging all businesses using temporary workers to familiarise themselves with new guidance providing advice on applying supply chain due diligence and warning about mini-umbrella company fraud.
  • It focuses on umbrella companies operating tax avoidance arrangements e.g.Disguised remuneration schemes and payroll fraud and advises businesses how to avoid them.
  • Mini umbrella fraud abuses the VAT Flat Rate Scheme and the Employment Allowance .
• Payroll Fraud involves an umbrella company failing to pay over the Income Tax and National Insurance Contributions deducted from workers’ wages to HMRC.
• It is a business’s responsibility to understand how their workers are engaged, who is responsible for paying them and how they are paid.
• You can protect yourself and ensure that any umbrella company you engage with is operating correctly and is fully compliant by:
  •  Adding a clause to contracts with the agencies who provide workers requiring your authorisation before the agency sub-contracts with a third party. This allows you to know who is involved in the supply chain and the details of any umbrella company involved.
  • Request payslips from the umbrella companies involved in your supply chains to conduct sample checks and confirm that PAYE is being operated correctly.
• If you have concerns about an umbrella company in your supply chain report them to HMRC.

See Spotlight 45: Umbrella Companies and Agency Workers: Employment intermediaries rules (subscribers)

General information and customer support

It is important that you continue to support your employees by meeting your ongoing legal duties. This includes paying the correct amount on time to your staff pension scheme. Make sure you understand what you need to do and by when.

External link

Employer Bulletin October 2021