Employer Bulletin: April 2022

HMRC have published their Employer Bulletin for April 2022. We have summarised the key content for you, with links to our detailed guidance on the topics covered. 

PAYE

PAYE Settlement Agreements deadline

• The deadline for applying for a PAYE Settlement Agreement (PSA) or making amendments to an existing PSA is 5 July following the tax year e.g. for 2021-22 you have until 5 July 2022.
• If you are adding an item(s) to a PSA you will get an appendix to the existing agreement, not a new agreement.
• The easement for the inclusion of COVID-19 items in PSA’s ended in September 2021. 

See PAYE Settlement Agreements

Electronic payment deadline falls on a weekend

This year the electronic payment deadline of 22 May falls on a Sunday.

• Unless you are able to use Faster Payments you need to have cleared funds in HMRC’s account by 20 May 2022.

Classification of company cars or vans for Benefits In Kind purposes

On 20 July 2020, the Court of Appeal handed down its decision in respect of appeals by HMRC and Coca-Cola European Partners Great Britain Ltd and Others.

• The decision agreed with HMRC’s longstanding interpretation of the car benefits legislation which is that for benefits purposes, the ‘construction’ of a vehicle is that of the final product when it is made available to the employee and not the use to which the vehicle is later put.
• The correct approach is to determine what a vehicle is first and foremost suitable for. Only if the predominant suitability is the conveyance of goods or burden, will it be accepted as a van.

See Company cars

Reporting expenses and benefits for tax year ending 5 April 2022

For employers payrolling Benefits In Kind

• You may still have a Class 1A National Insurance Contributions (NICs) liability.
• You will still need to send a P11D(b) to tell HMRC how much employer Class 1A NICs you owe plus a P11D to show any benefits that you did not payroll.
• Instead of giving your employees a P11D, you need to give them a letter explaining what you have payrolled.

Employers who have yet to join payrolling: Join for 2023-24

• Register now to payroll your benefits from 6 April 2023 and you will no longer need to submit a P11D for each employee for whom you payroll benefits.
• If you have had an informal arrangement in place you must register now.

Informally payrolling

If you have an informal agreement with HMRC to payroll benefits for 2021-22 you can still submit P11Ds marked ‘Payrolled’.

• You should formalise this agreement as soon as possible as HMRC may stop accepting new informal arrangements.

Employers who do not yet payroll

• The deadline for reporting any P11D expenses and benefits in kind is 6 July 2022.

See Payrolling of benefits

How to report

• HMRC considers paper submissions to be generally unacceptable but are keeping a paper process for those who cannot yet file online and have not yet moved to payrolling.

If you are unable to use digital methods you can use the official forms P11D and P11D(b).

Helping you to get it correct first time

You need to submit a P11D(b) form if:

• You have submitted any P11D forms.
• You have paid any employees’ expenses or benefits through your payroll.
• HMRC has asked you to file a P11D(b).  

Nothing to declare

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

P11D lists

In exceptional circumstances where you have to file P11Ds on paper and do so in list form, you must use the specified format or they will be returned and you may late filing penalties. The format is listed in the Employer Bulletin.

See P11D: Reporting benefits and expenses  

Paying your Class 1A National Insurance contributions

• There is a specific reference you need to use to make your Class 1A payment. This is your normal Accounts Office reference plus the numerals 2213 at the end with no spaces.

This is an example of the correct format, but use your own reference number: 123PA001234562213

• HMRC may send payment reminders and default notices until your payment is allocated correctly.

The official rate of interest for the 2022-23 tax year

HMRC has announced that the official rate of interest which is used to calculate the Income Tax charge on the benefit of employment-related loans and the taxable benefit of employer-provided living accommodation, will remain at 2% for the 2022 to 2023 tax year.

See Official rate of interest

Student and postgraduate loans

The 2022-23 thresholds and rates for Student and Postgraduate Loans were published in February’s Employer Bulletin 

Freeports employer National Insurance Contributions relief

A new relief for Employer National Insurance Contributions has been introduced as part of the Freeport tax offer.

• It will apply to the earnings of all new Freeports employees, up to £25,000 per annum from 6 April 2022 until April 2026, for 36 months per employee.

Exemption to the 60% rule

• To qualify for relief, employees must spend 60% of their working time in a designated Freeport tax site, except where the employer has adjusted their working pattern to accommodate disability, pregnancy and maternity.

See Freeports: Tax breaks

National Insurance holiday for employers of veterans: claims process now live

This relief allows employers who hire former members of the UK regular armed forces, during the first year of their civilian employment, to apply a zero rate of secondary NICs for up to 12 months.

• From 6 April 2022, employers can claim relief retrospectively for the period April 2021 to April 2022 through Real Time Information submissions going forward.

See Employer NICs relief for veterans

Claiming Employment Allowance from April 2022

In the Spring Budget, it was announced that from April 2022 the Employment Allowance would increase to £5,000 per year.

• For 2020-21 tax years onwards, you can only claim the allowance if your total secondary Class 1 NICs liability is below £100,000 in the tax year before the year of claim.
• You claim the allowance through your payroll using the Employer Payment Summary.
• Where your payroll software has been updated, you’ll automatically receive the increased allowance of up to £5,000 for 2022 to 2023.
• You can also claim the Employment Allowance by:
  • &Using HMRC's Basic PAYE Tools
  • Making a payroll adjustment to reduce your secondary Class 1 NICs to reflect the increased Employment Allowance.
• HMRC will advise you where you have an overpayment so that you can make an adjustment.

See Employers’ NICs Allowance 

Coronavirus (COVID-19) updates and information

See Agent update: March 2022 in respect of the following:

• Extended loss carry-back.
• Reminder to declare coronavirus grants on Company Tax Returns.
• Coronavirus Job Retention Scheme (CJRS) grants.
• Eat Out to Help Out payments.
• Cycle to Work coronavirus policy easement ending.
• Easement ends for employee home-office expenses.
• Tax on UK income for non-UK residents.

Making Tax Digital for VAT is coming to all VAT-registered businesses

• From April 2022, all VAT-registered businesses, regardless of taxable turnover, will be required to follow Making Tax Digital (MTD) rules.
• This means using MTD-compatible software to keep digital records and submitting VAT returns through MTD from the first VAT return period, starting on or after 1 April 2022, and signing up to MTD at least 72 hours before the first return is due.

See Making Tax Digital: VAT (subscriber guide).

Private sector off-payroll working rules (IR35)

It has been one year since the off-payroll working rules (IR35) were introduced for the private and voluntary sectors.

• Make sure you check the rules each year to see whether they apply to you especially if you:
  • are a newly formed business
  • have been bought by another organisation
  • have grown in size over the last few years
• If you are a small client organisation in the private sector and do not need to apply the rules, your contractors own limited company, or personal service company (PSC), must consider and apply the rules.
• You should confirm with your contractors that it is their responsibility to operate the rules. 

Taxpayers have not had to pay penalties as a result of mistakes made when applying the rules in the first 12 months to April 2022, unless there is evidence of deliberate non-compliance, regardless of when the inaccuracies are identified.

• This period has now ended, and penalties may now be charged on any inaccuracies.

Payroll software indicator

• Your payroll software should include an indicator to enable you to notify HMRC of any engagements being paid which are subject to the off-payroll working rules.
• It is mandatory for this indicator to be used, for engagements determined to be inside the off-payroll working rules, by the deemed employer responsible for deducting Income Tax and NICs on payments being made to:
  • the contractors own limited company
  • other intermediaries such as a client organisation or an agency
• The indicator is not to be used for payments made which are not subject to the off-payroll working rules e.g. payments made to contractors working as sole traders, or by a contractor's own limited company.
• If you have used the indicator incorrectly ensure this is corrected urgently on a corrective Full Payment Submission for the relevant period.

See IR35: Off-Payroll Working

Naming tax avoidance promoters

HMRC has published the first set of the names of those involved in the promotion and supply of tax avoidance schemes along with details of the schemes they are selling.

See Tax avoidance scheme promoters named

Hybrid working: Employment Income Manual guidance

HMRC has recognised an increase in the number of employers offering hybrid working arrangements and have updated guidance within the Employment Income Manual to provide certainty of HMRC’s view on the application of relevant rules under hybrid working arrangements. There have been no changes to the relevant legislation or policies.

See Working from home (employees)

Working from home: claiming tax relief from April 2022

• The rules around eligibility of tax reliefs for working from home are unchanged but the lifting of pandemic restrictions means that most will no longer be eligible to claim from April 2022.
• Employees who are eligible can continue to use the online service for claiming tax relief for working from home for the 2022-23 tax year.
• Employers can still choose to reimburse employees for reasonable additional household expenses incurred while carrying out employment duties at home under homeworking arrangements.

See Working from home (employees)

General information and customer support

Employers can get free and confidential advice from The Advisory, Conciliation and Arbitration Service (Acas) on topics such as employment rules, the law, employer duty of care and HR policies by calling 0300 123 1100 or sending a private message to @acasorguk on Facebook Messenger.

Help your employees understand their Child Benefit entitlements

Do any of your employees have a total taxable income 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 with income over £50,000 and who get, or whose partner gets, Child Benefit should:

• Check their annual income either on their P60(s) or their personal tax account.
• Add any taxable benefits, for example, medical insurance, company car or accommodation.
• Use the HMRC child benefit tax calculator to work out how much they may have to pay.
• Register for self-assessment if liable for the High-Income Benefit Charge.

First-time parents need to fill in the Child Benefit claim form and send it to the Child Benefit Office. Child Benefit claims can be backdated for three months.

See High-Income Child Benefit Charge

Help shape UK central government complaint handling

• The Parliamentary and Health Service Ombudsman have launched a survey asking about the new standards to improve complaint handling. A unified set of standards will be used by UK central government departments to improve complaint handling.
• The survey closes on 31 May 2022 and everybody is invited to respond here.

External link

Employer Bulletin April 2022