Employer Bulletin: October 2023

HMRC have published their Employer Bulletin for October 2023. We have summarised the key content for you, with links to our detailed guidance on the topics covered.

PAYE

Electric charging of company cars and vans at residential properties

HMRC has published amended guidance at EIM23900 about a change in interpretation regarding home charging of electric company cars.

• S.239 ITEPA 2003 provides an exemption on payments and benefits provided in connection with company cars and vans such as vehicle repairs, insurance, and road tax.
• HMRC previously said that the reimbursement of costs in relation to charging a company car or van at a residential property was not covered by this exemption.
• Following a review, HMRC now accepts reimbursing part of a domestic energy bill, which is used to charge a company car or van will fall within the s.239 exemption.
• This means that no separate charge to tax under the benefits code will arise where an employer reimburses the employee for the cost of electricity to charge their company car or van at home. 
• Employers will need to make sure that any reimbursement made towards the cost of electricity relates solely to the charging of their company car or van.

See Electric Vehicles: Update 2023 and HMRC change BIK policy on electric car charging

Electronic payment deadline falls on a weekend

In October 2023 the electronic payment deadline falls on Sunday 22 October.

• To make sure your payment for the month reaches HMRC on time, you need to have funds cleared into HMRC’s account by 20 October 2023, unless you are able to arrange a Faster Payment.
• If payment is late, you may be charged a penalty.

Paying your PAYE Settlement Agreement (PSA)

• Electronic payments for a PSA for 2022-23 must clear HMRC’s account by 22 October 2023.
• If your payment is received late you may have to pay interest and a late payment penalty.
• To make payment use the PSA reference number, e.g. XA123456789012, from the payslip HMRC sent to you. If you do not have this, contact HMRC’s Employers helpline for advice.
• Do not use your PAYE Accounts Office reference as the payment will be allocated to your normal PAYE account and you will keep receiving reminders for the PSA despite having paid.

See PAYE Settlement Agreements

Correcting payroll mistakes for an earlier tax year

From April 2019 HMRC changed the way in which employers can correct payroll mistakes for an earlier tax year.

• To correct a mistake made in the current tax year, update the year-to-date figures in your next regular Full Payment Submission (FPS).
• Submit another FPS with the correct year-to-date figures if you reported the wrong pay or deductions for the following tax years:
  • 2020 to 2021.
  • 2021 to 2022.
  • 2022 to 2023.
  • If you reported the wrong pay or deductions in the 2018-19 and 2019-20 tax years, you can correct this by submitting an Earlier Year Update (EYU) or a further FPS with the correct year-to-date figures.
  • If you reported the wrong pay or deductions for 2017-18 send an EYU showing the difference between what you originally reported and the correct figure. You can only use an EYU for tax years when you were reporting online in real-time.

The rules are different if you find a mistake in your final FPS of the year.

See RTI: Real-Time Information for PAYE

Correct an employee’s student loan repayments

Information on Errors deducting student loan or postgraduate loan repayments is available.

Correct an employee’s National Insurance (NI) deductions

What you need to do depends on when you made the mistake.

If the mistake was in the 2023-24 tax year:

• Repay/deduct the balance from your employee. Update the year-to-date figures to the corrected amount in your next regular FPS or send an additional FPS.
• If you deducted too little, you cannot recover more than the employee’s NI contribution due that month.

You will need to write to HMRC if both the following apply:

• The difference is negative because you deducted or reported too much National Insurance.
• You still owe your employee a refund, for example, because they have left your employment.

In the letter you will need to include:

• The reference ‘Overpaid NI contributions’.
• Your employee’s name, date of birth and NI number.
• Why you overpaid National Insurance contributions.
• Which tax years you overpaid in.
• How much National Insurance you overpaid.
• Why you are unable to make the payment to the employee.

If the mistake was in the 2018-19 and 2019-20 tax years

Send an FPS with the correct year-to-date National Insurance if:

• Your payroll software will let you submit an FPS.
• You can pay any National Insurance refunds you owe.

If you cannot use an FPS, send an Earlier Year Update (EYU) with the difference between:

• The amount of National Insurance you originally deducted.
• The correct amount you should have deducted.

If the difference is negative (because you deducted or reported too much NI) you also need to set the ‘NIC refund indicator’ to:

• ‘Yes’ if you have refunded your employee or no refund was due.
• ‘No’ if you still owe your employee a refund (e.g. because they have left your employment).

If the mistake was in the 2017-18 tax year:

• Send an EYU with the difference between:
  • The amount of National Insurance you originally deducted.
  • The correct amount you should have deducted.

If the difference is negative (because you deducted or reported too much NI), you also need to set the ‘NIC refund indicator’ to:

• ‘Yes’ if you have refunded your employee or no refund was due.
• ‘No’ if you still owe your employee a refund (for example, because they have left your employment).

If there is an underpayment:

• If you deducted too little NI, pay HMRC the underpayment straight away. You can then recover the amount from your employee by making deductions from their pay.

You cannot recover more than the amount of NI that the employee owes in a month. Carry over any difference to later months; you can only make deductions in the tax year when you made the mistake and the year after.

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

In 2019 HMRC introduced a permanent easement on reporting PAYE information in real time.

• If you pay your employees early over the Christmas period, report your normal or contractual payday as the payment date on your FPS and ensure it is submitted on or before this date.
• For example, if you pay on Friday 15 December 2023 but the normal or contractual payment date is Friday 29 December 2023, you will need to report the payment date on the FPSas 29 December 2023 and ensure the submission is sent on or before 29 December 2023.

Tax updates and changes to guidance

Online charge calculator for disposals of some capital allowances assets.

HMRC has a new online tool to help work out balancing charges for the disposal of plant and machinery.

• The tool can only be used for assets on which a company has claimed the super-deduction or the 50% special rate (SR) first-year allowance. It checks which relief the company claimed and gathers the necessary facts to work out the balancing charge.
• The super-deduction and SRallowance were only available to companies for expenditures incurred between 1 April 2021 and 31 March 2023.

See Super-deduction & First Year Allowances

Apply the new Alcohol Duty rates and check the new reliefs when submitting your return this month

If you are a producer, importer or reseller of alcoholic products, you must be aware of the new Alcohol Duty rates and reliefs introduced on 1 August 2023.

• Before submitting your Alcohol Duty return this month, make sure you apply the new rates and check if you can take advantage of the new reliefs.

Changes to Alcohol Duty introduced on 1 August 2023:

• The new system standardised the duty bands for all types of alcoholic products, with new duty rates based on alcohol by volume (ABV) for all products.

Small Producer Relief:

• A duty relief extended to small producers of all alcoholic products under 8.5% ABV.

Reduced rates for draught products (Draught Relief):

• A lower rate of duty for draught alcoholic products under 8.5% ABV, packaged in containers of at least 20 litres and designed to connect to a qualifying system for dispensing individual drinks.

Temporary arrangements for producers or importers of wine:

• A temporary method of working out the duty on some wine products from 1 August 2023 to 1 February 2025.
• Businesses can use an ‘assumed strength’ of 12.5% ABV when working out the duty owed on wines between 11.5% and 14.5% ABV.

See Small Producer Relief (alcohol)

Overlap Relief: preparing for the new tax year basis

On 11 September 2023, the online application for submitting requests for Overlap Relief figures was launched.

• If you are a sole trader or partnership and have an accounting date other than 31 March or 5 April, you may need to find out details of your Overlap Relief before you submit returns for the 2023-24 transitional year.
• Overlap Relief information can only be provided if the figures are recorded in HMRC systems, taken from information submitted as part of previous tax returns. If this information has not been submitted in tax returns, HMRC cannot provide it but it may be possible to provide historic profit figures, to allow Overlap Relief to be recalculated.

See HMRC's Overlap Relief form now available and Basis Period reform

General information and customer support

The UK and the European Economic Area (EEA) European Free Trade Association (EFTA) states of Iceland, Liechtenstein and Norway signed a Convention on Social Security Coordination on 30 June 2023.

Details on the Convention on Social Security Coordination between Iceland, Liechtenstein, Norway and the UK are available here. 

It is anticipated that the Convention will be first brought into force and apply between the UK, Iceland and Liechtenstein later this year, and then extend to Norway in 2024.

Art market participants' online learning guide

An art market participant (AMP) is defined in the Money Laundering Regulations as:

• A firm or sole practitioner who by way of business trades in or acts as an intermediary in the sale or purchase of works of art, and the value of the transaction, or a series of linked transactions, amounts to €10,000 or more.
• The operator of a freeport when it, or any other firm or sole practitioner, stores works of art in the freeport and the value of the works of art stored for a person, or a series of linked persons, amounts to €10,000 euros.

HMRC has launched an online learning guide for art market participants.

See Agent Update: September 2023

Pay by bank account enhancements

Following recent improvements, some customers who are logged in to their HMRC online account through the Government Gateway and paying HMRC by ‘pay by bank account’ are now able to schedule a payment to be made in the future.

Employers’ PAYE and related regimes are now live. Customers who wish to set up a payment for a future date can do so for:

• Employers PAYE.
• PAYE Settlement Agreement.
• PAYE late payment or filing penalty.
• Class 1A National Insurance Contributions.

A future-dated payment cannot be set up beyond the due date of the tax owed.

You can access the service by logging in to your HMRC online account or going to paying HMRC and choosing the ‘pay by bank account’ option.

The Administrative Burden Advisory Board Tell ABAB Report 2023

The Administrative Burden Advisory Board (ABAB) published their 2022 to 2023 Tell ABAB survey report on 19 September 2023.

See Agent Update: September 2023 

Getting your new starter’s National Insurance number just got quicker

• If your new starters are unsure where to find their NI number, the quickest way is by using the HMRC app or pay online.
• For future access, they can also add their NI number to their Apple or Google wallet.

Helping customers spot and get out of tax avoidance

See Agent Update: September 2023

Fit note: new guidance for employers

HMRC have recently relaunched their Fit note guidance, and created an Employer’s checklist to highlight key points to support the discussion between you and your employee after they have been issued with a fitness note by an eligible healthcare professional, such as a registered Group Income Protection (GIP) policies.

Group Income Protection Policies

In August 2022 HMRC corrected its advice on the treatment of Group Income Protection (GIP) policies and their interaction with salary sacrifice schemes following the issuing of incorrect advice in October 2019.

• EIM06474 shows the correct taxation position and agreed transitional arrangements if this incorrect advice had been relied on.
• In some cases, there may be an impact on an individual’s entitlement to contributory benefits including state pension if they or their employer relied on the incorrect advice given in October 2019.
  • Whether there is an impact will depend on other income or National Insurance credits an individual has received in the year. HMRC has considered this issue and concluded that any such impact should be looked at on a case-by-case basis.

Individuals should check their personal tax account or NI record for years where they have benefited from GIP policies to see whether there is a shortfall in their NI record. If there is they should contact HMRC if:

• They made contributions to a GIP policy by way of salary sacrifice.
• They received sick pay from their employer under that GIP policy and that sick pay was not fully subjected to NI contributions.

HMRC will look at each case individually and if required rectify the shortfall to mitigate the impact on any contributory benefit entitlement.

See Group Income Protection: double tax warning

External link

Employer Bulletin: October 2023