Employer Bulletin: December 2023

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

National Insurance rates: Autumn Statement 2023

As announced at the 2023 Autumn Statement, from 6 January 2024:

• The main rate of employee Class 1 National Insurance Contributions (NICs) will be reduced by 2%, from 12% to 10%.
• Employers are asked to take steps to work with their payroll software provider, and where applicable IT delivery partners, to get ready to implement the change. 
• HMRC’s Basic PAYE Tools will be updated to reflect this change. 

 See National Insurance: Rates

National Minimum Wage: geographical compliance approach

• HMRC are contacting employers, based on geographical location, to raise awareness and increase knowledge of the complexities of the National Minimum Wage (NMW) legislation, reducing the risk of non-compliance. 
• HMRC are: 
  • Giving guidance on common NMW issues.
  • Encouraging employers to review pay arrangements to ensure compliance with the law.
  • Offering some employers a free call with an NMW expert to talk about business practices that can lead to NMW underpayments.
• If potential issues are identified, HMRC will give the opportunity to correct them, with no sanctions being applied.

See  National Living Wage rates/National Minimum Wages rates

National Insurance Contributions (NICs) and relevant motoring expenditure

• Following the Laing O’Rourke Services Limited v HMRC & HMRC v Willmott Dixon Holdings Limited [2023] UKUT 155 case, the definition of 'relevant motoring expenditure' is widened to include fixed-sum mileage allowance payments relating to potential and anticipated use of an employee's own vehicle for work. 
• As a result, where car allowance payments have been made, and NICs have been paid on these amounts for previous periods which are no longer due, a refund of overpaid contributions may be claimed. 

Employers may correct such overpayments through Real-Time Information (RTI) but must provide:

• A list of the employees, with their National Insurance numbers, is included in the claim.
• Evidence of the number of business miles undertaken by each employee.
• The amount of car allowance payments that these employees received.
• Details of any other relevant motoring expenditure payments that the employees have received (for example if they have received mileage payments at less than the HMRC-approved rate).
• The Primary and Secondary Class 1 NICs that are being reclaimed.

For employers within HMRC’s Large Business population, claims should be made through their customer compliance managers. If RTI cannot be used, written claims can be made, detailing the qualifying expenditure and an explanation as to why RTI cannot be used. Reclaimed amounts should be passed on to the employees.

In the absence of an employer claim, employees may make a claim on a pay period-by-period basis, including:

• Evidence of the number of business miles.
• The amount of car allowance payments that they have received.
• Details of any other relevant motoring expenditure payments that they have received (for example if you have received mileage payments at less than the HMRC approved rate).
• The Primary Class 1 National Insurance Contribution that is being reclaimed.
• The reason their employer is not applying for this refund on their behalf.

See Authorised mileage rates (own vehicle)

Payrolling expenses and benefits for the 2024-25 tax year

• It is now possible to register for payroll benefits from 6 April 2024.
  • Payrolling benefits and expenses mean that you will not have to submit a form P11D.
  • You must tell HMRC which benefits you want to payroll during the registration process.
  • Tax codes for all employees receiving these benefits will be amended unless you exclude any employees that you do not want to payroll benefits for.
• If you have had an informal arrangement in place, you must register now to payroll your benefits.
  • HMRC will no longer accept new informal arrangements, except in exceptional circumstances.

See Payrolling of benefits

Umbrella company guidance 

• HMRC has published new guidance for employment businesses who use umbrella companies to employ workers. 
  • This guidance aims to help employment businesses understand their legal responsibilities, protect their business from bad actors in their supply chain and support umbrella company workers. 
• HMRC has also published updated guidance for umbrella company workers.
  • The guidance now includes advice on how workers can protect themselves from the actions of fraudulent umbrella companies.  
• The government is considering the responses it has received to the recent consultation on potential approaches to bringing umbrella companies within the scope of government regulation and options to tackle tax non-compliance in the sector.
  • A response will be published in due course.   

Off-Payroll Working rules (IR35): opportunity to pause settlement 

• From 6 April 2024, when HMRC find that a client has made a mistake in applying the Off-Payroll Working rules when assessing how much the deemed employer owes in Income Tax and NICs, they will be able to set off the taxes the worker or their intermediary has already paid.
• The policy applies to Income Tax and NICs assessed on or after 6 April 2024, from Off-Payroll Working errors in payments since 6 April 2017.
• Organisations may be able to pause the settlement of their open off-payroll working compliance check until after 6 April 2024.
• HMRC will consider a pause where: 
  • The compliance check has reached a settlement, and:  
    • The organisation has acknowledged in writing an error in applying the off-payroll working rules. 
    • The deemed employer’s gross liability, including any penalty, has been agreed.
  • The organisation gives HMRC the information we need to work out a set-off. This is:  
    • The name of the Personal Service Company and Company Registration Number.
    • The worker’s full name or National Insurance number.

See Off-Payroll Working: PSCs & Private Sector Engagers

Guidelines for Compliance: Off-Payroll Working rules (IR35)

• HMRC has recently published new Guidelines for Compliance — help to comply with the reformed off-payroll working rules (IR35). 
• HMRC will update the Employment Status Manual over the coming months to give further guidance in areas such as appeals and disagreements for off-payroll workers. 

See Helping to comply with Off-Payroll Working rules 

Basis period reform

• The rules used to calculate sole traders’ and partners’ profits for Income Tax Self Assessment purposes are changing from 2023-24 onwards. This may first affect returns due by 31 January 2025.
• HMRC plans to release a YouTube video in February 2024, giving a brief overview of the changes introduced by the basis period reform. 

See Basis Period reform

Help to check if work qualifies for Research and Development (R&D) tax relief

• HMRC has published Guidelines for Compliance (GfC) to help companies check if work qualifies for R&D tax relief.
• The guidance identifies common errors by explaining what the terminology means and what HMRC's expectations are, as well as what evidence is required to support a claim.

See Research & Development Tax Reliefs

Using ‘pay by bank account’ to pay HMRC

• Some taxpayers are unsure about using ‘pay by bank account’ when paying HMRC because they notice their payment has gone through the HMRC Shipley bank account when they are historically used to paying HMRC Cumbernauld. 
• Taxpayers should be reassured this is not a scam; this will not affect payments going to the correct taxpayer record or the time taken to update it. 

See How to pay HMRC

Help contractors steer clear of tax avoidance schemes

• Help protect contractors by telling them about HMRC's ‘Tax avoidance - don’t get caught out’ campaign.  
• This helps contractors spot the warning signs of tax avoidance, get support to leave schemes and report suspicious companies.  

 See Named tax avoidance schemes, promoters, enablers

The Administrative Burden Advisory Board Annual Report 2023  

• The Administrative Burden Advisory Board (ABAB) will publish its Annual Report 2023 on GOV.UK on 12 December 2023. 
• The Annual Report details ABAB’s progress against the priority areas identified in the previous report, which included Making Tax Digital for Business, the next steps for UK Border and Customs and the impact on small businesses and customer experience.
• The report also shares ABAB’s priorities for the forthcoming year. 

Stay on top of your workplace pension duties

• Employers should make sure they stay on top of their workplace pension duties. If they do not, The Pensions Regulator (TPR) may take enforcement action. 
• As well as monitoring the ages and earnings of staff and paying contributions, employers must also carry out re-enrolment duties including the duty to re-declare, every three years. 
• Employers should read TPR’s ongoing duties guidance on The Pensions Regulator website, and those supporting employers with their duties should look at TPR’s information for advisers. 

See Auto-enrolment: Workplace pensions

Correction to the Apprenticeship Levy Manual

• In July 2023, HMRC updated the content of page ALM07000 of the Apprenticeship Levy Manual.   
• The corrected a previous error. The page now sets out the correct legislative provision that ‘pay bill’ is based on the total amount of earnings on which an employer is liable to pay Class 1 secondary National Insurance contributions.  
• This includes earnings below the Lower Earnings Limit (LEL) and the Secondary Threshold (ST) and in particular earnings below the LEL and the ST are included in the pay bill even when the total earnings for the employee in that pay period do not exceed the ST. 

See Apprenticeship levy (employers' briefing)

Childcare Choices: helping families to juggle work and life

• The Childcare Choices website brings together the existing childcare offers in one place, so parents can get the help that fits their family.
  • Support includes Tax-Free Childcare, 30 Hours Childcare, or Universal Credit for Childcare.
  • Some families might be eligible to use more than one childcare offer together and get the most out of it.   
  • Depending on eligibility criteria, support could also be used for various clubs and schemes. 
• From April 2024, eligible working parents in England with children aged two will have access to 15 hours of childcare.   
• From September 2024, the 15-hour childcare offer will be expanded to eligible working parents in England with children between nine and 23 months old.   
• The availability of childcare before and after school, between 8 am and 6 pm, will also be expanded for primary-school-aged children.
• From September 2025, eligible working parents in England with children between nine months up to school age (four or five years of age) will have access to 30 hours child care.  

See Childcare: Free and Tax-free Childcare

External link

Employer Bulletin: December 2023