HMRC have published the Employer Bulletin for February 2025 which includes advance planning for the tax year-end. We have summarised the key content for you, with links to our detailed guidance on the topics covered.
End-of-year reporting
The last employer's Full Payment Submission (FPS) or Employer Payment Summary (EPS) for the year up to and including 5 April 2025, need to include an indicator that they are final submissions.
- This tells HMRC they can finalise their records for the year.
- Some payroll software will not allow an indicator on an FPS. This is addressed by sending the last FPS and then sending an EPS with the indicator duly ticked.
P60s must be provided by 31 May 2025 to anyone employed on 5 April 2025:
- If no one has been paid in the year, an EPS must be sent with the indicator ticked for nil pay in the final pay period and for the final submission.
- This must be done by 19 April 2025. Automatic reminders will be sent if employers have not filed by 11 April.
Employers' PAYE and Construction Industry Scheme repayments
Improvements to the online claim form for Construction Industry Scheme refunds were covered in Employer Bulletin: December 2024.
HMRC have updated the process for online PAYE refunds.
- Claims can be made for only one tax year at a time by employers signing in with their Government Gateway User ID and password or by agents using their agent services account.
- Employers should know why they have overpaid before beginning the claim process.
- The overpayment can be used to offset other outstanding taxes such as Corporation Tax.
Basic PAYE Tools - new release
HMRC's free PAYE software version 25.0 will be released at the end of March 2025 for 2025-26.
Electronic payment deadline falls on a weekend
In February and March 2025, the Electronic payment deadline falls on Saturdays - 22 February 2025 and 22 March 2025 respectively.
- To ensure the payment is received on time, funds must be cleared into HMRC's account by 21 February/21 March 2025, unless the employer arranges a Faster Payment.
- There are Penalties for late payment.
Payrolling employees' benefits and expenses
To Payroll benefits and expenses for employees for the year ahead - 2025/26 employers must register online by 5 April 2025.
All benefits can be payrolled except for:
- Employer-provided living accommodation.
- Interest-free and low-interest (beneficial) loans.
An online return form P11D(b) is still required to tell HMRC how much employer Class1A National Insurance is owed.
- Forms P11D must be submitted for any benefits and expenses not payrolled in the tax year to 5 April 2025.
Reporting expenses and benefits for the tax year ending 5 April 2025
The deadline for submission remains 6 July.
- Forms P11D and return form P11D(b) must be filed online and at the same time.
- Late submission can result in Penalties. Any errors can be corrected but this must be done by submitting an amended form online.
HMRC commented particularly on joint beneficial loans to employees where the total cash equivalent figure must be divided by the number of employees on the loan. If the final cash equivalent figure is nil, this is recorded as £0.00 on the P11D.
Changes to National Insurance
On 6 April 2025:
- The Employers Secondary Class 1 National Insurance rate increases from 13.8% to 15%.
- The Employer's Secondary Threshold reduces from £9,100 to £5,000 per annum.
- The Employment Allowance increases from £5,000 to £10,500 and the £100,000 upper threshold for eligibility will be removed. This means larger employers will no longer need to consider State Aid implications.
New online iForm for PAYE employment expenses
- HMRC included the reimplementation of the ability to claim tax relief on employment expenses using an online form in our Agent Update for January 2025.
Update on employee hours data requirements
- HMRC has Dropped the proposed RTI reporting changes which means it had proposed collecting detail on employee hours. The proposed data requirements for Income Tax Self Assessment returns are going ahead.
Company cars - classification of double cab pick-ups
The Official Rate of Interest (ORI) from 6 April 2025
- The ORI is used in calculating the charge for beneficial employment-related loans and the taxable benefit of taxable employment-related living accommodation.
- In the Autumn Budget 2024, it was announced that the commitment not to amend the rate during the tax year would no longer apply from 6 April 2025. The rate has always been reviewed quarterly but for 2024-25 onwards, any necessary changes to the rate will take effect on 6 April, 6 July, 6 October and 6 January.
Guidance updated; check your payroll for female employees who pay less National Insurance
- More information has been added to HMRC's guidance to help employers check the eligibility of employees who pay the married women's and widow's reduced rate of National Insurance, sometimes referred to as the 'small stamp'. These will be married women born before 6 April 1961 who chose to pay less National Insurance until 1977 when the scheme ended, but have continued to pay at this lower rate ever since.
- Employers should check the employees' date of birth, gender, and 'certificate of election' when reporting payroll for the married women's and widow's reduced rate.
Guidelines for Compliance; Help with labour supply chain assurance
- HMRC have recently published new guidelines aimed at larger organisations in the top tiers of a labour supply chain, but the principles can be applied to most businesses. HMRC continue to be concerned about tax defaulters in the labour supply chain and is tackling this directly. Their concern has also spawned consultations such as 'Fraud on provision of labour in the construction sector: consultation on VAT and other policy options'.
Relevant motoring expenditure & NICs
- There was a widening of the definition of relevant motoring expenditure as a result of an Upper Tribunal case which we covered in our Agent Update: November 2023. NICs that may have been paid previously may be recovered because of the change.
- HMRC have reminded employers that RTI should be used to make corrections. As we explained previously, a number of details must be provided. In some situations, employers may not be applying for a refund in which case the employee can apply on the provision of the same list of details.
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