Employer Bulletin: April 2025

HMRC have published the Employer Bulletin for April 2025, which includes various updates for the 2025-26 tax year, as well as guidance on reporting 2024-25 expenses and benefits. We have summarised the key content for you, with links to our detailed guidance on the topics covered. 

employer bulletin

New rates of the National Minimum Wage (NMW)

NMW and National Living Wage (NLW) are the lowest rates of pay per hour that most workers must be paid by law. 

  • Rates increase on 1 April each year: employers need to use the new rates from the first pay reference period starting after 1 April 2025.

See National Living Wage rates/National Minimum Wage rates

Changes to employer National Insurance Contributions (NICs)

From 6 April 2025: 

  • The employer secondary Class 1, Class 1A and Class 1B NIC rates increased to 15% from 13.8%.
  • The secondary threshold decreased from £9,100 to £5,000 per year. 
  • The Employment Allowance increased from £5,000 to £10,500. The £100,000 threshold was also removed.
  • The Small Employers’ Relief compensation rate increased to 8.5%
    • Employers who qualify for Small Employers’ Relief (if they have paid £45,000 or less in Class 1 NICs), can reclaim 100% of all statutory payments (e.g. maternity, paternity, adoption, parental bereavement, neonatal care and shared parental pay) they pay except Statutory Sick Pay, which cannot be reclaimed, plus an additional 3% compensation. Small employers can now reclaim 108.5% from HMRC.
    • All other employers paying Class 1 NICs can reclaim 92% of what they pay in statutory payments with the exception of statutory neonatal care pay.

See Tax Data Card 2025-26

The Official Rate of Interest (ORI) from 6 April 2025

The ORI, used to calculate the Income Tax charge on the benefit of employment-related loans and the taxable benefit of some employment-related living accommodation, increased from 2.25% to 3.75% on 6 April 2025. 

  • From 6 April 2025, the ORI may increase, decrease or be maintained following quarterly reviews.
  • If there are any changes to the rate, these will take effect on 6 April, 6 July, 6 October and 6 January and be published on the beneficial loan arrangements — HMRC official rates page.
  • The new rate means employees might have to pay tax on employment-related loans or living accommodation, where they may not have previously.
  • Employers will need to remain aware of any future changes in the rate during the tax year. 

See Official rate of interest

Reporting expenses and benefits for 2024-25

P11D and P11D(b) deadlines

  • For employers who do not payroll benefits, the deadline for reporting P11D(b) Class 1A NICs, P11D expenses, and Benefits In Kind provided in the 2024-25 tax year is 6 July 2025. Late submission may result in a penalty.
  • Forms P11D and P11D(b) must be filed online at the same time.
  • Commercial software or HMRC's PAYE online service may be used. The latter is free and will allow submissions of up to 500 employees. 

If you make a mistake and need to submit an amendment

Form P11D(b)

  • 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) form, by sending you a notification to do so
  • Form P11D(b) form tells HMRC how much employers’ Class 1A NICs are due on expenses and benefits provided through the payroll, as well as any reported to HMRC on a form P11D. 

Nothing to declare

Paying your Class 1A NICs

  • There is a specific reference number you must include when you make your Class 1A NICs payment. For 2024-25, this is your normal Accounts Office reference plus the numbers 2513 at the end (e.g. 123PA001234562513). Do not leave a space between any of the numbers.
  • If paying at a bank or sending a cheque, you must use the correct payment slip, which is pre-printed with the reference in the correct format. 

Employers payrolling Benefits In Kind

  • If payrolling benefits in kind, employers may still have a Class 1A NICs liability and will still need to submit a P11D(b) to HMRC to report the Class 1A NICs owed.
  • A P11D submission is also required for any benefits not payrolled. 

Joint beneficial loans

  • Where employers provide joint beneficial loans to employees, remember to divide the total cash equivalent figure by the number of employees on the joint beneficial loan.
  • Use this final figure to complete the cash equivalent for each employee on their P11D.   
  • If the final cash equivalent figure is nil, record this as £0.00 on the P11D before submission.

See P11D: Reporting benefits and expenses

Paying PAYE and VAT by Direct Debit 

You can make your PAYE or VAT payments by Direct Debit. 

  • Payments are automatically collected from your bank account based on the information provided in your Full Payment Summary and Employer Payment Summary for PAYE, or VAT return, as relevant.

 See PAYE: Paying HMRC

Tax treatment of double-cab pickups

The tax treatment of double-cab pickups with a payload of one tonne or more changed from April 2025 for capital allowances, Benefit In Kind and some deductions from business profits. 

  • This follows the Court of Appeal ruling that a multipurpose vehicle’s primary suitability is not determined by a fine margin, but by what it is first and foremost suitable for. Where no clear predominant suitability can be identified, the default should be that they are cars.   
  • HMRC no longer applies the one-tonne payload test in determining whether a double-cab pickup is primarily suited for the conveyance of goods or burden. A vehicle must be assessed as a whole at the point that it is made available to determine whether the vehicle’s construction has a primary suitability.

Transitional arrangements for Benefits In Kind

  • Employers that have purchased, leased, or ordered a double-cab pickup before 6 April 2025 will be able to use the previous treatment where a double-cab pickup with a payload of one tonne or more will be classified as a van, until the earlier of disposal, lease expiry, or 5 April 2029.

Transitional arrangements for capital allowances  

  • Expenditure incurred on or after 1 April 2025 for Corporation Tax purposes and 6 April 2025 for Income Tax purposes as a result of contracts entered into before those dates, and where the expenditure is incurred before 1 October 2025, are unaffected.

The current one-tonne payload test included in VAT legislation and applied for input tax recovery purposes remains unchanged.

See Company cars and Cars, Vans & Other 4-wheel vehicles: Allowances

Changes to company size thresholds for off-payroll working

From 6 April 2025, the thresholds determining if a company is classified as ‘small’ will change.

  • For accounting periods beginning on or after 6 April 2025, a private company or organisation will be considered small if two out of the three following conditions are met:
    • Turnover of not more than £15 million (increased from £10.2 million).
    • Balance sheet total of not more than £7.5 million (increased from £5.1 million).
    • Monthly average number of employees of not more than 50 (no change).
  • A large or medium-sized client is responsible for determining the employment status of any worker supplying their services through an intermediary, usually a personal service company.
  • The threshold changes will have no practical impact for Off-Payroll Working until 6 April 2027, at the earliest, because a company’s size is determined by reference to previous years.

See Off-Payroll Working: PSCs & Private Sector Engagers

Off-Payroll Working: student and postgraduate loan deductions  

Employers of individuals working under the Off-Payroll Working (OPW) rules must not deduct student or postgraduate loan repayments from the payments that go through payroll for OPW workers.

  • Where the OPW rules apply, the individual is classed as a deemed employee.
  • Payments to deemed employees are identified on payrolls by selecting the off-payroll worker marker 'Real Time Information data item 208'.
  • Deemed employees are responsible for making student or postgraduate loan repayments through their own Self Assessment tax returns after the end of the tax year. 

See Off-Payroll Working: PSCs & Private Sector Engagers

Student loans thresholds, rates and loan start notices

  • The new student loan plan and postgraduate loan thresholds and rates from 6 April 2025 are as follows:
    • Plan 1: £26,065 (9%)
    • Plan 2: £28,470 (9%)
    • Plan 4: £32,745 (9%)
    • Postgraduate loan: £21,000 (6%)
  • If employers receive a student loan and or postgraduate loan start notice (SL1 or PGL1) from HMRC for an employee, it is important that they check and use the correct loan or plan type, and start date, shown on the start notice.
  • If the employee’s earnings are:
    • Below the respective student loan and postgraduate loan thresholds: update the employee’s payroll record to show they have a student loan and or postgraduate loan and file the start notice. 
    • Above the respective student loan and postgraduate loan thresholds, and deductions have not been taken: HMRC will send a generic notification service prompt as a reminder and if deductions do not start, may contact you directly

 See Student Loans

High Income Child Benefit Charge (HICBIC) changes  

From summer 2025, eligible employees will be able to report their family’s Child Benefit payments through a new digital service and pay the HICBC through changes to their PAYE tax code. 

See High-Income Child Benefit Tax Charge

Check if you need to amend your payroll for female employees who pay less NI

HMRC has added further details to the guidance to help employers check the eligibility of employees who pay the married women’s and widows’ reduced rate of NI, sometimes called the ‘small stamp’.

  • Check that the employee’s date of birth and gender are correct and that they are eligible to pay the reduced rate of NI before making a payroll submission.
    • Following a system update, if the employee’s date of birth is not valid, you will get an error message and will need to check and select another NI category for them to submit payroll.
  • If a female employee gives you a ‘certificate of election’ form, she may be able to pay less NI.
    • Check the details on the certificate against the updated guidance.
  • The guidance payroll for female employees who pay less National Insurance states that married women born before 6 April 1961 could choose to pay less NI until 1977, when the scheme ended.
    • If your employee opted in before it ended, she can keep paying a reduced rate.
    • The guidance also explains which NI category letter you must use for your employee’s payroll submission, with different letters for eligible employees paying the reduced rate according to their place of work.
  • The National Insurance rate and categories letter table also specifies that only eligible employees should be given the NI category letter for paying the married women’s and widows’ reduced rate.
    • The majority will use category B for the reduced rate. 
  • Payroll for female employees who pay less National Insurance gives more information on what action you need to take if they want to stop. This includes changing your employees’ NI category letter in your payroll software, usually to A. 
  • Employers who need to correct an employee’s NI category letter can find further information on how to fix problems with running payroll.

 See Tax Data Card 2025-26

Changes to notifications by employers to operate PAYE on a proportion of a globally mobile employee’s income and changes to Overseas Workday Relief

From 6 April 2025, the rules for non-domicile status ended and were replaced by a system based on tax residence.   

Operating PAYE on a reduced percentage of an employee’s earnings  

  • The process known as Section 690 is changing. This is the process which allows an employer to apply for a direction to only operate PAYE on a proportion of income paid to a qualifying employee who works both in and outside the UK.
  • From 6 April 2025, the new process allows an employer to send HMRC a notification specifying a proportion of income paid to a globally mobile or treaty non-resident employee, which will be treated as not being PAYE income.
  • HMRC have published Further guidance on the new process.  
  • You can notify HMRC using a new online notification form, and you can operate PAYE on the reduced amount of income as soon as HMRC acknowledge receipt of it.  
  • Any HMRC directions that were issued before 6 April 2025 will have ceased to have effect. This means that if you wish to operate PAYE on a reduced amount of an eligible employee’s income for the 2025-26 tax year, you will need to submit a new notification. This will avoid any unintended consequences due to the interaction between the old and new regimes. 
  • If you pay employment income to an employee on or after 6 April 2025, which relates to an earlier tax year in which: 
    • the employee was non-UK resident, 
    • the employee was UK resident, but qualified for Overseas Workday Relief and had elected to be taxed on the remittance basis, or
    • the year was a split year in relation to that employee, 

the payment is treated as PAYE income on the basis of the best estimate that can be reasonably made on the amount of the payment likely to be PAYE income.  

Overseas Workday Relief  

  • Eligible individuals can claim relief on qualifying foreign income and gains. Subject to transitional provisions, employees eligible for foreign income and gains will also be eligible for relief on relevant employment income which relates to duties performed outside the UK. The relief is known as Overseas Workday Relief (OWR). 

The main changes to be aware of:  

  • You will no longer need to pay any foreign employment income into a designated bank account overseas for your employees to benefit from OWR, unless it relates to a tax year ending prior to 6 April 2025.
  • OWR will now be available for the first four years of UK residence, or it appears likely to you that they will have done so.
  • The eligibility criteria for OWR have changed, so you will need to consider whether your employee meets the revised eligibility criteria for the tax year.

Employers may wish to make employees aware that: 

  • Foreign employment income will no longer need to be kept offshore to be eligible for OWR, unless it relates to a tax year ending prior to 6 April 2025.
  • OWR will be subject to an annual financial limit for each qualifying year. The application for the financial limit is applied when an employee files their Self Assessment tax return

HMRC have published guidance about the new Overseas Workday Relief regime.

  • Employees claiming Overseas Workday Relief must continue to keep the necessary records of their work overseas to correctly complete their Self Assessment tax return at the end of the year.  
  • Employees and migrant workers may continue to be eligible for deductions on expenses incurred when travelling to perform duties in the UK, but with qualifying new residents permitted deductions for up to four years rather than the current five years. Non-resident individuals will continue to be eligible for deductions for five years from a qualifying arrival date.

See Overseas Workday Relief (OWR)

Find your National Insurance number online 

If employees do not know their National Insurance number, they can use the Find your National Insurance number service. HMRC cannot provide or confirm National Insurance numbers over the telephone.

Freeports and Investment Zones: employer NICs relief guidance update

From 6 April 2025, eligible employers operating in a designated special tax site who wish to claim the employer NICs relief will be required to provide the workplace postcode for each eligible employee within the RTI (Real Time Information) Full Payment Submission. 

The Private Intermittent Securities and Capital Exchange System (PISCES)

The PISCES is a new type of regulated stock market, which will facilitate secondary trading of private company shares from later in 2025.

Electronic invoicing consultation

HMRC and the Department for Business and Trade have launched a joint 12-week consultation on the government’s electronic invoicing (e-invoicing) proposals. The consultation closes on 7 May 2025.

See E-invoicing consultation

Expanding the cash basis  

From 6 April 2024, there were several changes to cash basis accounting and it now becomes the default method of accounting for most unincorporated trading businesses. 

  • If businesses wish to use traditional accounting (accruals basis) to report their profits for tax purposes, they will need to opt out of the cash basis when submitting their Self Assessment tax returns for the tax year 2024-25 and subsequent tax years.
  • Businesses excluded from using the cash basis should indicate this on their tax return each year by ticking the relevant box.

See Cash or accruals accounting toolkit

Capital Gains Tax (CGT): work out adjustments for 2024-25

CGT rates changed during 2024-25. Individuals, trustees and personal representatives will need to take additional steps to calculate their CGT if they made disposals on or after 30 October 2024.

  • This will make sure the new rates of tax are correctly accounted for in the 2024-25 Self Assessment return.
  • Adjustments are not required for: residential property, Business Asset Disposal Relief, Investors Relief or carried interest.

See HMRC's new 2024-25 CGT 'adjustment' calculator

HMRC’s new campaign to ‘take the hassle out of hustles’

HMRC has recently launched a new ‘Help for Hustles’ campaign to help those with side hustles get their tax right.

See Side-Hustles & Tax: At a glance

External link

Employer Bulletin April 2025