October 2022 issue of the Employer Bulletin – GOV.UK

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Published 19 October 2022

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This publication is available at https://www.gov.uk/government/publications/employer-bulletin-october-2022/october-2022-issue-of-the-employer-bulletin
In this month’s edition of the Employer Bulletin there are important updates and information on:
Reduction in the rate of National Insurance contributions and reversal of the Health and Social Care Levy — employer actions
Making your PAYE Settlement Agreement payment
Guidelines for Compliance — help with PAYE Settlement Agreement calculations
Electronic payment deadline falls on a weekend
Guidance for employers on reporting PAYE information in real time when payments are made early at Christmas
Student loans
Take advantage of the National Insurance holiday for employers of veterans
New starter checklist interactive guidance goes live — helping customers get it right
HMRC app and pre employment checks
How to reduce the number of P11Ds you fill in and send to us
New tax year basis will affect some sole traders and partners
You must now file VAT Returns using Making Tax Digital-compatible software
Change to VAT penalties and interest charges
Decision tool and calculator for the 130% super-deduction and the 50% special rate capital allowances
New powers for naming tax avoidance promoters
Spotlight 60 — warning for agency workers and contractors employed by umbrella companies
Government Information and Advice Service
HTML format of Employer Bulletin
Getting more information and sending feedback
HMRC’s principles of support for customers who need extra help set out our commitment to support customers according to their needs, and underpin the HMRC Charter.
Find out how to get help and the extra support available.
On 22 September 2022 the government announced in-year reductions to National Insurance rates and the cancellation of the Health and Social Care Levy as a separate tax. We emailed employers on our database to make sure awareness of the key changes which are:
We also asked employers to remove (from 6 November 2022) the temporary generic message on payslips for the tax year (2022 to 2023) explaining the National Insurance contributions uplift, and we confirmed full detail on all the changes would be published on GOV.UK in due course.
We wanted to take the opportunity now to remind employers to make the necessary changes to be ready for November 2022 payroll. We realise the timeline is tight and some employers may face challenges in implementing the changes in time. We will be directing employees to their employers to correct any overpaid National Insurance contributions in the first instance. Where needed, employers can then make corrections by submitting a revised Full Payment Submission (FPS).
On 22 September 2022 payroll software developers were made aware of the actions they need to take and provided with the relevant technical documents to facilitate software changes. You should therefore contact your payroll software developer initially with any queries. Always make sure that you are using the latest version of your payroll software.
HMRC’s Basic PAYE Tools will also be updated to calculate the correct National Insurance contributions from 6 November 2022 and therefore if you are a user of Basic PAYE Tools, you should make sure you install this new update, which will be available to download from 4 November 2022. For any employee payments due on or after 6 November 2022, you must be using Basic PAYE Tools version 22.2 (or later). The version number appears in the bottom left-hand corner of the Basic PAYE Tools screen. You can download Basic PAYE Tools from GOV.UK where you will also find comprehensive help on installing this software.
A PAYE Settlement Agreement allows you to make one annual payment to cover all the tax and National Insurance due on small or irregular taxable expenses or benefits for your employees.
Any electronic payments for a PAYE Settlement Agreement for the tax year ended 5 April 2022 must clear into the HMRC bank account on or before 22 October 2022. If you pay late you may have to either pay interest or a late payment penalty or both.
To pay, you will need to use the PAYE Settlement Agreement reference number from the payslip we sent to you, for example, XA123456789012. If you do not have this, contact the office dealing with your application for advice.
Do not use your PAYE Accounts Office reference, for example 123PA12345678, to make your PAYE Settlement Agreement payment, because payments received with your PAYE Accounts Office reference are allocated to your normal PAYE account and you will continue to receive reminders for the PAYE Settlement Agreement even though you have paid.
Guidelines for Compliance were announced in November 2021 as part of the review of tax administration for large businesses.
They offer HMRC’s view on complex, widely misunderstood or novel risks that can occur across tax regimes. They include best practice examples to follow and steps to:
Over time a suite of guidelines will be published to help customers get things right first time. The Guidelines for Compliance contains more information on what Guidelines for Compliance are and links to individual guidelines.
The first of these Guidelines for Compliance has been published and will provide support to employers regarding PAYE Settlement Agreement calculations.
The Guidelines for Compliance for supporting PAYE Settlement Agreement calculations includes:
The Guidelines for Compliance for supporting PAYE Settlement Agreement calculations is on GOV.UK and follows the redesigned PSA1 form which was covered in the August 2022 Employer Bulletin.
In October the electronic payment deadline of 22 October 2022 falls on a Saturday. So, to make sure your payment for that month reaches us on time, you need to have cleared funds in HMRC’s account on or before 21 October 2022 unless you are able to arrange a Faster Payment.
Remember that it’s your responsibility to make sure your payments are made on time and if your payment is late, you may be charged a penalty.
So that you know what date to initiate your payment and make sure we have it on time, you need to speak to your bank or building society well in advance of making your payment to check single transaction, daily value limits and cut off times.
Find out more information on paying your employer’s PAYE electronically.
In 2019 we introduced a permanent easement on reporting PAYE information in real time. We are aware some employers pay their employees earlier than usual over the Christmas period. This can be for a number of reasons. For example, during the Christmas period the business may close, meaning workers need to be paid earlier than normal.
If you do pay early over the Christmas period, report your normal (or contractual) payday as the payment date on your Full Payment Submission (FPS) and make sure that the FPS is submitted on or before this date.
For example, if you pay on Friday 16 December 2022, but the normal (or contractual) payment date is Friday 30 December 2022, report the payment date on the FPS as 30 December and make sure the submission is sent on or before 30 December.
Doing this will help to protect your employees’ eligibility for Universal Credit, as reporting the payday as the payment date may affect current and future entitlements.
The overriding PAYE reporting obligation for employers is unaffected by this announcement and remains that you must report payments on or before the date the employee is paid, that is their payday.
Employers are responsible for:
Your role in collecting student loan and postgraduate loan through the tax system is important.
According to Real Time Information (RTI) data for 2021 to 2022 over 95% of employers accurately deducted student loan and postgraduate loan for their employees and sent this information to HMRC on their Full Payment Submission within the RTI submissions.
Although most employers get it right first time, there is still a small percentage who do not.
Common errors identified on RTI were:
When you receive a ‘start notice’ or ‘stop notice’, you should:
Where you do not action the start or stop notice, or take deductions under the wrong plan type, HMRC will send a Generic Notification Service message to your Online PAYE account as a reminder. We recommend you register for email alerts for Generic Notification Service messages.
This makes sure:
More information is available on:
We would like to remind employers across the UK that they could save thousands of pounds in National Insurance contributions. Employers can tap into a unique pool of skilled and talented new recruits, if they hire former members of the UK regular armed forces during their first year of civilian employment.
Since April 2021, employers taking advantage of the ‘National Insurance holiday for the employers of veterans’ have been able to apply a zero-rate of secondary National Insurance contributions (for that employee) for up to 12 months.
Employers can claim through Full Payment Submissions from April 2022, although retrospective claims for the period April 2021 to April 2022 can also be made. There is no limit to the number of qualifying veterans a single business can employ. Further information on employee eligibility, and the process for claiming the relief is available.
The scheme is designed to encourage employers to look again at the unique skills and experience that former members of the UK armed forces can bring to the workplace. This creates fresh opportunities and supports veterans in making the transition to civilian employment.
The Office for Veterans Affairs are keen to hear from any employers already taking advantage of the scheme and willing to talk about their experience. If you’re interested in featuring as a case study, send an email with ‘NHEV case studies’ in the subject to: ovacommsandcopressoffice@cabinetoffice.gov.uk and someone will be in contact to discuss next steps.
The new starter checklist is an alternative method, in the absence of a P45, of providing HMRC with new employer details. This makes sure that employers apply the most appropriate tax code so that the correct tax is deducted by HMRC.
If a new employee has a P45 but also a student loan, they would also be required to complete a new starter checklist so the correct amount of student loan deductions are made.
Working with stakeholders, online interactive guidance has been developed which allows a new employee to answer a series of questions and select the appropriate answers to their circumstances. This will produce a new starter declaration which can then be downloaded and emailed or posted to the employer.
Nearly 3 million Real Time Information submissions for new starters with discrepancies were received in 2021 to 2022. The new guidance will help avoid postage costs, incorrect tax being applied, saving employees and employers time and less contact with HMRC.
For those customers that require a print and post service, the new starter checklist has been amended to reflect the interactive guidance and can be printed from GOV.UK.
The HMRC app has been updated and improved to include quick and easy ways for individuals to get their employment details.
Some employers require information on employment history as part of their pre-employment checks, and job applicants will be able to provide it instantly using the HMRC app.
If you need employment details as part of your recruitment process, encourage job applicants to get it using the HMRC app. They can get their employment history and income (going back 5 years), National Insurance number and tax codes all at a touch. They can also print and download this information, which is the same information we post to them, and they can share it with you if needed.
It can help speed up your recruitment process and security checks, and means your new recruits will not have to call us and wait 10 days for information to arrive in the post.
We have created a YouTube video on how to confirm your employment details using the HMRC app which demonstrates how simple it is to get this information:
How to confirm your employment details using the HMRC app
Alternatively, individuals can also get their employment details using their personal tax account.
If you provide benefits in kind or expenses to your employees and would like to reduce the number of P11Ds you complete, payrolling may be the way to go. Once you start payrolling, you no longer need to submit P11D returns to HMRC for most benefits in kind.
You can collect the tax due from your employees on a pay period basis (monthly, weekly, and so on) by signing up for payrolling. You can show your employees how much tax they have paid for the benefit or expense on their payslip.
You must register for payrolling on or before 5 April 2023 to be ready for the 2023 to 2024 tax year.
The rules HMRC uses to work out taxable profits for income tax in a self-assessment return are changing for many businesses. From April 2024 onwards, sole traders and partners will be taxed on profits generated in that tax year, that is, from April to March. This will be the case regardless of a business’s accounting date.
Only taxpayers with an accounting date other than 31 March or 5 April are affected by this reform.
The year beginning in April 2023 is a ‘transitional year’ in which all affected businesses will move to the new way of calculating taxable profits for the tax year. They will need to declare the total profits from the end of the last accounting date in 2022 to 2023 up to 5 April 2024. This means that profits generated over a longer period will be taxable in the transition year.
As an example, if your accounting date is 31 December, you must declare profits from 1 January 2023 up to 5 April 2024 in your tax return for the financial year 2023 to 2024,15 months rather than 12 months.
This return is due on or before 31 January 2025. By default, these additional ‘transition’ profits can be spread over 5 years.
This abolition of basis periods means that any double taxation from the early months of trading will be available to be used. Further instructions on how to claim this ‘overlap relief’, and further guidance on the new rules in general, will be published soon.
The way you file VAT Returns has changed, as part of Making Tax Digital.
You should already be using Making Tax Digital compatible software, since this became mandatory from April 2022. From 1 November 2022, you will not be able to file monthly or quarterly using your existing VAT online account to submit your VAT Returns.
If you have not already done so, you must sign up to Making Tax Digital and use Making Tax Digital compatible software now to keep your VAT records and file your VAT Returns. This will reduce common mistakes and make it quicker and easier for you to manage your tax affairs.
If you do not sign up for Making Tax Digital and file your VAT Returns using software, you may have to pay a penalty.
Even if you already use Making Tax Digital compatible software to keep your records and file your VAT Returns online, do not forget to sign up to Making Tax Digital before you file your next return.
If you have not done this already, then follow these steps today:
If you’re already exempt from filing VAT Returns online or if you or your business are subject to an insolvency procedure, you’re automatically exempt.
You can check if you can apply for an exemption on GOV.UK.
More information on Making Tax Digital is available.
New simplified penalties will start from next year for businesses who are late in submitting or paying VAT Returns.
For VAT periods starting on or after 1 January 2023, the default surcharge will be replaced by these new penalties. At the same time, we’re also making changes to how VAT interest is calculated.
If your business submits a nil or repayment VAT Return, you will need to make sure it’s submitted on time. Unlike the current default surcharge, under the new late submission penalties, if a nil or repayment return is submitted late penalty points and a £200 fine may apply.
More information about the upcoming changes to VAT penalties and VAT interest charges is available.
HMRC has published an interactive tool to help companies check if they can claim for the super-deduction of up to 130% or the 50% special rate first year allowances for qualifying expenditure on plant and machinery.
The tool is available in the HMRC customer guidance for super-deductions and special rate allowances. It helps companies find out if capital expenditure may qualify and calculates how much they may be able to claim.
Only companies can claim these allowances. The allowances are for qualifying expenditure on new and unused plant and machinery. They are for expenditure on or after 1 April 2021, up to and including 31 March 2023.
To support taxpayers in steering clear or moving out of tax avoidance, HMRC publishes lists of those involved in the supply of mass-marketed tax avoidance schemes and details of the schemes they are selling.
To further support taxpayers, new legislation was introduced in the Finance Act 2022 which enables HMRC to publish details of schemes they suspect are tax avoidance and to name suspected promoters earlier than previously possible. HMRC can now name connected persons including individuals involved in promoting tax avoidance such as directors, company officers and those behind these schemes. Publishing this information will help inform taxpayers about tax avoidance schemes being marketed and those that market them.
In August 2022 HMRC used these new powers for the first time to name 2 suspected tax avoidance promoters as well as the directors of these companies. The new cases have been added to the existing list of promoters and detail the legal powers that enabled publishing. More publications under this new power are planned and HMRC will update the list as cases progress.
The list is not a complete list of all tax avoidance schemes currently being marketed. Neither is it a complete list of all promoters, enablers and suppliers. There are other schemes, promoters, enablers and suppliers that HMRC cannot publish information about at this time.
HMRC provides a range of other tools for customers to help them steer clear of avoidance schemes such as an interactive risk checker, payslip guidance, and case studies demonstrating the risks of becoming involved in a tax avoidance scheme.
The article on Spotlight 60 gives you more information on possible tax avoidance associated with umbrella companies.
This information will help you and your employees identify tax avoidance schemes and those promoting them, so you don’t get caught out.
Many umbrella companies are compliant with the tax rules, but some use complicated arrangements that claim to allow agency workers and contractors to keep more of their earnings. These arrangements are tax avoidance schemes and most of them do not work.
Spotlight 60 provides useful information that supports taxpayers in being able to better identify tax avoidance schemes used by umbrella companies. Spotlight 60 describes how these schemes are claimed to work and give some warning signs to look out for. Also included is information on what taxpayers should do if they are worried about using a tax avoidance scheme or have concerns about being offered these kinds of pay arrangements.
This information will help you and your employees identify tax avoidance schemes and those promoting them, so you don’t get caught out.
Many employers are currently facing challenges in recruiting the people they need to help their business thrive. So, it has never been more important for those employers to keep and develop the people they already have. It’s therefore crucial that businesses have the tools they need to prevent long-term absence and avoidable job loss because of ill health or disability.
The government is testing a new online service for employers which provides advice and guidance on managing health and disability in the workplace. This explains your legal obligations and good practice.
This may be particularly helpful for smaller businesses without an in-house HR function or access to an occupational health service.
By taking part, you’ll receive free information and guidance on disability and health-related employment issues. You could use it to help manage a current case, or simply take a look around the site to see what’s useful and identify improvements. Your feedback is valuable to make sure the new service is designed based on user needs. We would appreciate you taking the time to provide feedback through support with employee health and disability site.
Since September 2020, documents published on GOV.UK or other public sector websites must meet accessibility standards. This is so they can be used by as many people as possible, this includes those with:
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