Employment tax update - August 2024

This bulletin follows the release of the July Agent Update (Issue 121). This month the content most relevant to employment taxes and reward activities includes:

P11D and P11D(b) filing and payment deadlines

• The deadline to submit forms P11D and P11D(b) for the tax year 2023/24 was on 6 July 2024. If any errors with the forms have since been discovered, an online P11D or P11D(b) amendment form should be completed. 
• Any Class 1A National Insurance contributions (NICs) should have been paid to HMRC by 22 July 2024 (if paid electronically). 

Payrolling Benefits in Kind

• Businesses can now register to payroll Benefits in Kind and must do so by 5 April 2025 to be able to payroll benefits for the upcoming 2025/26 tax year. 
• There is no need to send P11Ds for benefits that have been payrolled, although forms P11D(b) may still need to be submitted to report Class 1A NICs. 
• As mentioned in previous issues of our Employment tax update, payrolling of benefits will be mandatory from 6 April 2026. Currently, living accommodation and taxable cheap loan benefits cannot be reported via payroll so further guidance is expected. 

Reporting profits on a tax year basis

• In relation to the recent basis period reform, HMRC have launched a full package of online interactive guidance to aid completion of self-assessment returns and to support in working out transition profit. Please note, any computations entered on the interactive guidance do not form part of the return itself — the guidance is only there to assist in completing the boxes on the return.

Expanding the cash basis

• The cash basis is a method of accounting that self-employed people and partnerships can use to calculate trading profits for income tax purposes, as an alternative to traditional accrual accounting. 
• From 2024/25 tax year, the cash basis will become the standard way to calculate income and expenses for self-employed people and partnerships who are completing their income tax self-assessment return. 
• If businesses wish to use traditional accrual accounting, or they are excluded from using the cash basis, from 2024/25 tax year they will need to opt out of the cash basis when submitting their self-assessment return. The first return for which this will be required is the 2024/25 return, due by 31 January 2026.
• More information in relation to these changes can be found on the Government website.

Clarifying workplace nursery partnership requirement rules 

• As part of this Agent Update, HMRC have set out a detailed commentary on the rules relating to workplace nursery partnerships to offer more clarity to smaller employers wishing to provide childcare support to their employees. A summary of the rules is as follows.
  • To qualify for the workplace nursery tax exemption at section 318 Income Tax (Earnings and Pensions) Act 2003, certain conditions must be met.
  • As part of these conditions, the scheme employer must make the premises on which care is provided available to satisfy the partnership requirements.
  • Under the partnership requirements, the employer may enter into partnership with a commercial nursery provider to provide the childcare, but they must still satisfy the requirement for the scheme employer to be wholly or partly responsible for financing and managing the provision of care.
  • Responsibility for financing means the employer must accept the financial risk associated with running a childcare facility, which is likely to take the form of contributing to overall costs. Responsibility for managing could mean monitoring the performance of staff providing childcare, deciding the conditions in which care is provided or allocating places.
  • If the conditions around partnership requirements are not met, then the exemption will not apply. 

Guidelines to help with football agents’ fees and dual representation contracts 

• HMRC has recently published new guidelines to help with understanding the tax position for football agents’ fees and dual representation contracts.
• The guidelines are aimed at all UK football clubs, agents, players and coaching staff. They set out HMRC’s view on the tax position when an agent represents both the club and the player during transfer or contract negotiation, known as “dual representation”.
• The guidelines set out any payroll reporting obligations and help clubs, players and agents lower their compliance risk. They also detail evidence and documents that the relevant parties should keep to support any tax position.