End of year employment tax update

As the end of the 2024/25 tax year is approaching, we have included a table with UK employment tax deadlines as well as a summary of the key compliance and reporting considerations for employers and individuals. Let us know if you would like further information or help with any of these requirements.

Forms P60

• A form P60 must be provided to every employee who earned at a rate equal to or above the lower earnings limit for national insurance contributions (NICs) purposes. This will cover most employees.
• The P60 should contain details of taxable earnings paid by an employer to an employee in the tax year, along with details of any income tax and NICs deducted from those earnings. The P60 should also contain basic details such as the employer’s name and address and the employee’s NI number.
• The employer must issue the P60 to the employee no later than 31 May following the end of the tax year. The employee can then use the details of the P60 to prepare their own self-assessment tax return.

Short-term business visitors (STBV) reporting

• Employers who have an Appendix 4 Agreement with HMRC covering STBV from countries that have a double tax treaty with the UK, have to make a report to HMRC by 31 May after the end of the tax year, detailing the individuals covered by the agreement and providing information required for each of them. That information varies according to the number of days spent in the UK by each individual STBV.
• Employers who have a valid Appendix 8 Agreement with HMRC covering individuals who fall outside the scope of an Appendix 4 Agreement, must submit a single Full Payment Submission and pay PAYE due by 31 May following the end of the tax year.
• We have prepared an article setting out in more detail the main considerations in relation to STBV reporting. 

“Making good” payments of tax

• Where an employer makes a notional payment to an employee which is treated as PAYE income, the employer has to account for income tax on such payments to HMRC. This is the case even if the employee does not have sufficient earnings to allow the employer to deduct income tax from those earnings.
• If, by 90 days after the end of the tax year, the employee does not repay the tax that the employer has had to account for, some or all of the shortfall may be treated as additional earnings of the employee for the tax year in which the notional payment is made.
• There is no adjustment to that charge even if the shortfall is subsequently repaid after the 90-day period. For these reasons, employers should be aware of any such circumstances as any shortfall may have potential P11D reporting and income tax implications. 

PAYE Settlement Agreement (PSA) application

• A PSA allows employers to make one annual payment covering all income tax and NICs due on minor, irregular or impracticable expenses or benefits provided to employees.
• Employers or their agents can apply to get a PSA online and agree various categories with HMRC to report benefits and expenses. Once HMRC have agreed on what can be included in the PSA, they will send two draft copies of form P626, which will need to be signed and returned to HMRC.
• Once the PSA is in place, the agreement will continue until either the employer or HMRC cancel it or the employer needs to make changes to it.
• Class 1B NICs arising on the grossed-up amount of taxable benefits and expenses and the income tax charge are due on 22 October following the end of the tax year. Penalties and late payment interest apply where payments are not made on time. 

Employment-related securities (ERS) return

• Where an employer operates an ERS scheme, an annual ERS return must be submitted by 6 July following the end of the tax year. This includes one-off awards or gifts of shares.
• Before submitting the return, employers need to make sure the ERS scheme is registered with HMRC. Following this, employers (or their agents) can populate the return using HMRC’s template and submit it by the relevant deadline.
• Even if there have been no chargeable events during the tax year, employers (or their agents) have to submit a nil return.
• Employers should note that there are separate return templates for tax-advantaged schemes. 

Forms P11D and P11D(b)

• Taxable benefits provided by an employer to an employee (other than those benefits that are voluntarily payrolled), must be reported to HMRC by the employer using a form P11D by 6 July following the end of the tax year. As well as submitting P11Ds to HMRC, the employer must share these forms with the relevant employees who will use the form to prepare their self-assessment tax returns.
• Forms P11D(b) are used to include the total number of taxable benefits provided to employees during the tax year and calculate Class 1A NICs on these benefits. Forms P11D(b) must be submitted alongside forms P11D by 6 July following the end of the tax year.
• The associated Class 1A NICs must be paid by the employer to HMRC by 22 July following the end of the tax year. It is important to note that voluntarily payrolling benefits currently makes no difference to the employer’s liability to Class 1A NICs. This means that when calculating the Class 1A NICs liability included on the P11D(b), the value of both payrolled and non-payrolled benefits must be included in the calculation.