Global Employer Services News

United Kingdom - Employer year-end compliance – upcoming reporting deadlines

With the UK tax year for 2023/24 having ended on 5 April 2024, employers are now turning their attention to the reporting of numerous sets of employee data required by HMRC. 

There are a number of important upcoming deadlines for employers to be aware of, and the complexities of the reporting elements will vary according to the nature of the business. The upcoming requirements are summarized below.
Short-term business visitors
Strict PAYE obligations exist for employers in the UK. PAYE withholding is required when an employee from an overseas parent, subsidiary, or associated company visits the UK to work either for a planned project or on an ad-hoc basis. There is no de minimis threshold for this requirement, and as such, PAYE is due from the first day of work in the UK.

To assist with administration in this area, HMRC introduced the Short-Term Business Visitor Agreement. This enables the PAYE obligation to be relaxed in situations where individuals coming to work in the UK originated from countries with which the UK has entered into a double taxation agreement that would exempt those individuals from UK tax. Organisations are required to execute an agreement with HMRC that requires annual reporting of business visitors (by 31 May following the end of the tax year) in exchange for a relaxation of the PAYE obligation.

Ongoing tracking of business visitors is required for the annual reports and to reduce the reconciliation exercise that may be needed at the end of the UK tax year. 
Annual PAYE scheme (appendix 8)
The STBV Agreement relaxes the PAYE requirements only for individuals who meet the criteria for tax exemption under a relevant double taxation agreement. It does not cover non-resident employees employed by a foreign branch of a UK company, individuals coming from non-tax treaty countries, or if the treaty conditions are not met (for example, due to a costs recharge). In these circumstances, the only option for a company is to operate PAYE.

The Annual PAYE Scheme was introduced to mitigate the impracticality for employers of having to deal with employees who do not qualify for STBV treatment. It allows them to account for their visits to the UK for the whole tax year and operate PAYE at the tax year-end, with tax due and associated payroll reporting to occur at month 12. This applies only to limited categories of visitors. 

An application must be made to operate a scheme and the reporting, calculation, and payment of the appropriate tax must be made by 31 May following the end of the tax year.
P11D reporting
Employers must report annually for each member of staff (including directors) that receive certain benefits and expenses that are considered taxable by HMRC. Employers can choose to pay the tax and NIC due on these benefits for their employees through a PAYE settlement agreement (PSA) or report the benefits on a form P11D so that employees pay. The list of benefits is long, and working out the value of certain benefits, such as company cars and vans, can be challenging.

Currently a P11D is a form that must be submitted to HMRC by an employer annually for each staff member (including directors) that receives certain benefits and expenses considered taxable by HMRC. Based on current information, a P11D will be required for 2023/24, 2024/25, and 2025/26. 

The benefit values shown on the form enable HMRC to review the employee’s tax affairs for the relevant year to verify that the correct amount of tax has been paid. It also allows HMRC to update an individual’s tax code for the following year, so that regular tax deductions will be closer to the expected overall tax liability.

The following list is not exhaustive but includes the types of benefits typically reported in a P11D form:
  • Company car/fuel
  • Company vans (provided for personal use)
  • Private medical insurance
  • Employer loans over GBP 10,000 (when no/low interest is charged)
  • Professional/private memberships
  • Accommodation
  • Pecuniary bills paid by employer (accountancy, for example)
When an employer chooses to ‘payroll’ employee benefits – that is, if the employer taxes the benefits along with the employees’ monthly/weekly pay (if possible, as some benefits cannot currently be payrolled) -- those benefits do not need to be recorded on a P11D form.

The forms must be submitted to HMRC by 6 July annually. The employer is also required to complete and return the P11D(b) form, which calculates employer Class 1A national insurance contributions that are due on certain benefits. There are penalties for filing late or incorrect P11Ds. As of March 2023, HMRC no longer accepts paper P11D filings – all submissions must be made online.
Share plan reporting
If an employer operates a share plan or there has been any type of equity transaction involving UK employees or directors, the employer will almost certainly have to submit a return to HMRC.  The annual deadline to submit a return to report all transactions in Employment Related Securities (also known as Share Plan Reporting) is 6 July.

The annual Share Plan Reporting requirement applies to both private and listed companies. When plans are operated by UK parent companies, the UK parent or a UK employing company should report. When plans are operated by overseas parent companies, then the UK employing company should report.

Reportable transactions range from formal share plan activity to activity outside formal share plans, such as the acquisition of loan notes, gift of shares, and disposals of shares for more than market value. HMRC is increasingly looking at the correlation between payroll, corporation tax deductions, and share plan reporting.

For more information on the upcoming reporting deadlines, please consult your regular BDO contact or the author of this article.

Stuart Strong
BDO in United Kingdom
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