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PSA Deadline
Businesses that settle the tax on the employee non-cash benefits provided during the year ended 5 April 2024 must remember to pay the tax and Class 1B NIC by 19 October or 22 if paying electronically.
Typically, HMRC request that the PAYE Settlement Agreement (PSA) calculation to be submitted prior to payment to allow them to review and confirm the calculation is correct. Ideally, this should be done by 31 August following the end of a tax year to allow them to issue the payslip with payment reference before the October payment deadline. However, as there is no statutory deadline many employers send the calculation at the same time as the payment.
It is important to note that even if HMRC have not issued a payslip to allow an employer to settle the tax and Class 1B NIC, payment must still be made by the October dates mentioned above to avoid interest/penalties.
For employers that did not provide their employees with non-cash benefits but have a PSA in place, we would recommend notifying HMRC that 2024 is a £Nil PSA. This avoids HMRC issuing a tax/NIC determination which must be appealed as it is based on prior year reporting figures.
Employers wishing to have a PSA in place for the year ended 5 April 2025 have until 5 July 2025 to apply and have it approved by HMRC.
HMRC Updates
Late-payment and Repayment Interest Rates
HMRC has updated its late-payment and repayment interest rates, following the Bank of England’s 1 August 2024 decision to cut the bank base rate to 5% (from 5.25%).
For most taxes and payments, the late-payment interest rate will be 7.5% and the repayment rate 4%, with effect from 20 August 2024.
Interest charged on underpaid quarterly instalment payments of corporation tax will be 6%, and interest paid on overpaid quarterly instalments will be 4.75%, with effect from 12 August 2024.
Update to Guidance on Large Business Tax Strategy
HMRC has clarified how the turnover tests apply for the requirement to publish a tax strategy.
HMRC has revised its guidance on the requirement for large businesses to publish a tax strategy to clarify that the turnover and balance sheet test for UK companies, and the multinational enterprise (MNE) turnover test, are mutually exclusive.
This means that, if a UK company is part of an MNE, it does not need to publish a strategy if global turnover is less than €750m, even if it individually exceeds the £200m turnover threshold that applies under the UK company’s test.
Accommodation Provided to Staff in the UK: Tax Implications
Providing accommodation to employees can be an attractive perk, especially in industries where staff need to live close to their workplace. However, this benefit comes with specific tax implications that both employers and employees must understand.
In the UK, accommodation provided to employees by their employer is typically considered a “benefit in kind.” This means that it is subject to Income tax and Employer Class 1A NIC.
Valuation of Accommodation
The taxable value of accommodation depends on whether the property is owned or rented by the employer, and on the value of the property itself.
- Employer-Owned Property: If the employer owns the property, the taxable value is based on the “annual value” of the property. This is typically the property’s rental value on the open market. If the property’s value exceeds £75,000, an additional charge called the “expensive accommodation” charge, is added. This charge is calculated as the official rate of interest on the excess over £75,000.
- Employer-Rented Property: When the employer rents the property and provides it to the employee, the taxable value is generally the higher of the rent paid by the employer or the property’s annual value.
- Accommodation for Directors: Special rules apply if the accommodation is provided to directors or other high-ranking employees, particularly if the company owns the property. These cases often result in higher taxable values.
Exemptions and Reductions
There are several scenarios where the provision of accommodation may be exempt from tax, or the taxable value may be reduced. These are typically tied to the nature of the employment or the necessity of the accommodation for job performance.
Additional accommodation expenses such as heat, light, Council Tax etc may also be a taxable benefit and depending on how the expenses are paid, they may be subject to Class 1 NIC.
Reporting Requirements
Employers must report the accommodation benefit provided to employees on the employee’s P11D form. This must be submitted to HMRC by 6 July following the end of the tax year along with form P11D(b) which details the Class 1A NIC payable by 19 July following the end of the tax year (22 July if paying electronically).
Once the P11D is submitted to HMRC, the taxable value of the accommodation benefit will affect the employee’s tax code, which in turn affects how much tax is withheld from their salary through PAYE or via Self-Assessment (if applicable).
Gift Aid Declarations
Charities who claim gift aid may be aware HMRC recently changed their guidance to state that a gift aid declaration must include the ‘full name’ (rather than just the initial and surname) of the donor. This caused a lot of concern to many charities due to the practical difficulties both for previous and future gift aid claims. Several charity representative bodies had been in discussions with HMRC for some time over this point and had not concluded the discussions, so the publication of the revised guidance did come as a surprise. However, the guidance has now been withdrawn and representations are continuing to be made to ensure that HMRC are fully aware of the difficulties this would cause.
HMRC have been proposing this change for several years and it is possible collecting full names on gift aid declarations will become mandatory in future.
We continue to recommend charities collect donors’ full names on gift aid declarations where this is possible, to avoid any potential issues in the event of future guidance changes and to ensure HMRC can identify the donor.
If you would like assistance in reviewing your compliance or advice on maximising your donations, please don’t hesitate to get in touch.
Plastic Packaging Tax
Plastic packaging tax (PPT) applies to manufacturers and importers of plastic packaging components which contain less than 30% recycled plastic. Businesses need to register for PPT where 10 tonnes or more of finished plastic packaging have been manufactured or imported in the last 12 months, or 10 or more tonnes is expected to be manufactured or imported in the next 30 days. Those whose packaging contains the 30% recycled plastic content are exempt from the tax but must still register with HMRC and demonstrate the 30% threshold has been met.
The tax was introduced in April 2022, making this the first year the statistics could be compared. According to HMRC statistics, PPT receipts from 2023-24 were £285m – a decrease of 6% on the previous year when the figure was £285m. The rates of PPT charged were increased by inflation so without this the decrease in PPT receipts would have been larger than 6%.
Less tax being payable year on year indicates manufacturers are reformulating to use at least 30% recycled plastic or switching to other materials, which suggests the tax is working as intended.
We would expect the new Labour government will continue to pressure businesses to reduce their use of non-recycled plastic by increasing the PPT rates charged each year and potentially introducing incremental increases to the 30% recycled plastic threshold.