Employment Tax Update - October 2024

This bulletin follows the release of the October Agent Update (Issue 124). This month the content most relevant to employment taxes and reward activities includes:

Upcoming Autumn Budget

• On 30 October 2024, Chancellor of the Exchequer Rachel Reeves will deliver the Autumn Budget.
• As part of the Budget announcement, we are expecting updates that may affect individuals and companies in the employment taxes space.
• We will be releasing materials to help businesses and individuals manage the implications of the Autumn Budget in due course.

PAYE (P87) employment expenses

• HMRC have implemented new evidence requirements for PAYE employment expense claims to respond to the tax risk from ineligible employment expense claims.
• The new requirement came into effect on 14 October 2024.
• The requirement is HMRC's effort to ensure that individuals get the tax relief they are entitled to in as straightforward a way as possible, as well as identifying any ineligible claims and preventing individuals from receiving payments they are not entitled to.
• You can find further information on the evidence required to claim PAYE (P87) employment expenses on the Government's website.

Basis period – reporting profits on a tax year basis

• As a reminder, all sole traders and partnership businesses must now report their profits on a tax year basis, beginning with the self-assessment tax return due by 31 January 2025 (covering the 2023/24 tax year).
• The self-assessment return paper filing deadline is 11:59pm on 31 October 2024. If you are still awaiting an overlap relief figure, HMRC require that returns are filed using provisional figures, and these should then be amended when the final figure is received.
• HMRC will be holding basis period reform webinars including further details on how to amend a return. These will be delivered on 31 October, 7 November and 15 November 2024.

National Insurance gaps

• Individuals have until 5 April 2025 to fill gaps in their National Insurance records for all years from 6 April 2006 to 5 April 2018, which could boost their entitlement to the state pension if eligible. HMRC have an online service which enables individuals to quickly and easily check if they have gaps in their National Insurance record.
• After the deadline, individuals will only be able to make voluntary contributions for the previous six tax years, in line with normal time limits.

IR35 case law

• HMRC has had success in two recent IR35 cases: one in the Upper Tribunal involving Stuart Barnes, and another in the Supreme Court relating to Premier League football referees (the "PGMOL" case).
• These cases are now part of the long line of tax cases brought by HMRC under the anti-avoidance legislation relating to employment intermediaries, commonly known as "IR35".
• Read our full article on the Stuart Barnes judgment and its implications on the employment status of workers providing their services through PSCs. PGMOL case summary to follow.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.