Employer Bulletin: February 2021
10 February 2021
The latest edition of the Employer Bulletin has been released by HMRC and can be located here.
February’s Bulletin is absolutely packed full of information.
The Bulletin is published on a bi-monthly basis and is an essential read for all payroll professionals, so that they can ensure that they are aware of any legislative changes that have been announced.
As the start of the new tax year - 2021-22 - is rapidly approaching, it felt timely to include the information relating to end of year reporting.
Preparing for the last Full Payment Submission (FPS) or Employer Payment Summary (EPS) of the year
The last FPS or EPS of the year (up to and including 5 April 2021) needs to include an indicator to highlight the fact that the final submission is being made. This notifies HMRC that it has received everything a business expects to send, so that records can be finalised for both the business and its employees.
Certain commercial payroll software does not provide the option of applying the indicator to an FPS, and in these scenarios, the FPS must be sent, and followed by an EPS with the indicator ticked. An EPS can also be submitted with the indicator ticked in circumstances where the indicator was not ticked on the final FPS for the tax year.
Businesses need to start making preparations for providing their employees with P60s if they are in employment with them on 5 April 2021. Employees must receive P60s by 31 May 2021.
If no payments are being made to anyone again this tax year, an EPS needs to be submitted with the indicator ticked to highlight the fact that no payments were made in the final pay period and that it is the final submission. Businesses have until 19 April 2021 to do this, but a Generic Notification Service (GNS) message will be generated where it is filed after 11 April 2021.
There is guidance on Payroll: annual reporting and tasks available online.
Earlier Year Update (EYU) process change
As of April 2021, the EYU will no longer be a valid submission type for making amendments to the tax year ending 5 April 2021. Any changes to this, and future tax years, will need to be made using a further Year To Date (YTD) FPS.
Amendments to Tax Years ending:
- 5 April 2018 and earlier - will be made by the submission of an EYU only
- 5 April 2019 – EYU or FPS will be accepted
- 5 April 2020 – EYU or FPS will be accepted
Where an employee’s National Insurance (NI) contributions need to be corrected for either 2018-19 or 2019-20, involving a negative amount of employee NI contributions, an FPS can be utilised in situations where either no refund is due, or a refund is due, and an employer is able to pay the refund to the employee. If a refund is due and the employer cannot refund the employee, then they should submit an EYU and ensure that the NI contributions refund indicator is set to ‘No’.
Changes to the Tax Year ending 5 April 2021, and future years, will be made by submission of an FPS only, from 20 April 2021.
The update to the Basic Paye Tools (BPT) in March 2021 will include the change and will no longer support an EYU for 2020-21 onwards. BPT will still be available for tax year 2019-20 and earlier in-date years.
Reporting expenses and benefits
From 6 April 2021, businesses must inform HMRC about any expenses and benefits that employees received during 2020-21.
Businesses can use commercial payroll software, HMRC’s PAYE Online service or HMRC’s Online end of year expenses and benefits service to submit P11Ds and the P11D(b) online. This is faster and more secure than sending paper returns.
Businesses that registered to payroll their benefits for year 2020-21 must remember that they are still required to submit a P11D(b) to inform HMRC about any Employer Class 1A NI contributions that are due. P11Ds are only necessary for any benefits that the business did not payroll.
Payrolling expenses and benefits – 2021-22
Businesses are encouraged to register now to payroll their benefits for the tax year 2021-22, in order to report benefits in alignment with their employees’ PAYE on the FPS. Tax can be deducted and paid on the majority of employee expenses if a business has formally registered prior to the commencement of tax year 2021-22.
P11Ds are not required for any employees who have all of their benefits payrolled, but a P11D(b) will still need to be submitted so that businesses can pay any Class 1A NI they may owe.
There are a small portion of businesses who informally payroll benefits, but they are now required to formally register for payrolling before the start of the new tax year, as HMRC will no longer accept informal arrangements.
Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information. Download the CIPP's Payroll: Need to know - your guide to payroll legislation and reporting for the most up to date data.