The deadline for submitting the 2020-21 forms P11D, P11D(b) and P9D is 6 July 2021. Employees must also be provided with a copy of the information relating to them on these forms by the same date.

P11D forms are used to provide information to HMRC on all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs) unless the employer has registered to payroll benefits. This is known as payrolling and removes the requirement to complete a P11D for the selected benefits. However, a P11D(b) is still required for Class 1A National Insurance payments regardless of whether the benefits are being reported via P11D or payrolled.

Where no benefits were provided during 2020-21 and a form P11D(b) or P11D(b) reminder is received, employers can either submit a 'nil' return or notify HMRC online that no return is required. Employers should ensure that they complete their P11D accurately, including all the details of cars and loans provided. There are penalties for late filing of returns.

Employers pay Class 1A National Insurance contributions on most benefits. If you provided taxable benefits to staff or directors your business is likely to have a Class 1A employers’ NIC liability. The deadline for paying class 1A NICs is 22 July 2021 (or 19 July if paying by cheque).

In addition, any tax or National Insurance due for 2020-21 under a PAYE Settlement Agreement (PSA) needs to be paid electronically to clear into HMRC’s bank account by 22 October 2021 (19 October 2021 for payments by cheque).

A taxable benefit charge can apply when employees return office equipment they used to work from home. There was a significant rise in the provision of office equipment to employees working from home due to the COVID-19 pandemic. Qualifying home office equipment is that deemed necessary for an employee to work from home and can, for example, include a laptop, mobile phone, office desk and chair and other necessary computer accessories such as webcams.

Taxable benefit charges are as follows:

• If you supplied your employees with office equipment so they could work from home, and you did not transfer ownership, there is no tax charge when they return the equipment to you.
• If you transfer the ownership of home office equipment to an employee at any stage of their employment, a benefit charge generally arises on the market value of the equipment at the time of the transfer, less any amount made good by the employee.
• If your employee has agreed to purchase home office equipment for use whilst working at home due to COVID-19 and you reimburse the exact expense, unless you have specified that your employee must transfer ownership to you, the ownership of the equipment rests with your employee. There is no benefit charge on the reimbursement.
• There is also no benefit charge if you allow your employee to keep the equipment as it is something that they already own.

The new National Minimum Wage (NMW) and National Living Wage (NLW) rates came into effect on 1 April 2021. The new rate for the NLW is £8.91 which is a 19p increase over last year. The NLW is the minimum hourly rate that must be paid to those aged 23 or over. The NLW used to apply only to those aged 25 and over but from 1 April 2021 has been extended to 23 and 24 year olds for the first time. The threshold is expected to further reduce to 21 by 2024. The increase represents an additional £345 per year for someone working full-time and earning the NLW.

The hourly rate of the NMW (for 21-22 year olds) increased to £8.36 (a rise of 16p). The rates for 18-20 year olds increased to £6.56 (a rise of 11p) and the rate for workers above the school leaving age but under 18 increased to £4.62 (a rise of 7p). The NMW rate for apprentices increased by 15p to £4.30.

It is important that you ensure that you have adopted the new rates as there are significant penalties for employers who are found to have paid workers less that they are entitled to by law. 

If you have underpaid an employee, you must pay any arrears immediately. There are penalties for non-payment of up to 200% of the amount owed unless the arrears are paid within 14 days. The maximum fine for non-payment can be up to £20,000 per employee and employers who fail to pay face up to a 15-year ban from being a company director as well as being publicly named and shamed.

If you use your own vehicle for business journeys, then you may be able to claim a tax-free allowance from your employer known as a Mileage Allowance Payment or MAP. The allowance is available if employees use their own car, van, motorcycle or bike for work purposes. It is important to note that this tax-free allowance is not available for journeys from home to work, but it is available where employees use their own vehicles to undertake other business-related trips. 

Employers usually make payments based on a set rate per mile depending on the mode of transport used. There are approved mileage rates published by HMRC. For cars, the approved mileage allowance payment for the first 10,000 business miles is 45p per mile and 25p per mile for every additional business mile. An equivalent payment of 20p per mile is available for bicycle travel and 24p per mile for motorcycle travel. 

If an employee travels with business colleagues, they can claim an additional 5p per passenger per business mile for each qualifying passenger.

Planning note... Where an employer pays less than the published rates, the employee can make a tax claim for the shortfall using Mileage Allowance Relief (MAR). There is no equivalent to MAR for passenger payments.

The rules for individuals providing services to the public sector via an intermediary such as a personal service company (PSC) changed from April 2017. The new rules shifted the responsibility for deciding whether the intermediaries’ legislation applies, known as IR35, from the intermediary itself to the public sector receiving the service.

During 2017, the government announced plans looking to extend these rules to off-payroll working in the private sector. The new rules were due to come into effect from 6 April 2020 but were delayed until 6 April 2021 because of the coronavirus pandemic. 

This means that from 6 April 2021, all medium and large-sized clients will be responsible for deciding the employment status of workers. This includes some charities and third sector organisations.

The changes mainly apply to businesses with an annual turnover of more than £10.2 million (known as the simplified test). If the simplified test does not apply, then the rules still apply if the private sector client meets 2 or more of the following conditions:

• an annual turnover of more than £10.2 million
• a balance sheet total of more than £5.1 million
• more than 50 employees

HMRC has stated that it will focus on ensuring compliance with the new rules, rather than investigating past arrangements (unless they suspect fraud). HMRC has confirmed it will not open a new compliance enquiry into a contractor’s return for tax years before 6 April 2021 in circumstances where:

• a client decides that a contract is within the off-payroll working rules (IR35)
• a contractor changes the way they work from providing and invoicing services through an intermediary entity to now being paid via a client or end user’s payroll
• a contractor ends a contract because they disagree with a client decision on status

This includes any decisions that may have already been made to prepare for the delayed April 2020 changes.