There is no requirement to report certain routine expenses to HMRC. The types of expenses and benefits covered are referred to as exemptions and have replaced dispensations which can no longer be applied for. 

The travel and subsistence benefits that do not need to be reported include reimbursed costs to employees covering business travel. As an alternative to paying the employee back for actual costs incurred, HMRC’s benchmark scale rates or a special bespoke scale rate may be used. Employers only need to apply for an exemption if they want to use a bespoke scale rate which needs to be approved by HMRC. 

Employers that reimburse their employees with more than the necessary costs need to take action. The extra amounts should be added to employee’s other earnings and PAYE and Class 1 NIC’s will be due.

There is usually no tax relief for private travel between a permanent workplace and an employees’ home. Accounting for any tax due on private travel depends on who arranged the transport and who paid for it. There are a number of exceptions such as temporary workplaces and where the employee has a travelling appointment. 

Employers must also ensure that they have a checking system in place to ensure that employees are making valid expenses claims. This requirement is usually satisfied by asking employees to submit or retain receipts as evidence of a valid expense claim. HMRC is clear that employees aren’t allowed to check their own expenses and that someone else within the company must be responsible to ensure a claim is legitimate. 

New National Minimum Wage and National Living Wage rates will come into effect on 1 April 2021. These changes will see the National Living Wage increase by 19p to an hourly rate of £8.91 and the National Minimum Wage will increase to £8.36 (a rise of 16p). There are also increases in the other minimum wage thresholds. 

There are special rules to check that salaried workers who receive an annual salary are being paid at least the equivalent of the minimum wage. 

HMRC’s guidance states that someone is undertaking salaried hours work if all of the following apply:

• their contract states how many hours they must work in return for their salary (their basic hours)
• they’re paid in equal, regular instalments through the year, for example monthly or every 4 weeks
• there is no more than a month between each payment
• they do not get paid more than once a week

Once you know how many basic hours are relevant you can calculate if the employees are being paid at least the minimum wage to which they are entitled. 

There are penalties for employers that are found to have underpaid their workers and, in some cases, there may be criminal prosecutions.

It is not long until the current 2020-21 tax year comes to an end and there are a number of year end payroll chores that must be completed. This includes sending a final PAYE submission for the tax year. The last Full Payment Submission (FPS) needs to be submitted no later than the last payday for your employees of the 2020-21 tax year.

It is also important that employers remember to provide employees with a copy of their P60 form by 31 May 2021. A P60 must be given to all employees that are on the payroll on the last day of the tax year – 5 April 2021. The P60 is a statement issued to employees after the end of each tax year that shows the amount of tax they have paid on their salary. Employers can provide the P60 form on paper or electronically. Employees should ensure they keep their P60s in a safe place as it is an important record of the amount of tax paid.

In addition, a P60 is required in order that an employee can prove how much tax they have paid on their salary, for example:

• to claim back overpaid tax;
• to apply for tax credits;
• as proof of your income if you apply for a loan or a mortgage.

Employees who have left their employment during the tax year do not receive a P60 from their employer, as the same information will be on their P45.

The deadline for reporting any Class 1A National Insurance contributions and submitting P11D and P11FD(b) forms to HMRC for the tax year ending 5 April 2021 is 6 July 2021.

A new measure to remove the requirement for employers to check receipts for expense claims made by employees using the HMRC benchmark scale rates or overseas scale rates is to be introduced. The change will be included in the Finance Bill 2018-19.

The benchmark scale rates can be used by employers to reimburse staff for subsistence expenses when they are travelling on business away from their normal workplace. HMRC lists maximum rates, but employers can choose to pay less if they so wish. The new legislation will also place the concessionary accommodation and subsistence overseas scale rates on a statutory basis and the same rules will apply. The overseas scale rates are similar to the benchmark scale rates but take into account the cost of subsistence overseas including hotel accommodation etc and are calculated on a country-by-country basis.

From April 2019, employers will only be required to ensure that employees are undertaking qualifying business travel. This measure was first announced at Autumn Budget 2017 and should create ongoing administrative savings for many businesses. The new legislation will not stop employers checking employee receipts when reimbursing in this way for their own purposes. The proposed legislation does not apply to payments or reimbursements made under bespoke scale rate payments or industry-wide rates.

There are late filing penalties in place for employers that don’t report payroll information on time. The size of the late filing penalties depends on the number of employees within the PAYE scheme.

Number of employees	Monthly filing penalty per PAYE scheme
1 to 9	£100
10 to 49	£200
50 to 249	£300
250 or more	£400

Payments that are over 3 months late can be subject to an additional penalty of 5%.

HMRC has confirmed that having once again reviewed the effectiveness of the risk-based approach to late filing PAYE penalties, they have decided to continue with their same approach for the 2018-19 tax year. This means that late filing penalties will continue to be reviewed on a risk-assessed basis, rather than being issued automatically. The first penalties for 2018-19 will be issued in September 2018.

This means that penalties will not be charged automatically if Full Payment Submissions (FPSs) are filed late but within 3 days of the payment date and there is no pattern of persistent late-filing. This is not an extension to the statutory filing date, which remains unchanged and HMRC has confirmed that employers who persistently file after the statutory filing date but within three days, will be monitored and may be contacted or considered for a late filing penalty.

HMRC will continue to review their approach to PAYE penalties beyond 5 April 2019 and to focus on penalising those who deliberately and persistently fail to meet statutory deadlines, rather than those who make occasional and genuine errors for which other responses might be more appropriate.