Employer Bulletin: February 2025

HMRC has released its February 2025 edition of the HMRC employer bulletin, providing essential updates and guidance for employers and payroll managers. Here are some key highlights:

End of year reporting

As the tax year draws to a close, it’s time to prepare your final Full Payment Submission (FPS) or Employer Payment Summary (EPS). Ensure your last FPS or EPS, up to and including 5 April 2025, includes that it is the final submission of the year.

Additionally, you must provide your employees with a P60 by 31 May 2025 if they are employed by you on 5 April 2025. If you won’t pay anyone again this tax year, remember to submit an EPS by 19 April 2025 with the indicator ticked to show you did not pay anyone in the final pay period and that this is your final submission.

Employers’ PAYE and Construction Industry Scheme repayments

HMRC has enhanced its support for online claims for employers’ repayments and has also introduced an online claim form for PAYE repayments. Before claiming, ensure you understand the reason for any overpayment. You can also request to offset your overpayment against other taxes owed, such as corporation tax.

HMRC electronic payment deadlines

In February and March 2025, the electronic payment deadlines fall on Saturday 22 February 2025 and Saturday 22 March 2025 respectively. To ensure timely payments, funds must clear into HMRC’s account by 21 February 2025 and 21 March 2025, unless you can arrange a “Faster Payment” (electronic payments that typically reach HMRC on the same or the next day, including weekends and bank holidays).

Payrolling employees’ benefits and expenses

Starting from 6 April 2025, employers will have the option to payroll employees’ benefits and expenses, allowing them to be taxed directly through payroll.

However, it’s important to note that this option is only available at the beginning of the new tax year, and once you opt to payroll these benefits, you must continue to do so throughout the tax year unless you stop providing the benefits. It’s also worth mentioning that not all benefits and expenses are eligible for payroll. Employers cannot payroll the following:

• Employer-provided living accommodation
• Interest-free and low-interest (“beneficial”) loans

Reporting expenses and benefits for the tax year ending 5 April 2025  

For employers who have not yet taken the step of payrolling benefits, it’s crucial to be aware of the reporting deadlines for the tax year ending 5 April 2025. Employers must submit P11D(b) Class 1A National Insurance contributions (NICs), P11D expenses, and benefits in kind provided in the 2024 to 2025 tax year, by 6 July 2025. Your P11Ds and P11D(b) must be filed online and submitted at the same time.

Changes to employer NICs 

Employers should also be prepared for upcoming changes to employer NICs, set to take effect from 6 April 2025. 

These adjustments will be integrated into payroll software for employers who already use PAYE systems, helping businesses implement the necessary changes smoothly. Of particular note are the threshold changes. Some employers who previously didn’t need to pay National Insurance may now find themselves liable due to these updates. These changes could also require certain employers to begin reporting employee pay and deductions to HMRC for the first time, making it essential to understand these shifts well in advance.

Employment Allowance changes

The Employment Allowance (EA) is designed to reduce the Class 1 NIC liability for eligible employers. Currently, only those with NIC bills under £100,000 in the previous tax year are eligible to claim the EA. However, from 6 April 2025, this threshold will be removed, and the maximum amount of EA will increase from £5,000 to £10,500, opening the door for more eligible businesses to take advantage of the EA, and at an increased amount. Importantly, with the removal of the £100,000 threshold, businesses will no longer need to consider State aid restrictions when claiming the EA.

While most employers can apply for the EA, public bodies or businesses whose primary functions are considered public in nature will still be ineligible for the allowance. Even if the company receives public funding, this alone does not determine eligibility. Similarly, businesses with only one director who is the sole employee liable for secondary Class 1 NICs will not be able to claim the allowance.

The provides further topics and more detailed information around the above to support employers in ensuring they are working within the required guidelines.

If you have any questions or concerns about the topics covered in HMRC’s latest bulletin, please contact Simon Balaam.