As the New Year approaches, employers in the UK are urged to brace themselves for significant tax changes set to take effect, notably outlined in the Finance Bill 2023-24, currently advancing through Parliament following the Chancellor’s Autumn Statement.
Paul Robbins, Associate Director of Tax at Croner-I, has highlighted key modifications relevant to employers and offers insights into proactive measures they can take in anticipation of the impending changes.
One of the positive shifts is in the reporting requirements for Enterprise Management Incentives (EMI) options. Previously, employers faced a tight deadline of 92 days for reporting the issuance of new EMI options, risking the loss of EMI tax advantages. Effective April 6, 2024, this reporting timeframe extends to July 6 following the tax year end.
Aligning it with P11D reporting procedures grants employers a more manageable three to 15 months to submit notifications.
What other changes are there?
Another welcome change is the introduction of a set-off for tax already paid when HMRC determines that off-payroll working (IR35) provisions apply. The deemed employer’s liability will now consider the corporation tax or personal income tax previously paid by the worker or their intermediary concerning the deemed direct payment. This adjustment, applicable retroactively from April 6, 2017, addresses a prior anomaly allowing a full reclaim by the worker or intermediary, resulting in effectively tax-free income. However, this measure will not assist those who have already resolved cases with HMRC.
However, not all changes are met with enthusiasm. The Finance Bill grants HMRC powers to request additional information in PAYE returns. Although specifics regarding the required information are currently unspecified, the scope is limited to data related to the collection and management of income tax, corporation tax, and capital gains tax.
Additionally, the National Living Wage (NLW) is set to increase for pay reference periods commencing on or after April 1, 2024. Notably, the age threshold for NLW qualification will decrease from 23 to 21 years old. This adjustment means that employees aged 21 and above can anticipate a pay rise of approximately £1,800 per year for those working full-time.
The new hourly rates effective April 1, 2024, are as follows:
- 21 years old and over: £11.44 per hour
- 18–20-year-olds: £8.60 per hour
- Apprentices and workers 16–17 years old: £6.40 per hour
- Weekly ‘accommodation offset’: £9.99
Employers are strongly advised to proactively stay abreast of current and forthcoming tax laws as they transition into the new calendar year and the final quarter of the financial year. Implementing necessary processes now to update finance teams’ reporting records and procedures, or verifying that external accountants have done so, is crucial to ensuring full preparedness for the imminent changes.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.