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End of tax year PAYE procedures
Your year-end full payment submission (FPS) for your last payday of 2020/21 must have the last payment indicator ticked. If you forget, send a last employer payment summary by 19 April 2021. If you need to amend your 2020/21 figures use an FPS; earlier year updates are no longer valid.
Deadline for payrolling benefits in kind
Employers can do away with having to report most types of benefit in kind by payrolling them instead. This involves employees paying tax on their benefits through PAYE deductions. As an employer you still need to submit a P11D (b) for any Class 1A NI you owe on the benefits to which payrolling applies.
If you want to use benefits payrolling for the first time for 2021/22 you must register with HMRC no later than 5 April 2021.
Payrolling employees: taxable benefits and expenses – GOV.UK (www.gov.uk)
HMRC no longer accepts informal payrolling arrangements.
Capital allowances incentive
The deadline for qualifying expenditure on environmentally friendly cars, goods vehicles and related equipment, e.g. electric charging points, has been extended from 2021 to 2025. Keep a separate record of purchases which qualify so that the special tax deductions can be claimed without eating into your annual investment allowance.
Minimum wage increases from April 2021
The national living wage (NLW) is being extended to workers aged 23 and 24 for the first time, and the national minimum wage (NMW) is increasing again with effect from 1 April 2021.
The new hourly rates are:
Age of worker | NLW/NMW from 1 April 2021 (per hour) | % increase |
23 and over | £8.91 (previously £8.72) | 2.2% |
21 to 22 | £8.36 (previously £8.20) | 2.0% |
18 to 20 | £6.56 (previously £6.45) | 1.7% |
Under 18 | £4.62 (previously £4.55) | 1.5% |
Apprentice rate | £4.30 (previously £4.15) | 2.0% |
Ensure you have a system in place to keep track of younger employees’ birthdays. Any underpayment of NMW or NLW can attract a penalty of up to 200% of the underpaid amount, up to £20,000 per worker, with a minimum penalty of £100 per worker. Employers who underpay can also be publicly named, with no explanation that the underpayment was due to an innocent mistake.