HMRC have published their March 2025 Agent Update.
For bookkeepers, this contains developments and updates relating to the UK taxes HMRC collect and is broader in scope than the Employer Bulletin. We highlight some of the payroll issues covered:
PAYE
- In the section ‘Self-Assessment student loan repayments and payrolled benefits in kind’, HMRC detail how a new box has been introduced on the tax return to declare Benefits in Kind that are payrolled where there is also an obligation to repay a Student / Postgraduate Loan. This applies from tax year 2024/25, so still requires anyone completing a Self-Assessment tax return to separately identify this information and enter it manually;
- From 06 April 2025, company size thresholds are changing and this will impact considerations when operating the off-payroll working (OPW) rules, i.e. whether a company has to put someone on the payroll for the purposes of Income Tax and National Insurance. The Update says that in practical terms, this will not have practical impact for until 06 April 2026 because a company’s size is determined by reference to previous years;
- As ICB have reported, the Official Rate of Interest (ORI) for tax year 2025/26 increases from 2.25% to 3.75%. The ORI is used to calculate the Income Tax charge on the benefit of employment-related loans and the taxable benefit of some employment-related living accommodation. Further, this rate is going to be reviewed on a quarterly basis and, therefore, may not stay at 3.75% for the whole of the tax year;
- The Update also includes a section about the abolition of the Lifetime Allowance and lump sum payment reporting via RTI. This is complicated and will only impact you if you are reporting Pension Commencement Excess Lump Sums (PCELS) and / or Stand-Alone Lump Sums (SALS);
- As ICB have relayed, the Veteran’s Upper Secondary Threshold (VUST) will continue to apply in tax year 2025/26 where an employer employs an ex-Armed Service individual in their first civilian employment. See also the GOV.UK guidance, particularly the 12-month qualifying period. This means that the employer of a veteran can place the employee on National Insurance category letter V for 12 months and this period is not disrupted if the employee changes employment; and
- A reminder that employers who use a Special Tax Site National Insurance category letter (Freeports and Investment Zones) will be required to provide a workplace postcode on the Full Payment Submission for each eligible employee. Failure to do this will result in the rejection of the submission
Making Tax Digital for Income Tax (MTD ITSA)
As you will be well aware, MTD ITSA is being phased in from 2026 and the UK Government is extending the scope of this to capture sole traders and landlords whose income from these sources is over £20,000. This will be by 2029 when the current Parliamentary term ends. So, the phasing timetable is as follows:
- 2026 - gross income from self-employment and property over £50,000;
- 2027 - gross income from self-employment and property over £30,000; then
- By 2029 - gross income from self-employment and property over £20,000
This section highlights:
- The benefits of signing up for testing now (prior to mandation);
- How to sign up for testing; and
- The communication HMRC are undertaking with employers who may be required to use MTD ITSA
HMRC Agent Services
This section covers four topics:
1. HMRC’s ‘Take the hassle out of your side hustle’ campaign which concerns the taxpayers’ obligations when making earnings from things like selling online;
2. Working together with HMRC to combat fraud and protect customer data. This gives information on when to call HMRC if your Agent Online Service Accounts (AOSAs) and / or Agent Services Accounts (ASAs) have been targeted by fraudsters;
3. The requirement to use an advanced electronic signature service if you are acting as a repayment agent for the P87, R40, or MATCF print and post forms; and
4. HMRC’s new Personal Tax Query Resolution Service for agents from 31 March 2025 that will provide an escalation route for Self-Assessment and PAYE queries when querying via the Agent Dedicated Line or Agent Webchat but the issue has not been resolved. The important thing to note is that this service can only be used where the query has been raised at least twice via the above routes and at least 20 working days having passed from the reply date given by the Where’s my Reply tool
For Bookkeepers
As always, ICB always recommends reading the Agent Update in its entirety and the advice in March is no different. The Update is a valuable resource for members that recognises the bookkeeping role may involve more than the provision of payroll services.
