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Draft regulations require employers to provide more details of employees’ hours to HMRC. Additionally, shareholders will need to provide details of close company shareholdings and dividends.
HMRC is consulting on draft regulations that will change the information employers, directors and the self-employed are required to provide to HMRC from 6 April 2025.
Employers will be required to provide more detailed information on employees’ hours paid in pay as you earn (PAYE) real time information (RTI) returns. The reporting will depend on whether amounts paid to employees are calculated:
- by applying an hourly rate of pay to the number of hours worked by the employee;
- with reference to the number of working hours specified in the relevant employment contract; or
- a combination of the two (eg, a contractual amount plus paid overtime hours).
In some cases, the employer must also include a description of the payment. This could be for statutory payments, payrolled benefits, termination payments, employees paid by output (not number of hours worked), or for officeholders that are not subject to contractual terms that mention hours.
A person must indicate in their self assessment tax return if they are a director of a close company. If they are, they must identify the company, state their percentage shareholding and report the total dividends received from that company for the tax year.
Where a person commenced or ceased self-employment during a tax year, they must report the date of commencement or cessation as appropriate in their tax return for that year. It is possible but not compulsory to report this information in the tax return at present.
The consultation closes on 9 May. If you would like to contribute to a response from ICAEW, please contact taxfac@icaew.com.
Background
In 2022, the government consulted on six options to collect additional data from taxpayers. ICAEW’s Tax Faculty recommended the government consider the impact on employers and taxpayers of providing information that may not prove as useful to HMRC as expected. The government responded that it would publish draft regulations for three of the options (above) and keep the remaining options under review. The faculty also questioned whether the primary legislation included in the Finance Act 2024 obligates employers to report hours worked.
ICAEW’s Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
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