HMRC Payroll Updates

What Styles & Associates Clients Need to Know For The New Year

As our clients begin to wind down for the festive season and prepare for the new year, we want to ensure you are fully briefed on several key payroll updates released by HMRC. Staying ahead of these changes is essential for maintaining a compliant and efficient business as we look toward the 2025/26 period.

The latest guidance covers everything from new student loan structures to cryptoasset reporting. Here is our breakdown of the key areas you should take stock of for the new year.

1. New Student Loan Plan 5 on the Horizon

One of the most significant long-term changes is the introduction of Student Loan Plan 5. While repayments won't begin for PAYE purposes until 6 April 2026, it is vital to have this on your radar now.

• Threshold: Repayments start at an annual earnings threshold of £25,000.

• Rate: Deductions will be calculated at 9% on income above that level.

• Applicability: This applies to employees who applied to Student Finance England and started their courses after April 2023.

Use the coming months to ensure your payroll systems are updated and ready for this new classification.

2. Updated Advisory Electric Rates (AER)

For those of you with electric company car fleets, HMRC has updated its guidance regarding Advisory Electric Rates.

• Public Charging: New rates help reimburse employees for business travel and private use of electricity when using public charging points.

• Tax Efficiency: If reimbursements are at or below the AER, there is no taxable benefit or Class 1A National Insurance to pay.

• Justification: If you reimburse at a higher rate due to actual costs exceeding the AER, you must keep records to justify the excess, otherwise, it may be treated as taxable income.

3. NIC Guidance for Internationally Mobile Employees

HMRC has clarified the rules for employees working across borders. Work vs. Payment: Liability is determined by when the work was performed, not when the payment (such as a bonus) is actually made.

• Retrospective Corrections: If errors are found, you can correct NIC through RTI going back up to six years. Ensure you use the reference "NIC refund for Internationally Mobile Employees" where applicable.

4. Pensions: Automatic Enrolment & The HMRC App

The Pensions Regulator is taking a firm stance on compliance. If you are a new employer, remember that duties begin the day your first employee starts.

HMRC is also pushing for better retirement planning via their mobile app. We encourage our clients to signpost the HMRC App to their staff, giving them 24/7 access to their pension checker and savings tools.

5. Upcoming Cryptoasset Reporting Framework

From 1 January 2026, a new framework will affect businesses that exchange or provide platforms for cryptoassets.

• Classification: Affected businesses will be known as "Reporting Cryptoasset Service Providers."

• Deadlines: Registration must be completed by 31 January 2027, with the first reports due by 31 May 2027.

• Penalties: Late or inaccurate reporting can result in penalties of up to £300 per user.

The Christmas break is a perfect natural pause to review your internal processes. By taking stock of these updates now, you can ensure a smooth transition into the new year without the headache of compliance surprises.