HMRC updates employers ahead of upcoming PAYE changes

Following the Chancellor’s November Budget, HMRC has detailed guidance around a number of announced changes to PAYE and taxation in its December Employer Bulletin.

With a number of changes to PAYE taking effect in the coming years, HMRC is reminding businesses to take notice of issues that may impact them, particularly those employing their workforce through agencies and umbrella companies, or making use of Salary Sacrifice schemes.

New PAYE responsibilities in labour supply chains

From 6 April 2026, new rules mean that businesses are responsible for making sure PAYE is operated correctly when an umbrella company employs your workers. HMRC is advising businesses to review the new guidance and their supply chains, and conduct any due diligence on any umbrella company currently worked with. Where HMRC finds an umbrella company has not paid the correct amount of PAYE, they may recover it from the employer.

Agencies and other parties in labour supply chains are encouraged to register for one of HMRC’s upcoming webinars on the changes.

Salary Sacrifice reform for pension contributions 

Changes to to Salary Sacrifice for pension contributions were also announced in the Chancellor’s Budget. Although not due to come into force until April 2029, an employer and employee National Insurance contributions charge will be applied on employer pension contributions made by salary sacrifice above an annual threshold of £2,000.

HMRC has produced a guide for both employers and employees on the changes, and will engage with stakeholders on further details of the operation of the cap in due course.

Payrolling of benefits in kind

HMRC has also updated information ahead of changes to payrolling of benefits in kind. While implementation of the changes has been delayed to give businesses more time to prepare, new draft guidance was published in November to help employers meet real-time reporting requirements for benefits in kind.

Final guidance will be published ahead of mandatory payrolling of BiKs coming into effect in April 2027.