Employment Tax Compliance: Essential obligations for UK employers

From 1^st April 2026, HMRC updated and increased the National Minimum Wage (NMW) rates, meaning obligations for UK employers have now changed.

In this article, our Employment Tax team gives an overview of the key employer-related reporting requirements and deadlines to be aware of in chronological order following the end of the 2025/26 tax year.

Please note, the below information is not exhaustive, please get in touch for tailored advice.

National Minimum Wage

Please see the updated rates for National Minimum Wage in the table below:

Short-term business visitors

Employees of a non-UK entity who travel to the UK to work, whether for the UK business or for an overseas entity with a UK PAYE presence, are subject to UK income tax via UK payroll for the full duration of their UK duties. This is something that many UK employers are unaware of but can lead to significant liabilities.

Because operating PAYE for short-term visitors can be administratively burdensome for employers, employees and HMRC, in certain circumstances, the UK business can enter into an Appendix 4 Short-Term Business Visitor (STBV) Agreement.

This arrangement removes the requirement to operate PAYE where employees of a non‑UK entity work in the UK. There are a number of conditions that need to be met for an STBV agreement, and it won’t apply in every scenario: for instance, it cannot be used to remove the PAYE obligation for non‑UK resident directors who visit the UK in their capacity as director.

Please note, the STBV Agreement removes the obligation to operate PAYE only, National Insurance (NI) has its own separate rules.

Key deadlines:

Where an STBV Agreement is in place, the employer must submit an annual report to HMRC by 31st May following the tax year end, i.e. by 31st May 2026 for the 2025/26 tax year.

Globally mobile employees

Generally, UK employers are required to deduct PAYE from globally mobile employees’ remuneration when these individuals perform workdays in the UK. This can be even for as little as one day of work.

A Globally Mobile Employee (GME) Notification, where strict criteria is met, allows an employer to notify HMRC that they intend to operate PAYE on a specific proportion of income for the relevant individuals.

There are several scenarios in which the GME Notification may be applicable. Some common scenarios we see are non‑UK resident directors who travel to the UK as part of their directorship duties, tax treaty non-resident employees, and UK tax resident employees who are eligible for overseas workday relief on employment income.

Key deadlines:

A GME Notification can be made at any point in the tax year; however, it will only cover the remainder of the tax year and not the part before you applied for a GME Notification.

GME Notifications expire at the end of each tax year (5th April), therefore a new notification must be submitted by the beginning of each tax year to ensure coverage.

Forms P11D and P11D(b)

Forms P11D and P11D(b) are used by employers to report taxable expenses and benefits that do not meet the criteria to be included in a PSA or processed via payroll. Some examples are company cars, loans, accommodation and private medical insurance.

At the end of every tax year, employers must complete a P11D form for each employee who has received taxable expenses or benefits and submit these to HMRC to declare the value of the benefit/expense received. The employee is then subject to the income tax due on these benefits/expenses, typically via adjustments to their tax code in the following tax year.

In addition, employers must file a P11D(b) to declare and pay any Class 1A NI due on those benefits.

The exception to this is if employers have voluntarily agreed with HMRC to payroll benefits previously, in which case there is no obligation to submit P11Ds, unless any benefits have been provided that were not agreed to be payrolled. A P11D(b) still needs to be submitted for the 2025/26 and 2026/27 tax years.

Key deadlines:

PAYE Settlement Agreements

A PAYE Settlement Agreement (PSA) is an agreement between an employer and HMRC which allows the employer to make a single annual payment to cover the tax and NI liabilities on taxable employee expenses or benefits, where an appropriate category for reporting on the PSA has been agreed with HMRC and certain criteria for inclusion in the PSA are met. Meeting the tax and NI liability on behalf of employees is in itself a benefit therefore the tax on benefits included in a PSA is calculated on a grossed up basis. Class 1B NI is then charged on the benefit and grossed-up tax liability.

Typical benefits/expenses reported on the PSA include:

• Staff entertaining, g. Christmas parties, team drinks, team building and team meals as examples, however the scope of ‘staff entertaining’ is very broad.
• Staff gifts, g. Christmas presents, leaving gifts, new starter gifts, long‑service awards, vouchers.
• Employee incentives, g. non-cash prizes such as vouchers for hitting targets, holidays, trips to the races.

Benefits of having a PSA include:

• Reduced administration – The employer no longer needs to process these items through payroll at the time of giving the items or complete individual P11D forms for affected employees following the end of the tax year.

• No unexpected tax for employees – Because the employer pays both the tax and NI due, employees receive the benefit/expenses with no tax/NI cost to them.

• Improved compliance – Many employers are not aware that providing staff entertaining, staff gifts, incentives and similar can create a tax/NI liability, this can lead to significant liabilities to HMRC accruing in the background, which are then discovered when HMRC open a review or Putting in place a PSA allows the employer to report such items and settle the tax/NI liability due.

Key deadlines:

If a PSA is in place but there is nothing to report to HMRC for the relevant tax year, a nil return must be submitted to HMRC by 31st July 2026.

Note: As the PSA is an agreement between HMRC and the employer, the deadline for submission of the PSA calculation can differ, as it is contractual rather than a statutory deadline.

Payrolling of benefits

From 6th April 2027, HMRC have mandated that employers must payroll taxable benefits and expenses, replacing the traditional route of using the forms P11D and P11D(b) for most benefits. The only exceptions will be:

• Employment-related loans
• Accommodation benefit

Which can continue to be reported on forms P11D and P11D(b).

This is a significant change, and we recommend preparing for this at least 6 months prior to April 2027.

If you would like to discuss any of the topics covered, please get in touch with a member of our Employment Tax  team to see how we can help you.