MEMBERSHIP INSIGHT
a current maintenance arrestment, a conjoined arrestment order” and “Don’t make any student loan deductions if you have a DEO [deduction from earnings order] and a Scottish court order to apply.” So, the court order has priority and student loan deductions must cease until the court order has been paid in full. Q: From April 2019, we will start to payroll our benefits in kind. We understand that we must pay particular attention to the regulatory limit so that employees do not have more than 50% deducted in tax. Can you please clarify what the limit would be for an employee whose monthly salary is £2,000 with a benefit charge of £3,000 a month? A: The regulatory limit refers to 50% of the employees ‘pay/earnings’ and does not include the amount that is being payrolled. In your example, the’ regulatory limit is £1,000, so based on tax code 500L, taxable pay of £5,000 (earnings plus amount to be payrolled) and using period 1 as an example, the tax due would be £1,257.80. As this is over the regulatory limit, you will be unable to take the full amount of tax due. If this were to happen on your payroll, you have two options going forward. You can either: ● ● stop payrolling the benefit, in which event you will then need to continue to report the benefit via a P11D return at the end of the tax year, with HM Revenue & Customs (HMRC) sending an adjustment to the employee’s tax code for the following year to collect the tax owed, or ● ● you could continue to payroll the benefit and carry over any uncollected tax to the next period. If there are insufficient pay periods to recover the uncollected tax, then once the final full payment submission is made, any underpaid tax will be included in an end of year tax calculation sent to the employee by HMRC. Q: Will HMRC be informing employers about those employees who will have prefix C tax codes? Should we apply the same ruling as we do for new starters resident in Scotland – only use the prefix if advised via a P45 or P6 notice, ignoring the employee’s address? A: Yes, you are correct. HMRC will notify
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Q: We have assumed that the new national minimum/living wage (NM/ LW) rates are due from 1 April 2019. However, as we pay on the 25th of each month and the payment relates to the period 1st–30th/31st of that month, are we able to implement the new rates from 25 April? A: The new rates are to operate from 1 April 2019, and you should apply them to pay reference periods beginning on or after this date. In your case, pay day 25 April 2019 has a pay reference period of 1–30 April. I can confirm in your situation you would increase the rate from 1 April 2019. If your pay reference period was, say, 1–31 March, paid on 25 April, the start date of the pay reference period would be 1 March 2019 so the new NM/LW rate would not be due until the following month in May 2019. Q: Our business is reaching its three- year re-enrolment date for automatic enrolment. What is the process for re-enrolment of employees who have previously opted out, and are they entitled to opt-out again? If the answer is ‘yes’, within what time-period are they required to provide notification? A: The full process for re-enrolment of employees can be found on The Pension Regulator website at http://bit. ly/2uFsmp9. Eligible jobholders have a period of one month after automatic re-enrolment during which they may choose to opt out. This process is the same for automatic enrolment, so an employer can
utilise their existing opt-out and refund processes. Guidance on re-enrolment can be found here: http://bit.ly/2FKsJUqt. Q: We operate a cycle to work scheme involving salary sacrifice. Can electric bikes be included, and what if the cost is more than £1,000? A: The guidance states that electrically assisted pedal cycle can be included. Please see the guidance at this link: http://bit.ly/2K3BUos. If you allow the value to be above £1,000 the guidance indicates that you will need a special group license: “If employers also undertake regulated business other than that described in the group licence or wish to offer packages in excess of £1,000, they will need to obtain a standard consumer credit licence to cover that business.” monthly. This month the government gateway has flagged that no student loan deduction has been made. The only difference to the employee’s pay this month is that there has been a Scottish court order deduction processed. Is the system actioning this correctly? A: Your system has acted correctly. The legislation for student loan deductions and Scottish court orders differ from that applicable across the rest of the UK. The GOV.UK guidance (http://bit.ly/2FWWdjd) advises: “Don’t make any student loan deductions if you’re required to apply any of the following: an earnings arrestment, Q: A plan 1 student loan deduction operates for an employee paid
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| Professional in Payroll, Pensions and Reward | May 2019 | Issue 50
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