MY CIPP
The CIPP’s Advisory Service team provides answers to popular questions
Spreading backdated payments over several pay periods Q: An employee had a pay award backdated to 1 April 2022. To ensure there’s no adverse impact on the employee’s entitlement to, and amount of, Universal Credit, we’re planning to spread this over four months. Is this acceptable? A: A pay award would be settled and agreed by unions, management and the rest of the workforce, with an agreed date for making the payment of arrears. To subsequently split those arrears over several pay periods may be a breach of the agreement and give a false interpretation of income to the Department for Work and Pensions (DWP). The DWP should be contacted in this scenario to discuss the situation. Apprentice national minimum wage (NMW) Q: If someone is in their first year of employment as an apprentice but their official apprentice course hasn’t started, can they still be paid at the apprentice NMW rate? As an example, we had a new starter from 7 September 2022, but their college course didn’t commence until 7 October 2022. A: To pay the apprentice NMW rate, the worker must be employed under a contract of apprenticeship as specified in the National Minimum Wage Regulations 2015, Regulation 5: http://ow.ly/ CAER50LCokT. The contract should confirm the date the apprenticeship programme begins. It’s from this date (normally in September), that the apprentice rates of NMW would apply. If you’re employing an individual
National Insurance (NI) changes Q: We know that NICs rates reduced by 1.25 percentage points from 6 November 2022. Is this going to be backdated to 6 April 2022, when it was first introduced, or does the reversal only take effect from 6 November 2022? A: The NICs rates reversal is effective from 6 November 2022 and applies to the percentage only. This is not to be backdated. Some employees may not benefit immediately from the in-year reduction in NICs rates if their employer is unable to update payroll software before 6 November 2022 — these employees should receive the benefit retrospectively once updates have been applied. Payslip messages which may have related to the NICs rate increase in April must be removed from payslips for pay periods in which the NICs rate has been decreased. Tax and NI treatment of training courses for employees Q: We wish to reimburse an employee for a training course. Section 250 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003 suggests this can be exempt from tax if it doesn’t reward the employee and is required for the role or designed to ‘improve or reinforce any knowledge, skills or personal qualities’ they would use when performing the role. We want to reimburse a percentage. Can we reimburse this sum free from tax and NICs? A: Yes, employer-provided training which is for the benefit and improvement of employee skills that relate to their position in the company could be reimbursed free of tax and NICs.
prior to the beginning of an apprenticeship programme, NMW rates based on age would apply. It would be advisable to liaise with an employment law advisor if the contract isn’t clear with regards to this.
When is the apprentice NMW rate applicable?
Pay as you earn (PAYE) settlement scheme (PSA) computation deadline Q: What’s the PSA computation deadline date?
A: There’s no concrete guidance on the computation deadline date but payment is due by 19th October, or 22nd October, if paying electronically, so the computation must be submitted by then. The PSA1 form stipulates, “You can use this form to tell us the value of the items included in your PAYE Settlement Agreement. Please tell us as early as possible so that we have time to check your figures and agree the amount of tax and National Insurance contributions (NICs) due.” The PSA1 form can be found here: http://ow.ly/2l8v50LqsCn.
| Professional in Payroll, Pensions and Reward | December 2022 – January 2023 | Issue 86 8
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