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to the workers. Should both tax and NI should be applied to these tips? A: As the tips are distributed by the business owner the payment is subject to both tax and Class 1 NI. See section 7 of this guidance: https://ow.ly/EVR250TE6K9. Following the recent introduction of the Employment (Allocation of Tips) Act 2023, the code of practice can be found here: https://ow.ly/ywHT50TE6Ma. Taxi firm deducting fares from employees Q: We have a taxi company that staff can also use for their own private journeys, the cost of which is then taken from their net pay. Would this be classed
administration fee that the employee agrees to and they reimburse the employer. You will see this has been paid into your business bank account and pay back the employee. This will be classed as earnings and therefore subject to PAYE tax and Class 1 NI. For refunds that go back over previous tax years, HM Revenue and Customs doesn’t require previous year adjustments so the whole amount can be repaid as earnings in the current tax year. Employer funded IVF Q: How should IVF treatment and egg freezing employee benefits be treated for tax purposes? A: If the company is paying for the treatment on behalf of the employee, this would be considered a benefit in kind. How this is reported will depend on the setup of the arrangement, so: l if you arrange and pay for it, report on a P11d for tax and class 1a NIC l if the employee arranges but the company pays, report on a P11d but add the amount as a Class 1 NICable item through the payroll (not for tax) l if you reimburse the employee, this would be earnings and subject to PAYE tax and Class 1 NI. These treatments are confirmed here: https://ow.ly/1HNV50TE6Gb.
as taking them below the NMW? A: The amount would reduce the
employee’s NMW pay because it is for the employer’s own use and benefit since they can choose how the money is used once it is received from the employee. The employer’s own use rules, which can help with categorising the deduction, can be found here: https://ow.ly/ I4MR50TE6T1/.
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Do private taxi fares deducted from salary count towards minimum wage calculations?
Shared parental leave and pay Q: We have a female employee who has requested shared parental leave. The father’s employer is suggesting that our organisation should pay his statutory parental pay. Is this correct? A: The other employer is responsible for their employee’s statutory leave and pay and you are responsible for processing your employee’s leave and pay. The technical guide for employers details the employer’s responsibilities and liabilities on page 48: https://ow.ly/A6HL50TE75p. The employee must complete a declaration confirming they are eligible for shared parental leave. Information on what should be included in the employee’s declaration can be found on page 33 of the guide. n
Is IVF a taxable benefit?
Tax and NI on employer- distributed tips
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Q: A restaurant owner pays tips to their employees via the payroll. These tips are mainly paid via card payments with the bill and then split and added to the monthly payroll. The tips are split between all workers and not just front of house staff and the split is decided by the employer. There is no official tronc registered; it’s just the owner of the business who splits and pays these tips
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| Professional in Payroll, Pensions and Reward |
Issue 105 | November 2024
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