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Learn how to process a number of common termination packages correctly, from redundancies to contractual breaches, retirement and death-in-service. Termination payments
Treatment of benefits in kind for a deceased staff member Q: A member of staff has recently passed away. That staff member received private medical insurance, a benefit in kind. Do I create a P11D in the usual way for tax year ending 2023, sending it to the ex-employee’s widow, or is there another process I need to undertake, including advising HMRC? A: You would go through the normal process for the P11D, class 1A NICs would still be due and HMRC would need to be notified of the benefit. Send the copy of the P11D to the executors of the estate as notification. Holiday purchase schemes Q: We’re starting a holiday purchase scheme from July 22. However, it’s been called a salary sacrifice scheme. Am I correct in thinking I can process the holidays as a simple monthly deduction which will reduce tax and NI? Will this also impact pension contributions, as it’s salary sacrifice? A: I can confirm you’re correct. If you’re operating this scheme for employees to buy additional holidays as a salary sacrifice scheme then yes, the deductions will reduce employee pay for tax and NICs purposes (and pensions too). Employers should be aware that, where an employee leaves mid-way through a year, they will need to be reimbursed for any holiday they’ve bought but haven’t been able to take. n
total information to be reported for both PAYE scheme references. If you haven’t contacted HMRC to advise of your business succession and your employees continue to receive company benefits, you must submit two forms P11D for each employee: l one under the original PAYE reference for the period up to the succession date l one under the new PAYE reference from that date. Read further guidance in this area here: http://ow.ly/1RBt50KRnbi.
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CPD 3 points
What happens with the completion of P11Ds in TUPE transfer situations?
Tax and NICs liability for costs of obtaining UK citizenship Q: We’re intending to help one of our employees financially in obtaining UK citizenship. Please could you advise what the HMRC rules are in terms of tax and National Insurance contributions (NICs) liability, should we decide to reimburse part, or all, of their incurred costs? A: I’m afraid that such a reimbursement would be wholly subject to PAYE income tax and NICs as these are not classed as allowable business expenses. The reimbursement(s) should be incorporated in the payroll in the pay period(s) in which the reimbursements occurred. If you wish to reimburse the employee for the funds relating to obtaining UK citizenship, you could gross up a bonus to cover the costs plus the associated tax and NICs.
Can a holiday purchase scheme be operated via salary sacrifice?
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| Professional in Payroll, Pensions and Reward |
Issue 84 | October 2022
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