MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Reporting the value of cash and gift incentive awards Q: I have a couple of questions in relation to a new scheme we’re setting up to provide cash, and gift, incentive awards to some of our employees. I think the cash should be paid through payroll, but I’m not sure how to report the value of the gifts (watches, iPads, iPhones etc). A: You’re correct. The only correct treatment of the cash incentive is to process it via payroll, subject to income tax and class 1 National Insurance contributions (NICs). The non-cash award must be reported in one of three ways: ● report the cost of the benefit on P11D for tax and class 1A NICs purposes, or ● payroll the benefit for tax purposes and report the class 1A NICs due on form P11D(b), or ● apply for a pay as you earn (PAYE) settlement agreement (PSA) with Her Majesty’s Revenue and Customs (HMRC). The payrolling of new benefit provisions Q: We currently payroll medical benefits and have done for several years. How, and when, should I add a new type of benefit provision that I want to payroll? We’re proposing to implement this new benefit offering on an automatic opt-in basis, with the option for employees to opt out. Our target implementation date is 1 September 2022. A: When offering a brand-new benefit that hasn’t been offered to employees
and including the QW). The AWE must not be less than the lower earnings level for NI. So, the Switzerland employment service isn’t taken into consideration when establishing eligibility for SMP in the UK as no class 1 liability arose. See Section 164 of the Social Security Contributions Act 1992 here: http://ow.ly/ QXaO30soHgu. Late automatic enrolment into a pension scheme Q: I have discovered an employee who should have been automatically enrolled into the pension scheme in June 2021 but got missed. I have calculated the total employee and employer underpayment, and will automatically enrol the employee this month and pay over the total amount to our pension provider. What’s the legal position for recovering the employee contributions from the individual? A: The Pensions Regulator (TPR) provides guidance for circumstances such as this. If you’re late enrolling an employee, TPR requires you to pay back any missed contributions to put staff in the position they would have been in if you had complied on time. When backdating contributions, you must pay all the unpaid employer contributions and your employee must pay theirs, unless you choose to pay it for them. As part of any enforcement action, TPR may require that you pay your employee’s contributions as well as your own. Lawfully, you can enter communications with your employee to arrange a mutually agreeable repayment plan, or you
before, payrolling can start mid-year i.e., from the start date of the new benefit provision, if they’re already registered to payroll benefits. This must be added to your selection of benefits being payrolled using the payrolling benefits and expenses online service. This can be accessed here: http://ow.ly/jpiN30soH5e. However, it’s no longer lawful to use an automatic opt-in process. Following the introduction of the General Data Protection Regulation (GDPR) in May 2018, the UK GDPR set a high standard for consent, which must be unambiguous and involve a clear affirmative action. It specifically banned pre-ticked opt-in boxes. It’s necessary to obtain written agreement from these employees prior to the provision of the benefit and the deduction of tax on the benefit. Entitlement to statutory maternity pay (SMP) Q: An employee joined our UK entity on 1 April 2022, so has short service on our UK payroll. However, they were previously employed for two years by our Switzerland entity prior to coming to the UK. Does this count as continuous service for SMP purposes? A: For an employee to qualify for SMP, there are two qualifying conditions to meet. They must: ● have been continuously employed with an employer in the UK for 26 weeks by the end of the qualifying week (QW), and ● have average weekly earnings (AWE) that are subject to class 1 NICs liability, in the relevant period (the eight weeks up to
| Professional in Payroll, Pensions and Reward | September 2022 | Issue 83 8
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