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POLICY HUB
Holiday pay and leave
Record keeping requirements Q: In relation to HMRC statutory reporting requirements, I understand that records should be kept for a minimum of three years. We’re currently in the process of transitioning our payroll from one vendor to another and would like to know which key reports we should retain. Is there a list of specific reports that should be kept? A: No, HMRC doesn’t provide a specific list of reports to be kept. HMRC says you must be able to show them you have provided accurate reporting, and you need to keep those records for three years from the end of the tax year they relate to. Consequently, you must be able to provide the following if requested: ● what you paid to your employees and details of the deductions made from those payments ● copies of the reports sent to HMRC (full payment submission, employer payment summary, P11D, P11D(b)) ● records of payments made to HMRC ● records of any employee leave and sickness absences ● tax code and student loan notifications ● details of all taxable expenses and benefits given to employees ● payroll giving scheme documents, including the agency contract and employee authorisation forms. Records for HMRC aren’t the only records that should be kept. For example, you’ll also need to keep records to prove that you’ve paid the correct minimum wage to your employees and to demonstrate you have satisfied TPR’s requirements for automatic enrolment. See: http://ow.ly/bKUN30soHhr. Paying employees who are leaving for their untaken annual leave Q: I have a client who doesn’t want to pay a leaving employee for their untaken leave. Can they do this? A: No, they cannot do this. An employer must make a payment for any unused accrued statutory holiday when a contract of employment ends, regardless of the reason for the termination. However, if an employer offers more than the statutory minimum of 5.6 weeks’ annual leave, they can agree separate arrangements for the extra leave. See: http://ow.ly/ ESw430soHiF. n
could consider offering to pay their past contributions for them as a goodwill gesture. Tax implications of providing gift baskets for long service Q: Can you please tell me what the tax implications are if we provide service awards in the form of gift baskets to our employees in the UK? Also, is it mandatory that we use UK vendors for the provision of the baskets? A: There’s a tax exemption for the provision of a gift in recognition of long service, laid out in Income Tax (Earnings and Pensions) Act 2003 Section 323. The legislation states: ● you are able to give an employee a gift (tangible moveable property, i.e., a gift basket) to mark no less than 20 years of service ● the gift may not exceed the value of £50 for each year of service. See: http://ow.ly/6ZE030spAgb and http://ow.ly/6xnb30spAgh. If you wish to provide a service award to an employee with less than 20 years’ service, the above tax exemption won’t apply. The tax and NICs implications in this instance are based on the cost to the employer of its provision. Your choices are as follows: ● report the amount 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 PSA agreement with HMRC. Please note that, even if the value of the benefit costs you £50 or less, it cannot be treated as a trivial benefit. It’s a reward for service, which is one of the trivial benefit exclusions. There’s no requirement for you to use UK-only vendors for the provision of gift baskets.
Duration One half day
CPD 3 points
Case law continually produces changes to employees’ statutory holiday leave and pay entitlement, which are covered in this informative course, along with the various types of leave and the calculation of pay.
Visit cipp.org.uk/training to book your place
What are the tax implications of providing awards for long service to employees in the form of gift baskets?
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| Professional in Payroll, Pensions and Reward |
Issue 83 | September 2022
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