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scheme, remembering the employee does have the option to opt out.
the businesses ● each business has its own bank account, and ● each business has its own set of accounts, for example, if one business failed would it directly affect the viability of the others. If the answers to these questions indicate that they are separate businesses, then the owner would need to total the class 1 NICs liability in the qualifying tax year for each business to see if they qualified for small employer relief (SER) at 103%. Alternatively, if the answers indicate that each business is an integral part of the employer’s trade as a whole, then the employer may be less likely to qualify for SER. This is because they would need to calculate the total class 1 NICs liability in the qualifying tax year for all the businesses. Q: An employee left employment in September and was processed as a leaver on the last pay run. A form P45 was sent as standard practice. Unfortunately, we were not advised at the time that the person was due outstanding holiday pay. Can you advise how we would process this payment? A: This would be classed as a payment after leaving. The employee’s tax code should be amended to 0T and class 1 National Insurance contributions (NICs) would be applied on a weekly basis as holiday pay is seen as an irregular payment. Remember that you would not change the employee’s leave date or any other field other than the tax code and a further P45 should not be reissued. n
Q: In our company some of our employees have loans that have been written off, which means they must now be reported in a P11D return. Do these loans attract class 1 or class 1A NICs and will this impact on the apprenticeship levy? A: When these loans are written off, they will attract class 1 NICs and therefore this will have an impact on the apprenticeship levy. For example, a loan of £11,000 is written off in January and the employee earns £1,000 per month. What the employer has to do is add the £11,000 as a nominal amount to the £1,000 (but not physically pay the employee any more money) so that class 1 NICs would be calculated on £12,000 instead of £1,000. The employee would pay class 1 NICs on £12,000 and that would then impact the total pay bill for the apprenticeship levy. Q: Has the format of a National Insurance number (NINo) changed at all? A: The format of the NINo has not changed. It still consists of two letters at the beginning of the NINo, then six numbers and lastly one letter. Letters which will not be used for either of the prefix letters are D, F, I, Q, U and V; and O is not used as the second letter. Prefixes BG, GB, KN, NT, TN, and ZZ will not be used. The suffix letter relates to when contributions were recorded on cards, which were returned annually but with the letter indicating which quarter the return was to be made. Suffix letter ‘A’ cards were sent in March, ‘B’ cards in June, ‘C’ cards in September, and ‘D’ cards were returned in December. Q: We operate six different pay as you earn (PAYE) schemes under the one group. What percentage of SMP can we claim back? Is it calculated per PAYE entity or as a whole group? A: If a sole owner has more than one business, and each operates its own PAYE scheme, you have to look at the individual circumstances and decide if you can treat them as separate businesses. You need to consider whether: ● the staff are recruited by each business ● the staff are interchangeable between
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| Professional in Payroll, Pensions and Reward |
Issue 56 | December 2019 - January 2020
*correct at time of publication
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