MEMBERSHIP INSIGHT
would also use week 1 of the new tax year. Where an employer genuinely pays their employees on 5 April you would follow the protocols for week 53, although if you operate a fortnightly or a four-weekly payroll, you would be using week 54 or 56 instead. The employee does not get extra tax allowances, so HM Revenue & Customs (HMRC) could notify the employee (usually via form P800) that they have not paid enough tax for the payments they have received from the employer. Your payroll system will usually calculate the week 53 process for you automatically and you would need to ensure that you flag in the FPS that week 53 has been used. HMRC provide guidance on GOV.UK website at this link https://goo.gl/2eZ5Nx. You do not change an employee’s tax code to week 1 if the only reason is that you are operating week 53 (or 54/56). Most modern payroll systems will operate the week 53 process automatically. However, the process it should take – and you may wish to check that the system has correctly calculated paye as you earn income tax – is as follows: If an employee is already on a week 1 basis you just treat the payment as another pay day. Where the employee’s tax code is on a cumulative basis and they have not exceeded the annual personal allowance, then you would not need to deduct PAYE; it is only where the employee’s earnings have exceeded the annual allowance that week 53 would apply. Finally, where the employee has a prefix K code, the additional pay would be determined using weeks 1, 2, or 4 depending on the pay frequency. This is explained in detail in the CWG2 Employer Further Guide to PAYE and NICs at paragraph 1.13.1 and which is available on GOV.UK website at https://goo.gl/aVJQDR. Q: We have an employee who is due to commence her maternity leave next month and has decided to take 45 weeks of maternity leave. Do we accrue annual leave for only the 26 weeks of ordinary maternity leave and not the 19 weeks of additional maternity leave? A: Annual leave entitlement accrues during the full period of absence from work for maternity leave, which includes ordinary and additional maternity leave and all unpaid maternity leave up to the maximum of 52 weeks. The employee would accrue holiday for the full period of weeks she is on leave for maternity which, in this example, consists of the whole 45 weeks.
Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m.
to 4.30p.m. on Fridays. It is free to all CIPP members * , students and attendees of approved CIPP courses and conferences in the last six months. Call 0121 712 1099 , email advisory.service@cipp.org.uk or visit cipp.org.uk for frequently asked questions.
Advisory
*please see summary at cippmembership.org.uk for details.
Q: My employer operates salary sacrifice arrangements for the cycle to work scheme. Is it possible for an employee to have a second bike and agreement running before their first bike and agreement has completed? A: Yes, it is possible if the employee is using both bikes for qualifying journeys under cycle to work rules. However, you would also need to check the scheme agreements and the hire agreement as to whether you should allow this. I have provided a link to the implementation guide in regard to cycle to work schemes which illustrates in section three when an employee can have more than bike. What the company would need to consider is whether having two bikes would invalidate the company’s credit licence. See sections three and four: https://goo.gl/kNNP7X. Q: We are a payroll bureau and my client has recently employed a young person under sixteen years of age. Should my client put the person on the payroll and report details in the full payment submission (FPS)? A: As the employee is under sixteen there would be no liability for National Insurance contributions (NICs), so from that point of view there is no need to include their payment in the FPS. However, if the employee is earning above the personal tax allowances then the employee would need to be put on the payroll and FPS returns made. If the earnings are below the personal allowance for tax you would not need to put them on the payroll or report them via FPS returns.
Further information on employing children can be found at the following link: https://goo.gl/qxn91r. Q: I am trying to find further details regarding the changes to the employer supported child care vouchers scheme (ESC). Can you assist? A: The ESC scheme tax and NICs exemption is closing to new members from 6 April 2018. The employer has a choice as to whether to continue the scheme to existing members or close it totally; however, if the scheme continues they cannot allow any new entrants into the scheme from 6 April 2018. If an employee who is participating in ESC wants to change to the new tax-free childcare (TFC) scheme they will need to cancel their arrangement with the employer by using a childcare account notice within ninety days. These links to GOV.UK and the Employer Bulletin, respectively, give more detailed guidance: https://goo.gl/inMFjk and https:// goo.gl/QEPDBg. (Please refer to page 7 of the latter for guidance on the introduction of TFC and employer duties). Q: We usually pay employees on a Friday. This April the employees will be paid on Good Friday 6 April 2018. What tax week should we use or is tax week 53 appropriate? A: If the employer’s normal pay day is a Friday then you would use week 1 of the new tax year. When the 6 April falls on Good Friday (the last time this occurred was April 2015) and the employer chooses to pay early on Thursday 5 April, then you
| Professional in Payroll, Pensions and Reward | March 2018 | Issue 38 6
Made with FlippingBook - Online magazine maker