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Q: We have a new employee who requires a hire vehicle for two to three days a week and this can sometimes span over a weekend. Can you advise if this will have any tax or National Insurance (NI) implications and needs to be reported in a P11D return? A: There is no benefit in kind arising for a hire car that is used by an employee who does not have a company car – subject to the car being provided for business travel with only ‘incidental’ private use. HMRC’s guidance states that incidental private use is not measured by the number of private miles driven, but rather in the proportion of the private element of the journey when viewed as a whole. A hire vehicle provided for a business journey which is taken home overnight to serve this purpose the following morning will be classed as incidental private use, but if the vehicle was taken for private use over a weekend that would not be considered incidental. If the hire car is used for more than incidental private use then a benefit charge will arise, which is calculated using the normal rules and using the list price and CO2 emissions of the vehicle provided. This will be apportioned in the tax year according to the time it was available to the employee. To prevent and monitor this, you should have a strong and robust travel policy to capture any private miles. Where a hire or relief vehicle is used as a replacement for both business and private use during periods of unavailability, company car benefit still applies when this is for a continuous period of less than thirty days. Q: I would like to know how to report a benefit in kind for an employee who is due to leave the business and who is in possession of a company car. It has been agreed that he can keep the car for one further month after his leaving date. A: The final date to report this benefit would be the actual date your employee is no longer an employee of the company. For example, if your employee is due to leave on 31 March but they are still in receipt of the car until 30 April, you would continue to report this benefit as you do now (either via a P11D return or payrolling) up to 31 March only. You would not need to complete another P11D return as part of the following tax year’s P11D returns as the employee will no longer be employed by you. However, you will need to contact HMRC to
advise that the ex-employee is still in receipt of the vehicle for the period of 1–30 April and that they are no longer your employee. This can be done via a letter to HMRC detailing your PAYE scheme number, full company details and full employee details (including NI number, employee number, and address details etc) and details of when they left your employment. Q: Can you please clarify what are classed as ‘ordinary earnings’ and what earnings should be excluded from gender pay gap (GPG) reporting? A: The classification of ‘ordinary pay’ includes any monetary payment; for example, basic pay, allowances such as payments for extra responsibilities, location-related payments, car allowances, recruitment or retention incentives, pay for piecework, pay for leave and shift premium pay. You must use gross figures therefore before tax and any deductions for an employee pension contribution and after any deductions for salary sacrifices. You do not need to include earnings from overtime, redundancy pay, pay related to termination of employment, any repayments of authorised expenses, benefits in kind and interest-free loans. Q: Please can you advise me when the rate of statutory maternity pay (SMP) will increase for the new tax year 2018/19? A: It depends on the individual employee’s SMP week as to which week the increase is applied. If their week commences on a Sunday, then it is simple: SMP will increase from the first Sunday in April 2018, which this year falls on 1 April 2018. However, where the employee’s SMP week commences on any other day, for example Wednesday 28 March running to Tuesday 3 April, the new SMP rate would not increase until SMP week commencing Wednesday 4 April. n
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Issue 38 | March 2018
| Professional in Payroll, Pensions and Reward |
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