MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Q: A small part of our business is being sold and the employees are being transferred to the new business. We are making all the employees leavers and sending forms P45 to the new employer. Five employees are currently on statutory maternity pay (SMP). Should we pay out the balance of the 39 weeks of SMP or advise the new employer to pay the SMP? A: When there is a transfer such as this the new pay as you earn (PAYE) employer bears the responsibility for paying the rest of the SMP to the five employees. You must pass over all the paperwork for these employees as well as information about how many weeks of SMP have already been paid. This will enable the new employer to continue paying the SMP to the employees as if nothing had changed. Also, they may need historical data from you for these exiting employees in case there is a future pay increase and the Alabaster ruling is applied. Q: Please can you advise whether I should include salary sacrifice pension figures for ‘ordinary pay’ when calculating the figures for gender pay gap reporting? A: These would be excluded as you always use the pre-salary sacrifice pay. The following items are specifically excluded from the definition of ‘ordinary pay’: overtime pay, redundancy or other termination pay, pay in lieu of leave, remuneration provided otherwise than in money (benefits in kind and the value of salary sacrifice schemes) and expenses. Q: We have an employee who notified us in July 2019 that she wished to take maternity leave from 19 September. We have very recently received a communication that she now wishes to end her maternity leave on 17 May
and her partner (who also works for us) wishes to take statutory shared parental leave and pay (SShPL&P). Can the SShPL be requested at this point, when the mother has already started her maternity leave/pay? A: A mother can notify the employer of her intention to curtail her statutory maternity leave (SML) and pay and enter into a period of SShPL whilst she is already on SML. Notification of this does not have to happen prior to her starting her SML, but she must give at least eight weeks’ notice to end her SMP. ShPL&P can start for the partner while the mother is still on maternity leave if she has given notice to end her leave. ShPL&P must be taken between the baby’s birth and first birthday. Q: In tax year 2019/20 no class 1 National Insurance contributions (NICs) are due on termination payments above £30,000, but is this changing from 6 April 2020? A: Yes, with effect 6 April 2020 there will be employer-only NICs payable on termination payments above £30,000, but the NICs payable will be class 1A NICs. However, unlike class 1A NICs payable on expenses and benefits, which are unaffected by this new rule, the class 1A NICs payable on termination payments will be paid in year and at the same time the payment is made to the employee reported via PAYE full payment submissions. Q: If we give our employees non-cash vouchers and they are for work-related performance, can you advise me on how I would report them? A: You must report the value of the vouchers in the P11D return for income tax, and also include in and report the value of the vouchers via the payroll for class 1 NICs purposes. You
would notionally add the value to the employee’s earnings for the purpose of calculating NICs only. Q: Should the ‘Alabaster ruling’ be applied if there is a pay increase and the employee has been receiving statutory adoption pay (SAP)? A: Although the Alabaster ruling only applies to SMP, if your employee gets a backdated pay-rise which increases the amount of earnings already paid in the relevant period, you must: recalculate the employee’s average weekly earnings (AWE) and pay the extra SAP due. Also, if your employee wasn’t entitled to SAP you must still recalculate their AWE to check if they are now entitled to SAP and pay any SAP that may be due. Q: The earlier year update (EYU) return used to report PAYE in real time was due to be replaced by use of the FPS for updates to 2019/20 onwards. Is this still the case? A: HM Revenue and Customs (HMRC) are allowing employers to use either an EYU or a FPS for amendments to 2019/20 tax year, but you will only be able to use one of these methods so you will not be able to mix them. HMRC decided to extend the pilot use of the use of the FPS so they are able to evaluate the summary of these amendments. Q: Can you confirm whether there is no exception for childcare vouchers (CCVs) when ensuring a salary sacrifice arrangement does not take an employee below the NM/LW? A: The rules are unchanged. A salary sacrifice arrangement – whether for CCVs, cycle to work, pensions or cars for example – that takes the employee’s pay below the national minimum/living wage rate would breach those rules.
The CIPP Advisory Service is available * 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m. to 4.30p.m. on Fridays. Call 0121 712 1099, email advisory.service@cipp.org.uk or visit cipp.org.uk to live chat.
| Professional in Payroll, Pensions and Reward | April 2020 | Issue 59 8
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