MEMBERSHIP INSIGHT
CCVs to employees up to the maximum level that they can receive within the tax and NICs exemption. The employee concerned was in the CCV scheme prior to 6 April 2011 and so was entitled to receive CCVs up to the maximum of £243 per month. However, the employee had chosen to have a break from receiving CCVs and we have discovered the break was for thirteen months. So, according to HMRC’s guidance this is one month too many, which means this error covers several tax years. We have now determined they should not have received vouchers worth £243 per month but £124 instead. How can we correct this position? A: When an employee has a continuous break from a CCV scheme which exceeds 52 weeks then the employer must apply the tax and NICs rules which operate from 6 April 2011. The treatment for tax and NICs is different, so for the tax element the employer should report the excess value of £119 per month in a P11D return for each tax year that the employee has received the higher amount of CCVs. The excess of the CCVs will also attract Class 1 NICs rather than Class 1A NICs, as the employer should have applied Class 1 NICs through the payroll each pay period that the employee received the higher amount of CCVs. To correct the previous tax years, 2015–16 and 2016–17, the employer will need to make a RTI earlier year update return for both tax years as the employer has a duty to correct errors that occur in current and closed tax years. The underpayment of tax and NICs should be paid to HMRC as soon as possible. The employer must advise the employee of the error and make them aware that there will be additional tax to pay on the vouchers. The employer will have to issue replacement P60 certificates which incorporate the additional NICs paid for the relevant tax years. And, finally, as an error has occurred, HMRC may issue penalties to the employer for late reporting and interest on the relevant amounts underpaid. Q: A pensioner passed away on 8 July 2017, with their payment for July returned to us as his bank account appears to be closed. We were unaware at the time of payment that he had passed away and the original calculation of pay was for a full month. Should we
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Advisory
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Q: At the beginning of tax year 2016– 17 we provided an employee with a company car, but half-way through the tax year we started to provide her with a fuel card to pay for any fuel she put in the car. I would like to understand how we apportion the fuel benefit charge? A: When an employer provides an employee with a fuel card part-way through the tax year the benefit cannot be apportioned. The only way there would be a reduction in the benefit in kind is where a car is unavailable or the fuel card was withdrawn for a period. Alternatively, if an employer was to allow an employee to keep detailed records of all business journeys and reimburse the employer with the cost of all private fuel then this may reduce the fuel benefit to nil. Or, if the company did not provide a fuel card, the employee could simply claim reimbursement at HM Revenue & Customs’ (HMRC’s) approved rates for all business journeys. In your scenario, the employer will need to calculate the fuel benefit based on a full tax year. HMRC provides technical guidance which can be found on the GOV.UK website: https://goo.gl/BCAlh9. Q: My company still processes the company cars via P11D returns rather than payrolling the benefit. I have been asked recently whether payrolling of company car benefits will become mandatory for tax year 2018–19. Can you please advise? A: Payrolling of cars will not be mandatory for the tax year 2018–19. However, what is going to be mandatory from 2018–19 is that employers choosing to payroll company cars will need to report
all the required information about the car in the real time information (RTI) full payment submission return. This is a similar process to how employers would normally report this information via a P46(car) return. Where an employer is not payrolling company cars, the P46(car) must still be completed and sent to HMRC. For reference HMRC have provided information at the following link to GOV. UK’s website: https://goo.gl/OAwXWY. Q: I am enquiring about the calculation relating to the apprenticeship levy in England and Scotland as we have employees in these countries. Will the apprenticeship levy be calculated on all pay subject to secondary Class 1 National Insurance contributions (NICs) for employees working in England and Scotland? My understanding is that the apprenticeship levy payments only support the English apprenticeship service. A: The apprenticeship levy will be calculated on all pay that is subject to secondary Class 1 NICs in England, Scotland, Wales and Northern Ireland. The UK government will then apportion the contributions to each devolved nation. The English share of the levy payment that the employer pays each month will go into their digital account and this will be available for the employer to spend on approved apprenticeships with approved training providers. Q: After completing the basic earnings assessments we have recently discovered an error in how many childcare vouchers (CCVs) were given to an employee. We normally only provide
| Professional in Payroll, Pensions and Reward | September 2017 | Issue 33 6
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