Professional September 2020

E - L E A R N I N G

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This online course prepares those who have completed the CIPP’s Certificate in Pensions Administration and/or the Payroll Technician Certificate, or have at least two years’ experience, who wish to progress to a higher level of study; using evaluation of existing knowledge, additional support and team working guidance. INTERESTED IN HIGHER LEARNING BUT NEED EXTA HELP? FOUNDATION DEGREE ACCESS COURSE

Q: Please can you advise on the correct way in which the average weekly earnings (AWE) for statutory maternity pay should be calculated for an employee who was or had been furloughed? A: Where the normal AWE calculation is detrimentally affected because of the employee being furloughed, the AWE should be based on the income the person would have earned had they not been furloughed. Please refer to guidance found here: https://bit.ly/3jJBQIc. Q: Can the employer can claim anything back from HMRC, when paying the £6 a week allowance to employees who are for working from home due to COVID-19? A: The home working allowance is the amount specified in income tax law which employers can pay to their employees in certain circumstances without giving rise to an income tax or NICs liability. There is no provision for employers to get anything back from HMRC. Please see https://bit.ly/2D6AhDs for guidance. Q: We have a new employee who prefers to go by a name different to that on their passport. Can we record their preferred name in our payroll, or do we have to use the ‘official’ name in their passport? A: HMRC will require the official full name to be reported in the full payment submission (FPS), enabling checks to be made to ensure that National Insurance numbers match with full names, dates of birth and addresses. However, most payroll software has additional data item fields for ‘known as’ names which employers may utilise in circumstances such as this. The ‘known as’ field is not reported to HMRC in the FPS. Q: We provide a company motorbike to an employee. Is this reported in the same way company cars are? A: No, it is not reported the same way as company cars, because a motorbike is classified under section 185(1) of the Road Traffic Act 1988 as a mechanically propelled vehicle with less than four wheels. However, it will be treated as an asset owned by the company provided to the employee instead. n

number or are unsure about the action to take, contact HMRC’s PSA team on 0300 322 7077. An employer missing timely payment may be subject to penalties. Q: An employee has asked if he can give up his bonus payment in exchange for a pension contribution. Are we allowed to do this as we want to ensure we remain compliant? A: Yes, an employee could sacrifice a bonus payment in exchange for a pension contribution by the employer. Section 307 of the Income Tax (Earnings and Pensions) Act 2003 provides that such a death or retirement benefit provision does not give rise to liability to income tax (https://bit. ly/32WLm4F). Although the pension contribution would not give rise to income tax it is advisable to ensure that the contribution does not take the employee over the annual pension allowance of £40,000 as a higher tax charge may arise on the excess. Q: A director left employment on 31 August 2019. It was discovered he had been underpaid and the underpayment was processed in September 2019. However, payroll calculated the class 1 NICs via the alternative method not on the annual earnings period as the payroll team insisted that the directorship had ended the payment after leaving should not be treated as earnings for a director. How should the class 1 NICs have been calculated? A: Regulation 8(3) of the Social Security (Contributory) Regulations 2001 says that a person who is a director at the start of a tax year has an annual earnings period for class 1 NICs purpose for the whole tax year even if the directorship ends during the tax year. This would also apply to any earnings received in a tax year after the directorship has ended. As the director was in post at the start of the tax year, the earnings received in the tax year, including any payment after leaving, would be subject to class 1 NICs calculated using the annual earnings period. However, if a director is appointed after the start of a tax year, the annual earnings period would still apply but would have to be apportioned by the actual number of weeks left in the tax year from and including the week of appointment.

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| Professional in Payroll, Pensions and Reward |

Issue 63 | September 2020

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