MY CIPP
Q: We have a client who is starting a payroll part way through the tax year and the payroll has two directors both earning above the monthly NICs thresholds. They will not hit the annual thresholds, but they will exceed the pro-rata annual threshold, so will they qualify for employment allowance? A: Firstly, the directors must be paid above the annual secondary threshold, £8,632 for tax year 2019/20, or pro rata if the directorship began after the start of the tax year. Guidance can be found here: http:// bit.ly/2QzCs4Z. If the directors' prorated earnings are over the prorated annual threshold, then yes, the company will be able to claim the employment allowance this tax year. Q: When does an employee’s maternity leave commence when there is a pregnancy related illness directly prior to the employee taking maternity leave (ML)? A: If the employee is absent from work because of a pregnancy related absence on or after the Sunday of the fourth week before the week the baby is due, her maternity pay period (MPP) will start on the day after the first complete day she is absent from work for that reason. Useful guidance can be found at the following links: http://bit.ly/2PCtDsg; http://bit. ly/38PV7SZ. “ Statutory Maternity Pay (SMP): general information - pregnancy related absence – If a woman is absent from work due to her pregnancy on or before the start of the fourth week before the week the baby is due the MPP starts on the day after the first complete day of absence after the start of the fourth week. She may receive SSP [statutory sick pay] if appropriate right up to and including the day before her MPP starts. If a woman becomes sick for a reason unconnected with her pregnancy, she can receive SSP right up to the date she wants her MPP to start or the baby is born, subject to the normal rules. If an employer is not sure whether an employee’s absence is pregnancy-related or the employee does not agree with their decision on when the MPP should start, HMRC can arrange for them to be given advice from Medical Services. There is a period, spanning the week in which the baby is born, for which SSP is not payable…known as the disqualifying period.”
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.
Advisory
*please see summary at cippmembership.org.uk for details.
Q: The company is considering paying more than the advisory fuel rates for business mileage incurred by those with a car provided by reason of the employment (‘company car’). Can you please advise if we can pay a higher rate and will there be any tax and National Insurance (NI) implications for paying more? A: If you decide to pay in excess of these rates and you can prove that the fuel cost per mile is higher and the travel is solely for business, it is ok to pay more without tax or NI implications. If you are unable to demonstrate that the costs are higher, then the excess will be taxable and liable to NI contributions (NICs) on the payroll. The following advice can be found here: http://bit.ly/2M87Czk: “Reimburse employees for business travel in their company cars – If you pay a rate per mile for business travel no higher than the Advisory Fuel Rates, for the particular engine size and fuel type, HMRC will accept there’s no taxable profit and no Class 1A National Insurance to pay. You can use your own rates which better reflect your circumstances if, for example, your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates. If you pay rates that are higher than the advisory rates and cannot demonstrate the fuel cost per mile is higher, there’s no fuel benefit charge if the mileage payments are solely for miles of business travel. Instead, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.”
Q: Can you advise if the Alabaster ruling has been extended to the other types of statutory pay such as adoption pay? A: The Alabaster ruling only applies to statutory maternity pay (SMP), but the rules on backdated pay rises apply for statutory adoption leave. Please follow this link to see gov.uk guidance: http://bit. ly/2EvNPFJ. Q: Please can you advise which mileage rate we should be paying for electric cars? A: If your employee drives a company car and it is 100% electric you can pay 4p a mile, but if it is hybrid then you treat it as either petrol or diesel. If the car is a private car then the mileage rate is either 45p or 25p. Q: In the following situation would a cycle to work salary sacrifice scheme become taxable if it is not offered to everyone? For example, if we do not offer a bike to staff who are paid at national minimum wage. A: The scheme must be open to all in order for it to meet the rules set out by HM Revenue & Cust oms (HMRC) and to be exempt from tax, but the employer can include these types of employees by having a pool of bikes for them to use. So, this means they can be included in the scheme and, therefore, your cycle to work scheme can still be exempt. The guidance on cycle to work does cover element of details of how to include employees being paid at the minimum wage; please see:
● http://bit.ly/2EuqLY2 ● http://bit.ly/35B7X5f
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| Professional in Payroll, Pensions and Reward | February 2020 | Issue 57
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