PART 1: DATES, DEFINITIONS AND OBLIGATIONS
Leave Regulations (MPLR) were effective from October 2008. They require that non-cash benefits must be provided throughout statutory maternity, paternity and adoption leave. Such benefits include: • contractual holiday entitlement • private medical schemes including medical insurance, life assurance, childcare vouchers and gym membership • company car - where some entitlement for private use of a company car is provided the car should be treated as a benefit and should be retained throughout Ordinary and Additional Maternity leave. The employer may only take the car back where it is provided solely for business purposes. Cash allowances in place of a company car can be withdrawn. • discretionary annual, Christmas or loyalty bonuses are classified as wages so need not be paid except for bonus payments relating to the compulsory maternity leave period, which is 2 weeks for most workers and 4 weeks for those who work in a factory. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS In some cases, should the benefit in kind be provided using a “diverted pay” scheme, usually called salary sacrifice, the employer may have the right to withdraw the benefit during the leave period (Peninsula Business Services v Donaldson (EAT 2016)). Employers need to obtain specialist legal advice before embarking on such a move. OFF-PAYROLL WORKING (IR35) An off-payroll worker is anyone working for a company or organisation, in whatever sector of society, public, private and charity, but who is not paid using the organisation’s payroll or under its PAYE scheme. There can be many reasons why the worker does not appear on the payroll and in some cases it will be a legitimate way of dealing with that person but for some decades the Government has sought to create a proper distinction between a worker who is truly self- employed and one who ought to be PAYE. The programme of doing so started in the year 2000 when the Government issued guidelines on determining the difference between an off-payroll worker who was responsible for their own remuneration, the self-employed, and one whose relationship with the engaging organisation was so close as to make it an employment type arrangement. This guidance was issued publicly in a leaflet called IR35, meaning it was the Inland Revenue’s 35th press release made under that year’s Budget. No printing, copying or reproduction permitted. The problem as the Inland Revenue (now HMRC) saw it was the existence of a significant number of micro businesses created in the 1990s whose ownership was purely the worker, or very often a husband and wife team who used their own payroll, paid themselves a very low salary and then extracted the balance of their income as a share of the profits, called dividends. Given that these micro businesses, called “owner managed businesses” were for high value work but with minimum costs the opportunity for dividends was very high and given that dividends were extracted after Corporation Tax was calculated, were exempt from National Insurance contributions and were taxed at a much lower rate than income, the net pay was very high in comparison with being employed. The IR35 provisions sought to make the worker assess each contract and determine if it was truly self-employment or if, in reality, it was closer to being employed. If they determined that employment applied they were required to use a special calculation, called the “deemed remuneration” to assess themselves for an additional levy designed to bridge the gap between
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