PART 1: DATES, DEFINITIONS AND OBLIGATIONS
• earnings-related statutory payments SMP, SSP, SAP, OSPP and ShPP.
Where a portion of salary is sacrificed in exchange for a benefit, the benefit will be treated as a taxable benefit in kind reported on the P11D or within the FPS for payrolled BiKs unless there is an exemption from tax, for example as is the case for a certain amount of childcare vouchers. Since April 2017 some tax-exempt benefits in kind have lost their exemption if they are obtained using a salary sacrifice arrangement. The main benefits which use salary sacrifice as part of the arrangement, pension funding, pensions advice, childcare provision, cycle to work schemes and ultra-low emissions vehicles will retain their exemption, whether salary sacrifice is used or not, whereas others, such as parking at or near the place of work, will lose their exemption. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS Also, since 6th April 2017 the existence of any form of cash for benefit exchange may have the effect of altering the cash equivalent value of a benefit in kind. If the amount of the sacrifice is greater than the charge to tax on the benefit in kind, the benefit in kind will be valued at the higher amount. Cash for benefit arrangements will also be considered to be salary sacrifice arrangements and be affected in the same manner. Some transitionary arrangements are in place to protect employees who were already tied into a long-term benefit in kind arrangement. This covered all benefits initially until 5th April 2018 but extended to 2021 only for cars, vans, accommodation and school fees. Any amendment to the contract to supply has the effect of ending the transitional arrangement for that employee. SETTLEMENT AGREEMENT (compromise agreement pre-July 2013) A settlement agreement is an arrangement or contract between an employer and an employee for payment of a single sum in full settlement of various outstanding potential claims on termination of employment. The employer will, in making a single payment, seek to ensure that claims cannot be made at a later date through the courts in respect of those items included in the agreement. Such an agreement may include in the single payment such items as: • salary or wages not paid in full • contractual Payment in Lieu of Notice (PILON) • outstanding issues related to employment rights’ legislation • damages for a breach of contractual terms (period of notice etc.) • outstanding issues related to discrimination in serving of termination notice. No printing, copying or reproduction permitted. ACAS provides a template letters and a Code or Practice on their use at http://www.acas.org.uk/ media/pdf/j/8/Acas-Code-of-Practice-on-Settlement-Agreements.pdf. SHARE OWNERSHIP Share Incentive Plan (SIP) A scheme introduced on 6th April 2000, to encourage employee share ownership. The main features are:
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