Fit Notes
In general terms an employer may reimburse expenses incurred in the performance of duties without attracting liability for tax or NICs (see also Round Sum Allowances) but until 5th April 2016, unless the employer had a dispensation to this effect, even business expenses had to be reported on the P11D. Documentary evidence, mostly in the form of receipts, are required to support the expenditure. In addition, expenditure must be reasonable. On 31st March 2014 HMRC agreed that scanned images of receipts would be accepted as evidence of cost incurred for both expenses purposes and for any reclaim of input VAT. Where an employer sells an asset below market value to an employee a tax charge also arises on the extent of the benefit of that undervalue. This principle may be applied to all forms of benefit provision. Where a tax liability is determined that employers do not wish to pass onto the employee then a PAYE Settlement Agreement (PSA) should be considered - see separate section. Where a third party wants to provide a benefit a Taxed Awards Scheme (TAS) will be applicable if they do not want to pass the charge onto the employees concerned - see separate section. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS In the summer of 2014 the Office for Tax Simplification (OTS) reported on its review of expenses and benefits in kind and HMRC undertook a number of consultation exercises. Originally OTS had concluded that developments were unlikely to be completed until 2017, however in the 2015Autumn Statement the Government announced the following developments: • From April 2015 a statutory “trivial benefits” limit of £50 would apply (however, on 24 March 2015 the Government announced that it was not, after all going ahead with a statutory trivial benefits limit from April 2015 and would be deferring this to a future date.) The new provisions were in fact implemented on 6 April 2016. • From April 2016 the £8,500 threshold for P9D was abolished with two notable exceptions, effectively abolishing the P9D. • From April 2016 a simpler test for compliant reimbursed travel and subsistence expenses was introduced. • From April 2016 voluntary payrolling of benefits in kind received statutory backing for benefits in kind. Currently only beneficial loans and employer provided accommodation cannot be payrolled. FIT NOTES From 6th April 2010 the Med3 form, commonly known as the sick note, was replaced with a new form known as the Fit Note. On the new form GPs are required to indicate either that the employee is ‘unfit for work’ or ‘fit for some work now’. For the latter category the GP can then indicate what work the employee might undertake if certain adaptations were made to their hours or role. The employer is not bound by these suggestions and if unable to accommodate them, the employee can use the Fit Note as evidence of incapacity for work. Where an employee comes in to work on reduced hours such a day is not a day of incapacity for SSP purposes, so SSP cannot be paid. Where an employee is working fewer days, for example a Monday to Friday employee is working Monday and Thursday only, then a PIW will not be formed unless there are four days of incapacity. In this example there are not as the phased return to work interrupts the sickness pattern. There will therefore be no SSP entitlement until a PIW is formed. N printing, copying or reproduction permitted. In 2018 the Government agreed to conduct a consultation exercise on modernising the SSP
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