1 Table of contents 381

CIPP Payroll Reference Book 2021-22_v1_210701_MemberOnly

_Hlk3884306		23
PART 1: DATES, DEFINITIONS AND OBLIGATIONS		22
ABBREVIATIONS		23
ADOPTION PAY AND LEAVE		27
ADVANCES OF PAY		27
AGE EXCEPTION (EXEMPTION) CERTIFICATE CA4140		28
AGENCY WORKERS		28
APPRENTICESHIP FUNDING AND LEVY		30
ARREARS OF PAY		30
ARREARS OF PAY FOR CLOSED YEARS		30
ARRESTMENT OF EARNINGS (Scotland)		31
ASYLUM AND IMMIGRATION		42
The Asylum and Immigration Act 1996 and The Immigration, Asylum and Nationality Act 2006		43
Penalties		44
Non-EEA Nationals		44
Sponsors		45
Licensed employers		45
YOUTH MOBILITY SCHEME		45
SEASONAL AGRICULTURAL WORKERS SCHEME (SAWS)		46
ATTACHMENT OF EARNINGS ORDERS (AEOs)		46
Protected Earnings		47
Council Tax Attachment of Earnings Orders (CTAEOs)		47
Child Support DEOs		49
2012 CMS orders		50
Direct Earnings Attachment		50
Fines Enforcement Scheme		53
Income Payment Agreement (IPA)		55
Income Payments Order (IPO)		55
Income Support Deduction Notices (ISDNs)		55
Reciprocal Enforcement of Maintenance Orders (REMOs)		55
Voluntary Deduction from Earnings Arrangement (VDEA)		56
Determining court order priority		56
AUTO-ENROLMENT		58
COMPANY SHARE OPTION PLAN (CSOP)		59
CONSTRUCTION INDUSTRY SCHEME (CIS)		59
Definition of construction		59
Definition of contractor		59
Registration		60
Verification		60
Payment statement		61
CIS300 Returns		61
Deductions		62
Penalties		62
Proposed changes		63
COVID-19		64
Statutory Sick Pay		64
Coronavirus Job Retention Scheme (CJRS)		65
Holiday pay and entitlement		66
Taxable expenses		67
DATA PROTECTION		67
Transitional periods		68
The Data Protection Act 2018		68
DEADLINE DATES for 2021/22		69
Periodical Deadline Dates - Monthly		70
Quarterly		70
DEATH OF AN EMPLOYEE		71
Income Tax		72
National Insurance Contributions		72
Statutory Sick Pay		72
Statutory Adoption, Maternity, Paternity and Shared Parental Pay		72
Lump sum payments on death		72
Employee under notice		73
Payment after death		73
DEATH OF A PENSIONER		73
DEBT ARRANGEMENT SCHEME (DAS) (Scotland)		74
Procedure		74
Student Loans		74
DEFAULT RETIREMENT AGE		74
DEPENDANT LEAVE		75
Qualification		75
Contractual provisions		75
EARNINGS		75
ELECTRONIC PAYMENT OF PAYE		76
EMPLOYMENT EQUALITY (AGE) REGULATIONS 2006		77
EMPLOYEE SHAREHOLDER STATUS		77
ENTERPRISE MANAGEMENT INCENTIVE		78
EQUAL PAY		78
EU EXIT		78
EXPENSES and BENEFITS		79
FIT NOTES		79
FIXED TERM WORKERS		80
FLEXIBLE WORKING		80
Scope of a request		81
Eligibility		81
Procedure		81
Right of appeal		82
GENDER RECOGNITION ACT		82
GRATUITIES, SERVICE CHARGES, TIPS AND TRONCS		82
Tronc		83
HOLIDAYS – STATUTORY ANNUAL ENTITLEMENT		84
Holiday Pay - Long-term Sickness		85
INCENTIVE SCHEMES		86
Cyclists’ breakfasts		86
Golden Hellos/Carrots/Parachutes		86
Golden Handcuffs		86
Honoraria		86
Profit Related Pay (PRP)		86
INDEX LINKED PAY INCREASES		87
INDUSTRIAL ACTION		89
Strike Pay Calculation		89
INTERNATIONAL STUDENTS		89
ITEMISED STATEMENT OF PAY		89
Pension payments		90
JURY SERVICE		90
KEY HISTORICAL DATES		93
MANAGED SERVICE COMPANIES (MSC)		99
MATERNITY LEAVE AND PAY		99
Ordinary Maternity Leave (OML)		99
Additional Maternity Leave (AML)		100
Maternity Pay Period (MPP)		100
Evidence		101
Return to work		101
Penalties		101
Contract of Employment - changes for EWCs on, or after, 5th October 2008		101
NATIONAL LIVING WAGE (NLW)		102
NATIONAL MINIMUM/LIVING WAGE (NMW/NLW)		102
Arrears		104
Enforcement		104
Output (Piece) Workers		105
NEW DEAL SCHEME/THE WORK PROGRAMME		105
NON-BANKING PAYDAY		106
NON-CASH VOUCHER		106
NON-CASH BENEFITS		106
OFF-PAYROLL WORKING (IR35)		107
ONLINE FILING		108
PAYE Schemes		109
In-year filing		110
Future developments		110
OVERPAYMENTS		110
Recovery		110
PARENTAL BEREAVEMENT LEAVE		111
PARENTAL LEAVE		111
Qualification		111
Maximum Entitlement		111
Statutory fallback scheme provisions		112
Notice		112
Record Keeping		112
Shared parental leave		112
PART-TIME WORKERS		112
PATERNITY LEAVE AND PAY		113
PAYMENT OF WAGES		113
PAYE FORMS AND RETURNS		113
P11 Deductions working sheet		113
P11D/P9D - Annual statement of expense and benefit payments		113
P14 - employee’s annual PAYE summary		114
P35 - employer annual PAYE return		114
P38A - employer supplementary return		114
P45(1)s - starting in employment		114
P46 - starting in employment with no P45		115
P46(Car)		115
P46(Pen)		115
P46(Expat)		115
P60 - End of Year Certificate		116
PENALTIES		116
Incorrect tax returns		116
Late filing of end of year returns		117
Late filing of in-year Full Payment Submission (FPS)		117
Late/underpayment penalty		118
Recent developments		119
HISTORIC PENALTIES		120
Failure to file end of year returns online		120
Failure to file in-year forms online		121
POSTED WORKER		122
POWER OF ATTORNEY		122
PROBATE		123
QUALITY STANDARD		123
QUARTERLY PAYMENT OF PAYE		124
REAL TIME INFORMATION (RTI)		124
New employees		125
Payroll errors/ad-hoc salary advances		125
Tax codes and student loan notices		126
Leavers		126
Year End		126
Generic Notification Service (GNS)		126
Penalties		126
Viewing liabilities		128
Specified charge		128
Current issues		128
Quality control		129
RECORD RETENTION		129
SALARY SACRIFICE AND OPTIONAL REMUNERATION		130
SETTLEMENT AGREEMENT (compromise agreement pre-July 2013)		131
SHARE OWNERSHIP		132
Share Incentive Plan (SIP)		132
Savings Related Share Option Schemes (SAYE)		133
SMALL BUSINESS		134
Small Employers’ Relief (SER) for Statutory Payments		134
SOCIAL SECURITY BENEFITS		135
STUDENT LOANS COMPANY (SLC)		135
STUDENT LOANS - COLLECTION		136
Calculation of deduction		137
Priority		140
Returns and remittances		140
Future developments		140
SUPPLIER RECOGNITION SCHEME		140
TIME OFF for TRAINING		140
TURERA		140
VALUE ADDED TAX (VAT)		141
WEEKLY WORKING HOURS		141
PART 2: TAX		148
ANNUAL ALLOWANCES		149
ALLOWANCES - HISTORICAL NOTES		154
April 2000		154
2004/2005		154
2008/2009		155
April 2010		155
April 2013		155
April 2015		155
April 2016		155
April 2017		155
April 2018		156
April 2019		156
April 2020		156
April 2021		156
APPROVED MILEAGE ALLOWANCE PAYMENTS (AMAPs)		156
MAPs and dispensations		158
ADVISORY FUEL RATES		158
ANNUAL and LIFETIME ALLOWANCES		160
BANK CHARGES		161
BENEFICIAL LOANS		161
BICYCLES AND BICYCLE SAFETY EQUIPMENT		163
CANTEEN FACILITIES		163
CAR ALLOWANCE ENHANCED REPORTING SCHEME (CAERS)		163
CAR FUEL BENEFIT		163
CAR PARKING AT WORKPLACE		166
CHARITABLE GIVING		166
Future developments		167
CHILDCARE VOUCHERS & NURSERY PROVISION		167
Transition to Tax-Free Childcare		168
COMPANY CARS		168
Company Car Benefit Tables		169
Company car benefit historical notes		170
Reduced Car Benefit Charge		170
Second car discount		171
Qualifying Low Emission Cars - QUALECs		171
Alternative Fuels		171
Change from 6th April 2011		172
Change from 6th April 2012		172
Change from 6th April 2013		173
Company car benefit 6th April 2002 to date		173
Emission details		173
Classic cars		174
From 6th April 2014		174
From 6th April 2015		174
From 6th April 2016		174
From 6th April 2017		174
From 6th April 2018		175
From 6th April 2019		175
From 6th April 2020		175
COMPANY VANS		181
Scale rates – 6th April 1993 – 5th April 2005		181
Company van benefit from 6th April 2005		181
Company van benefit from 6th April 2007		181
DISPENSATIONS		183
ELECTRIC VEHICLE CHARGING SCHEME		183
EMPLOYEE CAR OWNERSHIP SCHEME (ECOS)		183
ENTERTAINMENT		184
Corporate		184
Working Lunches		184
EXEMPT MINOR BENEFITS		184
Tax reliefs available on other benefits		186
EXTRA STATUTORY CONCESSIONS (ESCs)		186
FIXED PROFIT CAR SCHEME (FPCS)		186
HEALTH INSURANCE AND ASSISTANCE		187
HEALTH SCREENING		188
Use of Visual Display Units (VDUs)		188
HOME COMPUTING INITIATIVE (HCI)		189
MARORS (Mileage Allowance Relief Optional Reporting Scheme)		189
PAYE SETTLEMENT AGREEMENTS (PSA)		189
PENSIONS ADVICE		190
PROFESSIONAL FEES AND SUBSCRIPTIONS		191
RELOCATION		191
ROUND SUM ALLOWANCES AND SCALE RATES		192
SCOTTISH INCOME TAX		193
Scottish variable rate (SVR) and SRIT (Scottish Rate of Income Tax)		193
SELF-ASSESSMENT (SA)		194
Timetable		195
SELF-EMPLOYED STATUS		195
IR35 - (Personal Service Company Legislation)		196
STATUTORY RESIDENCE TEST (SRT)		198
Other connection facts and day-counting		198
STUDENT EMPLOYMENT		199
Tax		199
NICs		199
Hours of work		199
Foreign students		199
STUDENT TAX EXEMPTION SCHEME - P38(S)		199
TAXED AWARDS SCHEME (TAS)		200
TAX - AN EARLY HISTORY		200
TAX CODES		200
TAX CODE PREFIX AND SUFFIX LETTERS		201
TAX CALCULATIONS		203
Week 53		203
Pay after employee has left employment		203
Holiday pay - paid in advance		203
TAX - FREE PAY		204
TAX RATES AND BANDINGS		204
LOWER RATE BAND (formerly Lower Rate Relief)		207
TAX AVOIDANCE SCHEMES		208
TAXIS - LATE NIGHT		208
TELEPHONES - HOME		209
TELEPHONES - MOBILE		209
TERMINATION SETTLEMENTS		210
PILONS (Payments in Lieu of Notice)		210
TRAVEL AND SUBSISTENCE		211
Incidental Overnight Expenses		211
TRIVIAL BENEFITS		212
VOLUNTEER DRIVERS		212
PART 3: NATIONAL INSURANCE		214
INTRODUCTION		215
CLASSES OF NATIONAL INSURANCE CONTRIBUTIONS		215
Class 1		215
Class 1A		215
Class 1B		215
Class 2		215
Class 3		216
Class 3A		216
Class 4		216
Future developments		216
NATIONAL INSURANCE – HISTORICAL NOTES		216
From April 1976 to March 1978		216
From April 1977 to 1st October 1984		216
From April 1978		217
From October 1985		217
From October 1989		217
From April 1999		217
From April 2000		217
From April 2001		218
From April 2002		218
From April 2003		218
From September 2008		218
From April 2009		218
From 22nd June 2010 to 5 September 2013		218
From April 2011		219
From April 2012		219
From April 2015		219
From April 2016		219
From April 2017		219
From April 2020		219
From April 2021		220
NATIONAL INSURANCE CLASS 1 EARNINGS LIMITS		220
CLASS 1 NATIONAL INSURANCE EARNINGS THRESHOLDS		221
CLASS 1 NATIONAL INSURANCE CONTRIBUTIONS RATES		223
NIC REBATES		247
CLASS 1 AND 2 AGE EXCEPTION CERTIFICATE CA4140/CF384		247
AGGREGATION OF EARNINGS		248
CLASS 1 NICs - RECOVERY OF UNDERPAID CONTRIBUTIONS		248
CLASS 1A NATIONAL INSURANCE		249
CLASS 1B NATIONAL INSURANCE		251
CLASS 2 NATIONAL INSURANCE		252
CLASS 3 NATIONAL INSURANCE		254
CLASS 4 NATIONAL INSURANCE (for self-employed earners)		254
COMPANY CARS, VANS AND FUEL		256
Assessment of liability		257
Historical Note		257
COMPANY DIRECTORS		257
CONTRACTING-OUT		258
Age-related Rebates		258
Contracting-out Rebate		259
CONTRIBUTION TABLE LETTERS		259
Current categories		259
Abolished NICs categories		259
DEFERRED CONTRIBUTIONS		259
DEFICIENCY NOTICE		259
EMPLOYEES SECONDED ABROAD - NICs		259
EMPLOYMENT ALLOWANCE		259
EMPLOYMENT OF VETERANS		259
HOLIDAY PAY IN ADVANCE		259
HOLIDAY PAY SCHEMES/HOLIDAY PAY STAMP FUND		259
HOLIDAY CREDIT SCHEME		259
MAXIMUM ANNUAL CONTRIBUTION THRESHOLD		259
NATIONAL INSURANCE NUMBER		259
Applying for a NINO through Jobcentre Plus		259
Format		259
Temporary NI Number (TNs)		259
Historical notes		259
PRIVATE CAR DRIVERS (MAPS & NICs)		259
REDUCED RATE NI CONTRIBUTIONS		259
UPPER ACCRUAL POINT (UAP)		259
VOUCHERS		259
PART 4: STATUTORY PAYMENTS		273
STATUTORY PAYMENTS		274
ADOPTION - STATUTORY ADOPTION PAY (SAP) AND LEAVE		274
Qualification for leave		274
Qualification for pay		274
Entitlement		274
Daily Rates		275
Exceptions		275
Keeping In Touch (KIT) Days		275
Statutory Adoption Pay		276
Notice		277
Notification		277
Exclusions		277
Payment		277
Advanced funding		278
Rates at the start of a tax year		278
Guidance		278
Penalties		281
Employment rights		281
STATUTORY MATERNITY PAY (SMP)		282
Historical notes		282
SMP Entitlement and qualification from April 2007		284
Keeping-In-Touch (KIT) Days		284
Qualification for pay		285
Evidence of Pregnancy		285
Calculation of Average Weekly Earnings (AWE)		285
Backdated Pay Rises - the effect of a pay rise on SMP		286
Maternity Pay Period (MPP)		287
Payment rates		288
Payment of Statutory Maternity Pay		290
Daily Rates		291
Rates at the start of a tax year		291
Multiple employment		291
Stillbirths		291
Disqualifying Period from SSP		292
Recovery of SMP paid		292
Advanced funding		292
Penalties		292
Records		292
Guidance		293
STATUTORY MATERNITY LEAVE		295
Return to work		295
SHARED PARENTAL LEAVE		296
THE EU PREGNANT WORKERS DIRECTIVE - REFORM		296
MATERNITY ALLOWANCE		297
Keeping In Touch (KIT) Days		299
MATERNITY GRANT		300
Health in pregnancy grant		300
PARENTAL BEREAVEMENT - STATUTORY PARENTAL BEREAVEMENT LEAVE (SPBL) AND PAY (SPBP)		301
Definition		301
Qualification		301
Notice		301
Entitlement		301
Parental bereavement leave		302
Statutory Parental Bereavement Pay (SPBP)		302
Employment rights		302
Administration of SPBP		302
Small Employers’ Relief (SER) for Statutory Payments		302
Rates at the start of a tax year		302
Statutory Parental Bereavement Pay Forms		303
Advanced funding		303
Penalties		303
Guidance		303
PATERNITY- STATUTORY PATERNITY LEAVE (SPL) AND PAY (SPP)		303
Qualification		304
Notice		304
Entitlement		304
Notification Week		305
Ordinary paternity leave		305
Additional paternity leave (until April 2015 only)		305
Statutory Paternity Pay (SPP)		305
Additional Statutory Paternity Pay (ASPP) (to April 2015 only)		305
Keeping in touch (KIT) days		306
Employment rights		306
Administration of OSPP/ASPP		306
Small Employers’ Relief (SER) for Statutory Payments		307
Rates at the start of a tax year		308
Self-certification		308
Advanced funding		309
Penalties		309
Guidance		309
REDUNDANCY - PAYMENT IN LIEU OF NOTICE (PILON)		312
REDUNDANCY - STATUTORY PAYMENTS		312
Qualification		313
Service		313
Calculating Redundancy Pay		313
A Week’s Pay		313
REDUNDANCY READY RECKONER		315
STATUTORY LIMITS ON COMPENSATION PAYMENTS		321
STATUTORY SICK PAY (SSP)		324
Qualification		324
Disqualification		325
Earlier disqualification rules		326
Agency workers and SSP		326
Entitlement		326
Notification		326
Linking Periods of Incapacity for Work (PIWs)		327
Waiting Days		327
Interaction with Paternity and Adoption Pay		327
Calculation of Average Weekly Earnings		327
End of entitlement		328
Leaver’s statements		328
Opting-out of SSP		328
Guidance		328
Records		328
Recovery of SSP		329
Penalties		330
Percentage Threshold Scheme (PTS)		330
Advanced funding		334
MEDICAL ABBREVIATIONS		339
STATUTORY PAYMENTS – STATE BENEFITS		341
BEREAVEMENT ALLOWANCE		341
CHILD BENEFIT and GUARDIAN’S ALLOWANCE		342
DISABILITY LIVING ALLOWANCE (DLA)		344
DISABILITY WORKING ALLOWANCE		345
EMPLOYMENT AND SUPPORT ALLOWANCE (ESA)		345
FAMILY CREDIT		350
INCAPACITY BENEFIT (IB)		351
INCOME SUPPORT		354
INCOME SUPPORT – MINIMUM INCOME GUARANTEE (MIG)		359
INDUSTRIAL INJURY DEATH BENEFIT		359
INDUSTRIAL INJURIES DISABLEMENT BENEFIT		360
INDUSTRIAL INJURIES DISABLEMENT SUPPLEMENTS		363
PENSION CREDIT		365
Qualification		366
SICKNESS BENEFIT		369
SOCIAL FUND		370
STATE PENSION		370
APPENDICES		371
APPENDIX 1 – USEFUL ADDRESSES, HELPLINES, and WEBSITES		372
Accounting and payments service		373
Pensions		375
Helplines		376
APPENDIX 2 – STUDENT LOAN DEDUCTIONS		379
Plan 1 loan repayment		379
Plan 2 loan repayment		379
Plan 4 loan repayment		379
Post Graduate loan repayment		380
PART 1: DATES, DEFINITIONS AND OBLIGATIONS		22
ABBREVIATIONS		23
ADOPTION PAY AND LEAVE		26
ADVANCES OF PAY		26
AGE EXCEPTION (EXEMPTION) CERTIFICATE CA4140		27
AGENCY WORKERS		27
APPRENTICESHIP FUNDING AND LEVY		29
ARREARS OF PAY		30
ARREARS OF PAY FOR CLOSED YEARS		30
ARRESTMENT OF EARNINGS (Scotland)		30
ASYLUM AND IMMIGRATION		40
The Asylum and Immigration Act 1996 and The Immigration, Asylum and Nationality Act 2006		41
Penalties		42
Non-EEA Nationals		42
Sponsors		43
Licensed employers		43
YOUTH MOBILITY SCHEME		43
SEASONAL AGRICULTURAL WORKERS SCHEME (SAWS)		44
ATTACHMENT OF EARNINGS ORDERS (AEOs)		44
Protected Earnings		45
Council Tax Attachment of Earnings Orders (CTAEOs)		45
Child Support DEOs		47
2012 CMS orders		48
Direct Earnings Attachment		48
Fines Enforcement Scheme		51
Income Payment Agreement (IPA)		53
Income Payments Order (IPO)		54
Income Support Deduction Notices (ISDNs)		54
Reciprocal Enforcement of Maintenance Orders (REMOs)		54
Voluntary Deduction from Earnings Arrangement (VDEA)		54
Determining court order priority		54
AUTO-ENROLMENT		56
COMPANY SHARE OPTION PLAN (CSOP)		57
CONSTRUCTION INDUSTRY SCHEME (CIS)		58
Definition of construction		58
Definition of contractor		58
Registration		59
Verification		59
Payment statement		60
CIS300 Returns		60
Deductions		61
Penalties		61
Proposed changes		62
COVID-19		63
Statutory Sick Pay		63
Coronavirus Job Retention Scheme (CJRS)		64
Holiday pay and entitlement		66
Taxable expenses		66
DATA PROTECTION		66
Transitional periods		68
The Data Protection Act 2018		68
DEADLINE DATES for 2021/22		69
Periodical Deadline Dates - Monthly		69
Quarterly		69
DEATH OF AN EMPLOYEE		71
Income Tax		71
National Insurance Contributions		71
Statutory Sick Pay		72
Statutory Adoption, Maternity, Paternity and Shared Parental Pay		72
Lump sum payments on death		72
Employee under notice		72
Payment after death		72
DEATH OF A PENSIONER		73
DEBT ARRANGEMENT SCHEME (DAS) (Scotland)		73
Procedure		73
Student Loans		74
DEFAULT RETIREMENT AGE		74
DEPENDANT LEAVE		74
Qualification		74
Contractual provisions		74
EARNINGS		75
ELECTRONIC PAYMENT OF PAYE		75
EMPLOYMENT EQUALITY (AGE) REGULATIONS 2006		76
EMPLOYEE SHAREHOLDER STATUS		77
ENTERPRISE MANAGEMENT INCENTIVE		77
EQUAL PAY		77
EU EXIT		78
EXPENSES and BENEFITS		78
FIT NOTES		79
FIXED TERM WORKERS		80
FLEXIBLE WORKING		80
Scope of a request		81
Eligibility		81
Procedure		81
Right of appeal		82
GENDER RECOGNITION ACT		82
GRATUITIES, SERVICE CHARGES, TIPS AND TRONCS		83
Tronc		83
HOLIDAYS – STATUTORY ANNUAL ENTITLEMENT		84
Holiday Pay - Long-term Sickness		85
INCENTIVE SCHEMES		86
Cyclists’ breakfasts		86
Golden Hellos/Carrots/Parachutes		86
Golden Handcuffs		86
Honoraria		86
Profit Related Pay (PRP)		87
INDEX LINKED PAY INCREASES		87
INDUSTRIAL ACTION		88
Strike Pay Calculation		89
INTERNATIONAL STUDENTS		89
ITEMISED STATEMENT OF PAY		89
Pension payments		90
JURY SERVICE		90
KEY HISTORICAL DATES		92
MANAGED SERVICE COMPANIES (MSC)		98
MATERNITY LEAVE AND PAY		99
Ordinary Maternity Leave (OML)		99
Additional Maternity Leave (AML)		99
Maternity Pay Period (MPP)		100
Evidence		100
Return to work		100
Penalties		100
Contract of Employment - changes for EWCs on, or after, 5th October 2008		100
NATIONAL LIVING WAGE (NLW)		101
NATIONAL MINIMUM/LIVING WAGE (NMW/NLW)		101
Arrears		104
Enforcement		104
Output (Piece) Workers		104
NEW DEAL SCHEME/THE WORK PROGRAMME		104
NON-BANKING PAYDAY		105
NON-CASH VOUCHER		105
NON-CASH BENEFITS		105
OFF-PAYROLL WORKING (IR35)		106
ONLINE FILING		108
PAYE Schemes		108
In-year filing		109
Future developments		109
OVERPAYMENTS		109
Recovery		109
PARENTAL BEREAVEMENT LEAVE		110
PARENTAL LEAVE		110
Qualification		110
Maximum Entitlement		111
Statutory fallback scheme provisions		111
Notice		111
Record Keeping		111
Shared parental leave		111
PART-TIME WORKERS		112
PATERNITY LEAVE AND PAY		112
PAYMENT OF WAGES		112
PAYE FORMS AND RETURNS		113
P11 Deductions working sheet		113
P11D/P9D - Annual statement of expense and benefit payments		113
P14 - employee’s annual PAYE summary		113
P35 - employer annual PAYE return		113
P38A - employer supplementary return		113
P45(1)s - starting in employment		114
P46 - starting in employment with no P45		114
P46(Car)		114
P46(Pen)		114
P46(Expat)		114
P60 - End of Year Certificate		115
PENALTIES		115
Incorrect tax returns		115
Late filing of end of year returns		116
Late filing of in-year Full Payment Submission (FPS)		116
Late/underpayment penalty		117
Recent developments		118
HISTORIC PENALTIES		119
Failure to file end of year returns online		119
Failure to file in-year forms online		120
POSTED WORKER		120
POWER OF ATTORNEY		121
PROBATE		121
QUALITY STANDARD		122
QUARTERLY PAYMENT OF PAYE		122
REAL TIME INFORMATION (RTI)		123
New employees		124
Payroll errors/ad-hoc salary advances		124
Tax codes and student loan notices		124
Leavers		125
Year End		125
Generic Notification Service (GNS)		125
Penalties		125
Viewing liabilities		126
Specified charge		127
Current issues		127
Quality control		128
RECORD RETENTION		128
SALARY SACRIFICE AND OPTIONAL REMUNERATION		129
SETTLEMENT AGREEMENT (compromise agreement pre-July 2013)		130
SHARE OWNERSHIP		130
Share Incentive Plan (SIP)		130
Savings Related Share Option Schemes (SAYE)		131
SMALL BUSINESS		132
Small Employers’ Relief (SER) for Statutory Payments		133
SOCIAL SECURITY BENEFITS		133
STUDENT LOANS COMPANY (SLC)		134
STUDENT LOANS - COLLECTION		135
Calculation of deduction		136
Priority		138
Returns and remittances		138
Future developments		138
SUPPLIER RECOGNITION SCHEME		138
TIME OFF for TRAINING		139
TURERA		139
VALUE ADDED TAX (VAT)		140
WEEKLY WORKING HOURS		140
WORKER		140
WORKER REGISTRATION SCHEME		141
WORKER AUTHORISATION SCHEME		141
WORKING TIME REGULATIONS		141
Provisions		141
48-hour rule		142
Minimum rest period		142
Night workers		142
Holidays		142
Rolled Up Holiday Pay (RHP)		142
Records		143
Derogations		143
Holiday pay		143
Young Workers		144
YEAR END		145
NICs		145
Tax Codes		145
Basic Earnings Assessment		145
Auto-enrolment qualifying earnings threshold		146
PART 2: TAX		148
ANNUAL ALLOWANCES		149
ALLOWANCES - HISTORICAL NOTES		154
April 2000		154
2004/2005		154
2008/2009		154
April 2010		154
April 2013		154
April 2015		154
April 2016		154
April 2017		154
April 2018		155
April 2019		155
April 2020		155
April 2021		155
APPROVED MILEAGE ALLOWANCE PAYMENTS (AMAPs)		155
MAPs and dispensations		156
ADVISORY FUEL RATES		156
ANNUAL and LIFETIME ALLOWANCES		159
BANK CHARGES		160
BENEFICIAL LOANS		160
BICYCLES AND BICYCLE SAFETY EQUIPMENT		161
CANTEEN FACILITIES		162
CAR ALLOWANCE ENHANCED REPORTING SCHEME (CAERS)		162
CAR FUEL BENEFIT		162
CAR PARKING AT WORKPLACE		164
CHARITABLE GIVING		164
Future developments		165
CHILDCARE VOUCHERS & NURSERY PROVISION		165
Transition to Tax-Free Childcare		167
COMPANY CARS		167
Company Car Benefit Tables		167
Company car benefit historical notes		168
Reduced Car Benefit Charge		169
Second car discount		169
Qualifying Low Emission Cars - QUALECs		169
Alternative Fuels		170
Change from 6th April 2011		171
Change from 6th April 2012		171
Change from 6th April 2013		171
Company car benefit 6th April 2002 to date		171
Emission details		171
Classic cars		172
From 6th April 2014		172
From 6th April 2015		172
From 6th April 2016		172
From 6th April 2017		172
From 6th April 2018		173
From 6th April 2019		173
From 6th April 2020		173
COMPANY VANS		178
Scale rates – 6th April 1993 – 5th April 2005		178
Company van benefit from 6th April 2005		178
Company van benefit from 6th April 2007		178
DISPENSATIONS		179
ELECTRIC VEHICLE CHARGING SCHEME		180
EMPLOYEE CAR OWNERSHIP SCHEME (ECOS)		180
ENTERTAINMENT		181
Corporate		181
Working Lunches		181
EXEMPT MINOR BENEFITS		181
Tax reliefs available on other benefits		183
EXTRA STATUTORY CONCESSIONS (ESCs)		183
FIXED PROFIT CAR SCHEME (FPCS)		183
HEALTH INSURANCE AND ASSISTANCE		184
HEALTH SCREENING		185
Use of Visual Display Units (VDUs)		185
HOME COMPUTING INITIATIVE (HCI)		186
MARORS (Mileage Allowance Relief Optional Reporting Scheme)		186
PAYE SETTLEMENT AGREEMENTS (PSA)		186
PENSIONS ADVICE		188
PROFESSIONAL FEES AND SUBSCRIPTIONS		188
RELOCATION		188
ROUND SUM ALLOWANCES AND SCALE RATES		190
SCOTTISH INCOME TAX		191
Scottish variable rate (SVR) and SRIT (Scottish Rate of Income Tax)		191
SELF-ASSESSMENT (SA)		193
Timetable		193
SELF-EMPLOYED STATUS		193
IR35 - (Personal Service Company Legislation)		194
STATUTORY RESIDENCE TEST (SRT)		196
Other connection facts and day-counting		196
STUDENT EMPLOYMENT		197
Tax		197
NICs		197
Hours of work		197
Foreign students		197
STUDENT TAX EXEMPTION SCHEME - P38(S)		198
TAXED AWARDS SCHEME (TAS)		198
TAX - AN EARLY HISTORY		198
TAX CODES		199
TAX CODE PREFIX AND SUFFIX LETTERS		199
TAX CALCULATIONS		201
Week 53		201
Pay after employee has left employment		202
Holiday pay - paid in advance		202
TAX - FREE PAY		202
TAX RATES AND BANDINGS		203
LOWER RATE BAND (formerly Lower Rate Relief)		205
TAX AVOIDANCE SCHEMES		206
TAXIS - LATE NIGHT		207
TELEPHONES - HOME		207
TELEPHONES - MOBILE		207
TERMINATION SETTLEMENTS		208
PILONS (Payments in Lieu of Notice)		209
TRAVEL AND SUBSISTENCE		209
Incidental Overnight Expenses		210
TRIVIAL BENEFITS		210
VOLUNTEER DRIVERS		211
VOUCHERS		212
Cash Vouchers		212
Non-cash Vouchers		212
WELSH INCOME TAX		213
WORKS BUSES & PUBLIC BUS SUBSIDIES		213
PART 3: NATIONAL INSURANCE		214
INTRODUCTION		215
CLASSES OF NATIONAL INSURANCE CONTRIBUTIONS		215
Class 1		215
Class 1A		215
Class 1B		215
Class 2		215
Class 3		215
Class 3A		216
Class 4		216
Future developments		216
NATIONAL INSURANCE – HISTORICAL NOTES		216
From April 1976 to March 1978		216
From April 1977 to 1st October 1984		216
From April 1978		216
From October 1985		216
From October 1989		217
From April 1999		217
From April 2000		217
From April 2001		217
From April 2002		217
From April 2003		217
From September 2008		217
From April 2009		218
From 22nd June 2010 to 5 September 2013		218
From April 2011		218
From April 2012		218
From April 2015		218
From April 2016		218
From April 2017		218
From April 2020		219
From April 2021		219
NATIONAL INSURANCE CLASS 1 EARNINGS LIMITS		219
CLASS 1 NATIONAL INSURANCE EARNINGS THRESHOLDS		220
CLASS 1 NATIONAL INSURANCE CONTRIBUTIONS RATES		222
NIC REBATES		243
CLASS 1 AND 2 AGE EXCEPTION CERTIFICATE CA4140/CF384		244
AGGREGATION OF EARNINGS		244
CLASS 1 NICs - RECOVERY OF UNDERPAID CONTRIBUTIONS		245
CLASS 1A NATIONAL INSURANCE		245
CLASS 1B NATIONAL INSURANCE		247
CLASS 2 NATIONAL INSURANCE		248
CLASS 3 NATIONAL INSURANCE		249
CLASS 4 NATIONAL INSURANCE (for self-employed earners)		250
COMPANY CARS, VANS AND FUEL		252
Assessment of liability		252
Historical Note		252
COMPANY DIRECTORS		253
CONTRACTING-OUT		254
Age-related Rebates		254
Contracting-out Rebate		254
CONTRIBUTION TABLE LETTERS		265
Current categories		265
Abolished NICs categories		265
DEFERRED CONTRIBUTIONS		266
DEFICIENCY NOTICE		266
EMPLOYEES SECONDED ABROAD - NICs		266
EMPLOYMENT ALLOWANCE		267
EMPLOYMENT OF VETERANS		268
HOLIDAY PAY IN ADVANCE		268
HOLIDAY PAY SCHEMES/HOLIDAY PAY STAMP FUND		268
HOLIDAY CREDIT SCHEME		268
MAXIMUM ANNUAL CONTRIBUTION THRESHOLD		268
NATIONAL INSURANCE NUMBER		269
Applying for a NINO through Jobcentre Plus		269
Format		270
Temporary NI Number (TNs)		270
Historical notes		270
PRIVATE CAR DRIVERS (MAPS & NICs)		271
REDUCED RATE NI CONTRIBUTIONS		271
UPPER ACCRUAL POINT (UAP)		272
VOUCHERS		272
PART 4: STATUTORY PAYMENTS		273
STATUTORY PAYMENTS		274
ADOPTION - STATUTORY ADOPTION PAY (SAP) AND LEAVE		274
Qualification for leave		274
Qualification for pay		274
Entitlement		274
Daily Rates		275
Exceptions		275
Keeping In Touch (KIT) Days		275
Statutory Adoption Pay		276
Notice		276
Notification		277
Exclusions		277
Payment		277
Advanced funding		277
Rates at the start of a tax year		277
Guidance		278
Penalties		280
Employment rights		280
STATUTORY MATERNITY PAY (SMP)		281
Historical notes		281
SMP Entitlement and qualification from April 2007		283
Keeping-In-Touch (KIT) Days		284
Qualification for pay		284
Evidence of Pregnancy		284
Calculation of Average Weekly Earnings (AWE)		285
Backdated Pay Rises - the effect of a pay rise on SMP		285
Maternity Pay Period (MPP)		287
Payment rates		287
Payment of Statutory Maternity Pay		290
Daily Rates		290
Rates at the start of a tax year		290
Multiple employment		290
Stillbirths		291
Disqualifying Period from SSP		291
Recovery of SMP paid		291
Advanced funding		291
Penalties		291
Records		291
Guidance		292
STATUTORY MATERNITY LEAVE		294
Return to work		294
SHARED PARENTAL LEAVE		294
THE EU PREGNANT WORKERS DIRECTIVE - REFORM		295
MATERNITY ALLOWANCE		295
Keeping In Touch (KIT) Days		298
MATERNITY GRANT		298
Health in pregnancy grant		299
PARENTAL BEREAVEMENT - STATUTORY PARENTAL BEREAVEMENT LEAVE (SPBL) AND PAY (SPBP)		299
Definition		299
Qualification		299
Notice		300
Entitlement		300
Parental bereavement leave		300
Statutory Parental Bereavement Pay (SPBP)		300
Employment rights		300
Administration of SPBP		300
Small Employers’ Relief (SER) for Statutory Payments		300
Rates at the start of a tax year		301
Statutory Parental Bereavement Pay Forms		301
Advanced funding		301
Penalties		301
Guidance		301
PATERNITY- STATUTORY PATERNITY LEAVE (SPL) AND PAY (SPP)		301
Qualification		302
Notice		302
Entitlement		302
Notification Week		302
Ordinary paternity leave		303
Additional paternity leave (until April 2015 only)		303
Statutory Paternity Pay (SPP)		303
Additional Statutory Paternity Pay (ASPP) (to April 2015 only)		303
Keeping in touch (KIT) days		303
Employment rights		303
Administration of OSPP/ASPP		304
Small Employers’ Relief (SER) for Statutory Payments		305
Rates at the start of a tax year		305
Self-certification		305
Advanced funding		306
Penalties		306
Guidance		306
REDUNDANCY - PAYMENT IN LIEU OF NOTICE (PILON)		309
REDUNDANCY - STATUTORY PAYMENTS		309
Qualification		310
Service		310
Calculating Redundancy Pay		310
A Week’s Pay		311
REDUNDANCY READY RECKONER		312
STATUTORY LIMITS ON COMPENSATION PAYMENTS		315
STATUTORY SICK PAY (SSP)		318
Qualification		318
Disqualification		319
Earlier disqualification rules		320
Agency workers and SSP		320
Entitlement		320
Notification		320
Linking Periods of Incapacity for Work (PIWs)		321
Waiting Days		321
Interaction with Paternity and Adoption Pay		321
Calculation of Average Weekly Earnings		321
End of entitlement		321
Leaver’s statements		322
Opting-out of SSP		322
Guidance		322
Records		322
Recovery of SSP		322
Penalties		323
Percentage Threshold Scheme (PTS)		323
Advanced funding		327
MEDICAL ABBREVIATIONS		332
STATUTORY PAYMENTS – STATE BENEFITS		333
BEREAVEMENT ALLOWANCE		333
CHILD BENEFIT and GUARDIAN’S ALLOWANCE		334
DISABILITY LIVING ALLOWANCE (DLA)		336
DISABILITY WORKING ALLOWANCE		337
EMPLOYMENT AND SUPPORT ALLOWANCE (ESA)		338
FAMILY CREDIT		342
INCAPACITY BENEFIT (IB)		343
INCOME SUPPORT		346
INCOME SUPPORT – MINIMUM INCOME GUARANTEE (MIG)		349
INDUSTRIAL INJURY DEATH BENEFIT		350
INDUSTRIAL INJURIES DISABLEMENT BENEFIT		351
INDUSTRIAL INJURIES DISABLEMENT SUPPLEMENTS		354
PENSION CREDIT		355
Qualification		355
SICKNESS BENEFIT		359
SOCIAL FUND		359
STATE PENSION		360
Contributory Pension		360
Non-Contributory Pension		360
Basic State Retirement Pension		361
State pension - calculation and qualification		363
State pension - deferment		363
State pension - deficiency notice		364
State pension equalisation		364
State pension forecast		365
State pension - Graduated Retirement Benefit (GRB)		366
STATE EARNINGS RELATED PENSION SCHEME (SERPS)		367
STATE SECOND PENSION (S2P)		367
STATE PENSION – SINGLE TIER		369
TAX CREDITS		369
WELFARE REFORM - THE FUTURE OF STATE BENEFITS		370
APPENDICES		371
APPENDIX 1 – USEFUL ADDRESSES, HELPLINES, and WEBSITES		372
Accounting and payments service		374
Pensions		375
Helplines		376
APPENDIX 2 – STUDENT LOAN DEDUCTIONS		379
Plan 1 loan repayment		379
Plan 2 loan repayment		379
Plan 4 loan repayment		379
Post Graduate loan repayment		380

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