MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Q: Can a National Insurance number (NINo) issued in the Isle of Man be used to process an employee on a UK payroll? A: Guidance in HM Revenue & Customs' (HMRC's) National Insurance Manual (see NIM39620, https://bit.ly/3wHvsXN) confirms that the Isle of Man and the UK have historically operated similar National Insurance contributions (NICs) and social security schemes. This has allowed the operation of one National Insurance account for a person who has lived or worked in both territories. The territory in which the taxpayer resides normally holds and maintains the account. Employees with an Isle of Man NINo, which begins with letters ‘MA’, can use it in the UK. Similarly, customers with a UK NINo can use it in the Isle of Man. A person with a NINo starting ‘MA’ arriving in the UK from the Isle of Man, will need to contact the Isle of Man tax office to ensure their NINo is activated in the UK and accessible to HMRC. Q: Can an employer arrange gym membership for their employees through a salary sacrifice arrangement? A: There are limits to the benefits that retain their tax and NICs advantages. These were introduced in April 2017 and are termed as optional remuneration arrangements (OpRA). The arrangements mean that where an employee chooses to receive a benefit as opposed to an amount of cash pay, the taxable value of the benefit is taxed at whichever is the higher of: ● the amount of cash foregone, or ● the taxable value of the benefit under normal benefit in kind rules. The values are then reported via the P11D return, as the employee is liable to tax and the employer is required to pay
A: Regulations include a duty on employers to provide a statement of benefits to every employee who has received payrolled benefits at any point during a tax year. The information must be provided before 1 June, following the end of the tax year. This includes employees who have been employed for only part of the year, so yes this does apply to an employee who leaves the business mid- year. There is no prescribed format for these statements, so they could be on paper or online. The information could be included on payslips throughout the year or in an annual statement of benefits, for example. Q: We have produced our P11D returns for tax year 2020/21 and submitted them to HMRC. Included are P11D returns for employees who left our employment prior to the start of this tax year. Are we required to issue them with a statement of the content of their P11D return? A: Whilst this isn’t mandatory, it would be good practice to send the ex-employees a copy of the content (typically a copy of the P11D). This is because former employees can request a statement from a former employer at any time, up to three years after the end of the tax year. (See regulation 94 of the Income Tax (Pay As You Earn) Regulations 2003, https:// bit.ly/3vKFyXG.) Q. An employer wishes to create a contract of employment whereby employees are provided with a set payment for the completion of a task. However, the employer is struggling to understand how to calculate holiday pay for them. Are there any methods that should be considered?
class 1A NICs on the amount. Under the OpRA rules, a gym membership is not an exempt benefit that retains salary sacrifice advantages. See EIM44131 in HMRC’s Employment Income Manual (https://bit.ly/3vgl5d0), and guidance on OpRA here: https://bit. ly/3ffin1H. Q: An employer is currently looking into setting up an annual leave buy scheme for its employees. Should a deduction be taken from gross or net pay? A: If an employer contractually agrees to reduce an employee’s salary in exchange for a benefit, it will be regarded as a salary sacrifice arrangement. Reducing an employee’s gross pay may affect their NMW rate, so checks will be required to ensure they do not fall below the NMW. HMRC advise that holiday purchase can be a salary sacrifice arrangement which is not caught by the OpRA rules as it is an intangible benefit. Q: Are diesel vehicles that are registered as Euro 6AP subject to the income tax exemption of the 4% supplement? A: Cars that meet the Euro 6d standard will have a Euro status of the car displayed in their V5 Registration document and will be shown with: Euro 6AJ, Euro 6AK, Euro 6AL, Euro 6AM, Euro 6AN, Euro 6 AO, Euro 6AP, Euro 6AQ, Euro 6AR. Therefore, diesel vehicles that are registered as Euro 6AP are exempt from the 4% supplement. Q: If an employer payrolls benefits, do they still need to provide a statement of benefits for employees who leave the business in the middle of the tax year?
| Professional in Payroll, Pensions and Reward | July / August 2021 | Issue 72 6
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