MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Q: When an employee is reinstated, can you use their previous payroll number? A: If an individual is re-employed, they are classed as a new employee for the purposes of tax and national insurance (NI) and must be treated as such when they are processed through payroll. A new employee ID is required. The only time an employee’s closed payroll record can be used for making additional payments is when an outstanding payment is due to the individual after they have left employment. For reference see: http:// ow.ly/JRjs30rSdTE. Q: A client based in the USA does not have a business presence in the UK. They have employed two UK resident workers to work remotely in the UK. How would we enrol them into an approved pension scheme when there is no UK business presence? National Employment Savings Trust (NEST) pensions advised that its schemes can only be used by UK-based companies with UK bank accounts and a pay as you earn (PAYE) scheme. A: Under UK pensions legislation an employee must be auto enrolled into a pension scheme when they: ● are classified as a worker ● are aged between 22 and ‘State Pension Age’ ● earn more than £10,000 per year ● ‘ordinarily’ work in the UK ● aren’t already part of a qualifying workplace pension scheme. There are UK pension schemes that can be used by overseas employers to comply with UK pensions legislation. These pension schemes assist the US company in transferring funds into a UK approved pension scheme or will assist the company in setting up a UK bank account. The CIPP advises members to contact independent pensions advisors or international human resource (HR) advisors for their assistance with this. In the interim, an overseas employer
could postpone pensions enrolment for up to three calendar months following the start date of employment, giving them time to make suitable arrangements. Q: A business intends to hold a lucky dip raffle for its employees. The prizes will include holidays and televisions costing between £500 and £2,500. Entry to the raffle will be free for all employees as it is not performance related. Will these raffle prizes be a taxable benefit and reportable on our PAYE settlement agreement (PSA)? A: In Her Majesty’s Revenue and Customs (HMRC’s) Employment Income Manual, it states “it is sometimes argued that the raffle or lottery results in prizes being awarded by chance and not by reason of the employment. This contention should not be accepted unless it can be shown that the draw was equally open to members of the public, on the same terms as employees”. For reference, see: https:// bit.ly/3lRdcsM. Unless the raffle is open to members of the public, a benefit in kind arises and this would be at a cost to the employer for providing the raffle. Please see section 204 of the Income Tax (Earning and Pensions) Act 2003 (ITEPA) for more information: https://bit.ly/3jF26UN. The employer could approach HMRC to request that the company settle the tax on behalf of the employees via a PSA, as the raffle prize is much more likely to be considered a minor, irregular or an impracticable benefit in kind to operate. Q: The company has a PSA in place. We know the deadline for making payment is 22 October but cannot find any guidance on the deadline for submission of the PSA computation. Is there any guidance available? A: HMRC guidance explains that form PSA1 should be used to calculate the amount due. If the form is not used, HMRC will calculate the amount, but there
will be an extra charge where this happens. The completed form should be sent to HMRC as soon as possible following the end of the tax year. HMRC will confirm the total tax and NI due prior to 19 October following the tax year the PSA covers. The guidance can be located here: http:// ow.ly/oGWA30rSRz0. The deadline for applying for a PSA is 6 July and payment is due by 22 October if an employer pays their liability electronically. The guidelines on submission of the computation sheet are vague but the CIPP advises that employers aim to submit form PSA1 by 6 July to allow HMRC time to raise queries if necessary. This also allows time for corrections to be made if required. For reference see: https://bit.ly/3s6mJwT. Q: Instead of holding its annual summer barbecue this year, a company gave staff members a £50 (non- cash) voucher. Would this amount be regarded as an exempt benefit under trivial benefit rules? A: Section 323A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) sets out a statutory exemption for trivial benefits. Under this exemption, if an employer provides a benefit to its employees, the benefit is exempt from tax as employment income if all the following conditions are satisfied: ● the cost of providing the benefit does not exceed £50 ● the benefit is not cash or a cash voucher ● the employee is not entitled to the benefit as part of any contractual obligation ● the benefit is not provided in recognition of services performed by the employee as part of their employment duties (or in anticipation of such services). For reference see: https://bit.ly/3yxpNVk. Q: The company paid for employee taxis to and from work during the pandemic and now wishes to settle the tax on behalf of the employees via
| Professional in Payroll, Pensions and Reward | October 2021 | Issue 74 10
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