MY CIPP
The CIPP’s Advisory Service team provides answers to popular questions
Long service awards Q: Our company gives a long-term service award of £1,000 for 40 years’ service. An employee who will be receiving this award would like goods worth £1,200, which we will purchase and pass on. Can we then request a payment from them of £200 (the amount we overpaid) with no tax or National Insurance (NI) implications? A: The legislation around this means long service awards can only be given for 20 or more years of service, and the permitted maximum award is £50 per year. The key thing to note here is that it can only be given as a ‘tangible moveable property’ – in plain English that means an object, such as a TV, a watch etc – or as shares in a company. Here are the links to the legislation and guidance: https://ow.ly/9AOx50Se22q and https:// ow.ly/iqq750Se4lC. Any monetary award you’re paying employees for long service should be made via the payroll as earnings, attracting a tax and NI liability. If you don’t wish employees to suffer the tax and NI, you may gross up that payment so the net they receive will be the true value of the award. Based on the above guidance, the employee could receive up to £2,000 in goods for their long service award. If you wish to give over the £1,000, you could do so without attracting a tax or NI liability. Covering these awards under a pay as you earn (PAYE) settlement agreement is another common approach.
paying staff weekly to monthly but doesn’t want employees to miss out on pay. Can we do so but pay some of the net pay halfway through the month? A: Yes, what you’ve set out seems perfectly reasonable and is often the way employers do this in a transition period. The mid-month payment would be seen as an ‘advance’ of wages, so whatever is paid to employees at that point would be deducted from them net and shown as an advance in the first monthly payslip.
contract between your company and the voucher provider.
Sickness and bank holidays Q: If an employee is off sick, do we still need to pay the statutory bank holidays as holiday pay at the same time as statutory sick pay (SSP)? A: Firstly, what does the employment contract or sickness policy state in this situation? We can only offer the legislation on this guidance, which is not definitive. As a general rule, an employee cannot be off sick and in receipt of holiday pay. Sickness supersedes holidays, so the bank holidays during periods of sickness should not reduce the employee’s overall holiday entitlement. All employees are entitled to 28 days of leave. If they are unable to take this entitlement, they must be allowed to carry statutory leave forward if they are on long- term sickness. ACAS states SSP can be paused so holiday can be paid but HMRC states the SSP period of incapacity for work (PIW) continues while they take leave. This must be a company decision. HMRC could be followed whereby the employee is still off sick on their PIW, but they can also receive top up to full pay while off on SSP. For more, see: https://ow.ly/ TQVB50Se5ng and https:// ow.ly/8CVQ50Se5qQ. Backdating new starters Q: If a new starter joins towards the end of March after the cutoff date, how should tax be calculated? Should it be based on if the pay was earned in March? Or should the backpay be taxed as though it is considered part of April pay was because this was paid and backdated in April? The employee querying this has come across this guidance which has led them to believe they have been incorrectly taxed: https://ow.ly/kb7B50Se98A. A: It is quite normal for new starters who start part-way through the year to be paid in
Can a refund on childcare vouchers be processed as a payment after leaving?
Refund of childcare vouchers Q: We need to refund a childcare voucher salary sacrifice amount through the payroll for someone who left in 2020. We would normally process such payments as a payment after leaving but is there a limit on the length of time after leaving that we should do this? A: Yes, a payment after leaving can be made. HM Revenue and Customs (HMRC) guidance states childcare vouchers can be refunded but tax and NI contributions (NICs) must be deducted. If the childcare vouchers relate to a previous tax year the refund would still be made in the current year, as tax and NI is due when the payment is made available to the employee. This applies to both current and former staff. The relevant guidance can be found here: https://ow.ly/ EYba50Se4Q8. You need to deduct PAYE tax and NICs before making the refund to employees. This applies to both current and former staff. If your company no longer exists, the voucher provider may refund the employee directly. This will depend on the
Can we recoup a long service overpayment without any tax or NI liabilities?
Change to pay period Q: A client wants to transition from
| Professional in Payroll, Pensions and Reward | September 2024 | Issue 103 8
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