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Q: We currently operate ‘IR35’ requirements for several personal
agreement) and that as the employer we are going to pick up the tax bill. To gross up, I will apply 0T tax code, resulting in the values being substantial. If the individual in the future queries his tax paid in the year, and his allowances are applied, it will be apparent the tax collected on his earnings are incorrect and a refund would apply. Therefore, if a refund is calculated, will it be paid to us as the employer who paid the tax on the employee’s behalf or would it be paid to the employee? A: Any tax that has been overpaid will be refunded to the ex-employee. The employer has deducted tax from the employee via PAYE in accordance with the tax code applied. HMRC would not know that the employer has grossed-up the payment so that the employee can receive an agreed amount of net pay. In the eyes of HMRC, the amount processed as gross is the employee's earnings in that period. Q: We have recently taken on a new member of our sales team who will be using their own fully electric car for business use. We understand that when using a fully electric company car for business miles, each mile is reimbursed at a rate of 4p per mile. But what rate is applicable for a private electric car? A: The rates that are reimbursed for business miles when travelled in a private car are called mileage allowance payments (MAPs). The MAPs are in relation to vehicle type rather than fuel type. The rate paid for every qualifying business journey is 45p for the first 10,000 miles and 25p thereafter, without attracting tax and National Insurance contributions (NICs). This is the maximum you can reimburse your employee without tax and NICs liabilities. If you pay more than the approved amounts, then you would need to apply PAYE to the difference either via PAYE or report in a P11D return. If you decide to pay less, then the employee could claim tax relief directly from HMRC. n
service company consultants who are working for us. Should these consultants each receive a P60 certificate? A: Referring to guidance, yes you would issue a P60 certificate, but there is no effect on the employment status of the individuals. The reason for this is that the payments made via pay as you earn (PAYE) are ‘deemed employment payments’ and the figures need to be reported in a P60 so that the worker can enter them into their self-assessment tax return. If the worker then becomes an employee or is also an employee at the same time that they are a contractor, and all within the same tax year, then you would enter both figures in the same P60. Q: Would we be able to cover the cost of a van benefit in our PAYE settlement agreement (PSA)? A: Vans or company cars cannot be covered in a PSA as they do not fall into the available categories. A PSA can be used to cover things that would fall into the categories of minor, irregular or impracticable benefits. Q: We have an employee who is receiving SMP. Her maternity pay period does not end until April, but she has informed us that she has been offered a new job and will be leaving our employment. What happens to her SMP? A: An employer’s liability to pay SMP ceases if the employee starts to work for a new employer after her baby has been born. Ask your employee when she will be starting employment with the new employer as this is the date up to which she should be paid SMP. Remember that SMP is paid in weeks, meaning that she can only be paid for full SMP-weeks, not part-weeks. As with all leavers, you must process her final pay to include any holiday pay that she has accrued during the period of maternity leave when she was still employed by you. You would not include the period in which she was no longer your employee, even if SMP is due for this period.
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Q: It has been agreed that a leaver is to be paid gross (via a settlement
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*correct at time of publication
| Professional in Payroll, Pensions and Reward |
Issue 55 | November 2019
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