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The CIPP's Advisory Service team provides answers to popular questions
Q: Do we submit an employer payment summary (EPS) as our final submission of the tax year, even if we have sent a final full payment submission (FPS)? A: You would only send an EPS as your final report instead of a final FPS. So, if you have forgotten to put ‘yes’ in the final FPS submission for the year, or you did not pay anyone in the final pay period of the tax year, then you would have to send an EPS and indicate that this is your final submission for the tax year. Q: When sending final real time information returns for the tax year, is it possible to send more than one FPS for a pay as you earn (PAYE) reference scheme, if for example you have weekly and monthly payrolls on the same PAYE scheme? A: You would only send one final FPS per PAYE scheme, and you would tick the box to state: “This is your final FPS” in the last payroll you run. Regardless of the pay frequencies, you would only mark the payroll nearest to the end of the tax year as your final submission. Alternatively, if this box is not ticked you would use an EPS to tell HM Revenue & Customs (HMRC) that it is your final submission for the PAYE scheme. If you make an error in your final FPS, you will be able to send a replacement. You would need to ensure you have selected a late reason as well as marking this as your final FPS for the tax year. advances where employees are missing a large payment and are unable to wait until the following payday. If this is still a valid process, can you please advise on the rules? A: I can confirm that HMRC do allow you to make ‘ad hoc’ payments outside of your regular payroll without the requirement Q: Within our organisation we occasionally issue payroll loans/
to send a FPS (such as where you have missed an overtime payment, or after the payroll has processed you are told about a new employee). However, if you make regular payments outside your normal payroll these would not be classed as ‘ad hoc’; and in these circumstances an additional FPS should be sent. Please refer to the following guidance: http://bit. ly/2S0AbRA. Q: We have been advised that as of 6 April 2020, class 1A National Insurance contributions (NICs) will be due on all termination payments that exceed the £30,000 threshold. How will these NICs be collected during tax year 2020/21? relevant termination award that exceeds £30,000 from 6 April 2020. This will not be collected and reported via the P11D(b) return unlike class 1A NICs liabilities on benefits in kind. Instead this will be reported and collected in real time, meaning that your payroll system will need to be updated to accommodate this change. Class 1A NICS due on these payments will be reported and paid when the payments occur in year. You will need to liaise with your software provider to ensure that your software and payroll codes have been updated so that the class 1A NICs are shown correctly in the FPS returns and are included in the PAYE bill due for the period. Q: Can we use a new employee’s form P45 in our April 2020 payroll if it has a leaving date in the ‘previous’ tax year, e.g. 23 March 2020? A: You cannot use the pay and tax shown in a form P45 for a previous tax year, but in this case you would use the code in the P45 and uplift it as appropriate. Best practice would always be to use the tax A: Class 1A NICs will be due on payments awarded in relation to a
code checker provided by HMRC at the following link: http://bit.ly/38QtYhJ.
Q: Is it possible to pay holiday pay in advance in week 53? A: It is not advisable to do this because the employee will not be entitled to tax and NICs allowances for the new tax year. This could mean the employee would pay more PAYE income tax and class 1 NICs than they would have if the holiday pay had been paid in the pay period when they take the holiday. Q: An employee intends leaving the company on 31 March 2020 and will receive form P45 then. Do we need to give this person a P60 certificate for the 2019/20 tax year? A: A P60 certificate would not be issued in this scenario as the employee was not employed by the company on 5 April 2020. In the event a former employee loses the form P45 they received when leaving their employment, they might request information about earnings and tax etc to complete their annual self- assessment tax return in which case you could provide a statement of earnings to assist. Q: Can you provide an overview of the changes to the employment allowance (EA) that have effect from April 2020? A: From 6 April 2020 the EA will be restricted so that it can only be claimed by an employer if its total qualifying employer’s (secondary) class 1 NICs liability in the previous tax year was less than £100,000. Also, if the employer has multiple PAYE schemes or is part of a connected group of companies, the employer’s (secondary) class 1 NICs liabilities of all companies and PAYE schemes must be added together in order to assess eligibility for the EA. Remember the allowance can only be
The CIPP Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m. to 4.30p.m. on Fridays * . Call 0121 712 1099 , email advisory.service@cipp.org.uk or visit cipp.org.uk to live chat.
| Professional in Payroll, Pensions and Reward | March 2020 | Issue 58 16
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