MY CIPP
The CIPP’s Advisory Service team provides answers to popular questions
Employees appointed as directors mid-tax year Q: We have a client with several employees who have been appointed as directors mid-tax year. I know how to handle directors who are appointed mid- tax year who haven’t been on the payroll so far in the tax year, but in this instance, all three of them have been receiving earnings, and have been appointed as directors as of 1 November 2023. A: When an employee is appointed as a director during the tax year, the pro-rata annual earnings period should be used for the remainder of that tax year based on the tax week of appointment. This doesn’t include any previous earnings prior to the date of appointment. For reporting purposes, additional information should be flagged to HM Revenue and Customs (HMRC) on the full payment submission, as ‘AN’ for the annual earnings method or ‘AL’ for the alternative method, along with the week the director was appointed. Please see the following links for further information: https://ow.ly/Jnwu50Qn1Lp and https://ow.ly/nLvL50Qn1Mj.
allowance through the payroll and is reimbursed for business mileage only, what rate should we be paying for the mileage on a fully electric vehicle? A: As the employee is claiming mileage in their own electric car, the approved mileage rate is 45 pence per mile for the first 10,000 business miles and 25 pence thereafter. If a company wishes to pay a different rate, they can, but any excess is subject to tax and class 1 National Insurance contributions (NICs). Please see here for more details: https:// ow.ly/15Vx50Qn1Ny. The employment allowance (EA) and the kickstart scheme Q: We’re taking on a new company client from another accountant. They confirmed they didn’t claim the EA for tax years 2021/22 and 2022/23 because they weren’t eligible for the EA as state aid was being claimed for an employee on the kickstart scheme. They stated that using the kickstart scheme for one employee meant the company couldn’t use the EA at all for the entire tax years mentioned. Please could you confirm if this is correct? A: The EA counts as de minimis state aid allowance, and there’s a limit to the de minimis state aid allowance businesses can claim over a three-year period. This means that it could be the case that EA couldn’t be claimed if the de minimis state aid limit was breached. Additionally, the kickstart scheme (which has now closed) allowed employers to help certain individuals at risk of long-term unemployment aged 16-24. Employers of all sizes could apply for funding from the government for 100% of the national minimum wage (NMW) for 25 hours per week for a total of six months, along with the associated employer NICs and
employer minimum automatic enrolment contributions. For individuals under the age of 21, there are no employer NICs, so, if the company only had these types of employees (all under 21, plus the kickstart scheme employee), then the EA couldn’t be claimed as there would be no employer NICs to claim it against. Please see here for further information on the EA: https://ow.ly/ nOTm50Qpz1r.
How do you treat e-vouchers and NI purposes?
Can you claim the EA if you have used the kickstart scheme for any of your employees?
What are the rules regarding the maximum number of council tax attachment of earnings orders (CTAEOs) running through payroll? Q: We received two CTAEOs dated 7 June 2023. We later got a priority order dated 23 November 2023. We assumed we could only have two order deductions running concurrently, so have tried contacting the council to consolidate the two existing orders but cannot get an answer. Please can you confirm the order of priority we should be following? A: An employee can only have two CTAEOs running at any one time. Therefore, if this order is another CTAEO, then only the two existing ones can be processed. If, however, this additional order is not another CTAEO, then all three can be processed. This is because with other
What happens when employees are appointed as directors mid-tax year?
Business mileage rates on fully electric vehicles Q: If an employee receives a car
| Professional in Payroll, Pensions and Reward | February 2024 | Issue 97 8
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