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allowance given up or the list price of the car (depending on which is more)? A: The P46(Car) return asks for all the relevant information and also if the employee is giving up/foregoing ‘cash’ to be in receipt of the car and the value. The value entered would be the annual amount the employee would have received if they had not chosen the car, but this may be prorated if the employee is in receipt for only part of the year as illustrated by the following example: Sue has decided that she would like to give up £5,000 of her salary for a company car that she will receive in June. The value of cash foregone would be calculated as: £5,000 ÷ 12 × 10 = £4,166.67 (June to March = 10 months for the calculation). Q: We employ seasonal workers who remain ‘dormant’ for many months and usually do not return to work. When should we remove them from the payroll? A: There is no guidance on when you should remove dormant employees. HMRC, however, will assume an employee has left the employment if they are not paid after a three-month period. It is recommended to have data cleansing procedures in place to remove employees from the payroll who are inactive for three months. Q: If we were to change our private medical insurance deductions to salary sacrifice, would the optional pay arrangements (OpRA) tax rules apply? A: Yes, private medical insurance would be subject to the OpRA rules. Where an employee chooses to receive a benefit as opposed to an amount of cash pay, the taxable value of the benefit is taxed at whichever is the higher of the amount of cash pay foregone or the taxable value of the benefit under the normal benefit-in-kind rules. If the two are equal, then normal benefit calculation rules must be applied. The CIPP policy and research team’s OpRA fact sheet can be found here: https://bit.ly/2Ilg0gb. Q: An employee has been overpaid and has agreed to pay back the overpayment. What is the process to correct our payroll records?
A: Where the employee repays the overpayment, and the tax year in which the overpayment occurred is still open, then you can adjust the pay, tax and NICs figures appropriately for that year and report to HMRC via the full payment submission. Where an employee has repaid the overpayment, and the tax year in which the overpayment occurred is closed, you should claim the appropriate tax and NICs refunds from HMRC. This is because adjustments to the monthly or quarterly remittances of tax and NICs should not be made in a later tax year without obtaining the agreement of HMRC. A replacement record must be sent to HMRC for the previous end of year submissions. Q: This tax year we have acquired three companies that were below the limit for the apprenticeship levy. If our company is liable to make payments, would these companies start to pay the apprenticeship levy from the date we bought them? A: Government guidance (see http://bit. ly/3gPnyEH) confirms that your pay bill is cumulative and apprenticeship levy must be considered from the first time you process a payroll for a connected company. Q: Can we accept photocopies of a MATB1 certificate for statutory maternity pay purposes? A: Government guidance (see https://bit. ly/39Vo96F) says that a photocopy of the certificate is acceptable. Q: For the purpose of calculating the maximum 28 weeks of statutory sick pay (SSP), are waiting days included? A: No, the waiting days are not included in the 28 weeks, as SSP is not payable for them. Q: How is the rate of tax to pay in a PAYE settlement agreement determined? A: The calculations for determining the rate are based on each employee’s marginal rate of tax at the end of the tax year. To establish the employee’s marginal rate you need their gross taxable pay plus the taxable value of any benefits provided minus their income tax personal allowance according to their final tax code. Guidance can be found on the gov.uk website at http://bit.ly/2VqsSHu. n
This course is a bridge to year two of the CIPP Foundation Degrees in either payroll and
pensions, and specifically designed for those who have the experience, and would now like a formal qualification We have developed this online course to provide those who have completed one of our level three certifications, or who have two years’ experience and are confident with manual calculations.
If this sounds like you or a member of your team, enrol today.
CPD 18 points
For more information or to enrol: Visit: www.cipp.org.uk/study Email enquiries@cipp.org.uk
Call: 0121 712 1023 Live chat with us
cipp.org.uk @CIPP_UK
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| Professional in Payroll, Pensions and Reward |
Issue 67 | February 2021
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