MY CIPP
The CIPP’s Advisory Service team provides answers to popular questions
Payments to staff working from home Q: Can a net payment of £26 still be made to employees who work from home most of the time? Many do have an office they can attend but they have no fixed desks and there’s no expectation for them to come into the office. A: This will depend on what the contract of employment states. Under Section 316A of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003, employers can make tax-free payments to employees of up to £6 per week, to meet or reimburse additional household costs incurred by employees under a home working arrangement – for example – if there are hybrid working arrangements in place and employees work from home two days per week. Further information is available here: https://ow.ly/ QXo450VCxOZ.
travelling to their normal place of work and the accommodation and food is provided outside of business time. This is being done so the new employee can stay closer to work rather than having a lengthy commute every day. Are these payments subject to tax and NI? A: All the payments mentioned here would be subject to tax and NI, as they’re earnings derived from employment and payments for home to work commuting costs, which aren’t exempt.
What are the tax and NI implications if an employer reimburses an employee’s holiday deposit?
Reimbursement of a holiday deposit Q: An employee has booked a holiday and paid a deposit of several hundred pounds. There’s been an unexpected delay to our new payroll system ‘go live’ date, and this now clashes with the employee’s holiday dates. We would therefore like to cover the total cost of the payment they’ve already made, as the employee has agreed to take the holiday at a later date as long as they aren’t left out of pocket. What would the tax and NI implications of reimbursing the cost to the employee be? Would it be best for the employee to claim this as an expense or for an ad hoc grossed-up amount to be paid to them through the payroll? A: As this payment has not been incurred wholly and exclusively in the performance of the duties of the employment, this will result in the payment being subject to income tax and NI. As the employee is being given cash, this is classed as extra income under ITEPA 2003 Section 62 (https://ow.ly/ G5FI50VGZUP). This payment would need to be paid via the payroll to ensure the income tax and NI is deducted. You’re able to gross-up the payment should you wish to, and further information on that can be found here: https://ow.ly/2T9K50VGZW5. Expense payments to a new starter Q: A new starter is being paid per day worked. They don’t live locally so they’re reimbursed for their accommodation, travel and food each week. They’re
Can SMP be paid in days to align with OMP?
Can statutory maternity pay (SMP) be paid in days? Q: A client of ours would like to process SMP in days rather than weeks. We know that occupational maternity pay (OMP) can be processed in days. However, our understanding is that SMP should be processed in full weeks only. Could you advise on whether it would be legally compliant to process SMP in days? A: SMP can be processed in days in order to align it to a company’s pay period. The only thing to remember is that only full weeks of payment (not payment for part-weeks) can be made and this needs to be considered when an employee returns to work. Please see the following excerpt taken from https:// ow.ly/27Mk50VH1gi, below: “Statutory Maternity Pay paid part weekly You can pay Statutory Maternity Pay in part weeks if it helps to align the payments to your employee’s normal pay period. Divide the weekly rate by 7 and multiply by the number of days for which Statutory Maternity Pay is due in the week or month. For example, if the pay period covers the end of one month and the beginning of the next (2
Are homeworkers still entitled to receive tax-free payments of £6 per week from their employers?
Eligibility for National Insurance (NI) relief in UK freeport or investment zone special tax sites Q: We supply agency workers to various client sites throughout the country, and some of those sites are based in freeport and investment zones. Our head office is based in Nottingham. Does this mean we can claim the employer’s NI relief on the pay of the workers we place at the sites within freeport and investment zones?
A: The business needs to have an establishment within the freeport or
investment area. If the workers are sent into the area but the company doesn’t have a business presence there, the company can’t apply the relief. Further information can be found here: https://ow.ly/E5I050VCyG1.
PROFESSI NAL in Payroll, Pensions and Reward
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June 2025 | Issue 111
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