MY CIPP
The CIPP’s Advisory Service team provides answers to popular questions
Processing one-off benefits through payroll Q: Please can you advise on how to process one-off benefits through payroll? For example, if a chair is provided, is the notional amount processed through payroll in full the following pay period or can it be split across the remaining pay periods in the tax year? A: When a benefit is supplied and the company providing it payrolls its benefits, the notional, taxable amount is split across the remaining pay periods in the tax year. Please see the following guidance: https://ow.ly/ it7450Xgbkf.
Mileage payment rates Q: Expenses at our organisation are paid in arrears. (They’re usually paid a month in arrears, but this can go up to a maximum of three months.) We pay 45p per mile for the first 10,000 miles and 25p thereafter. In our system, if an employee has completed over 10,000 miles in March and is due to receive any outstanding mileage for March in April’s pay run, the additional miles are also paid at 45p per mile. This is because all the year-to-date figures reset to zero at the start of the new tax year. Is this correct? A: As per Section 230 of the Income Tax (Earnings and Pensions) Act 2003, the number of miles travelled relate to the tax year. Therefore, if the employee has travelled over 10,000 miles in the tax year, any miles over that 10,000 mark should be paid at 25p per mile for tax purposes. The following guidance should help with this area: https:// ow.ly/kOof50WXx3H.
Insurance (NI) deductions. So, the employee still has to pay NI on the amount, but no tax. The employer would first need to set up a scheme with an approved agency before any deductions from pay are taken. There’s a full, detailed set of guidance on this, which also includes a list of approved agencies, here: https://ow.ly/LyCC50WXxiL. Multiple salary sacrifice reductions and the impact on national minimum wage (NMW) Q: We’d like to introduce a cycle to work salary sacrifice scheme for our employees. We understand that the salary sacrifice arrangement can’t allow employees’ pay to go below the NMW / national living wage (NLW). If we also have a salary sacrifice pension scheme in place, would we base the NMW calculation on the salary before or after the pension reduction? A: Both the salary sacrifice pension and cycle to work salary sacrifice amounts would reduce employees’ cash earnings. Therefore, both need to be taken from employee pay prior to calculating the hourly rates for NMW / NLW purposes. Neither salary sacrifice amount should reduce employee earnings below the NMW / NLW, and it’s the employer’s responsibility to put procedures in place to ensure they remain complaint with NMW rules. When calculating an employee’s rate of pay, it should be done for each pay reference period, as some periods are longer than others (for example, some monthly pay reference periods may have more working days than others). The following links should be useful here: https://ow.ly/JgAp50WXAcj, https://ow.ly/suEu50WXAnx and https:// ow.ly/qxxI50WXAqB. Dividend / dividend equivalent payments Q: What’s the correct NI threshold for an expected dividend payment (weekly or monthly), which is paid every quarter
What’s the correct process for processing a one-off benefit through payroll?
Statutory neonatal care pay (SNCP) when an employee leaves the company Q: What happens if an employee leaves before their SNCP is processed? For example, a mother on maternity leave wants to take statutory neonatal care leave (SNCL) at the end of her period of maternity leave but resigns as soon as that maternity leave finishes. Would the SNCP owed be paid as a lump sum as they’re entitled to it, or, as they haven’t technically taken the leave, are they not entitled to the pay? A: If the employment ends prior to the individual taking the SNCL, and they’re not employed in the ‘relevant week’, they’ll not be entitled to SNCP. If the employment ends during their leave, they’ll be entitled to the remainder. Confirmation of this and further details can be found here: https://ow.ly/ FMpa50WXwzT.
When do we need to move from paying 45p per mile to 25p per mile?
Payroll giving Q: A n employee has requested for a deduction from their pay to be made via salary sacrifice, to make a payment to a charity. This is a one-off deduction, and no further deductions would be made. Is this allowable if we draw up a proper salary sacrifice agreement? A: Deductions taken from an employee’s pay for the purposes of charity donations aren’t classed as salary sacrifice arrangements. Payroll giving deductions are taken from an employee’s pay prior to tax but after National
| Professional in Payroll, Pensions and Reward | November 2025 | Issue 115 8
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