MEMBERSHIP INSIGHT
type. You cannot change the plan until you have received notification from HM Revenue & Customs (HMRC) to change it to the correct loan type. Q: An employee who is currently on maternity leave has brought in a sick note saying she wants to suspend maternity leave and pay and be considered sick until she resumes her maternity leave. Can she do this? A: The employee is in the disqualifying period for SSP whilst in the statutory maternity pay (SMP) period and can only take statutory maternity leave in the set 52 weeks. You must pay her SMP and not SSP even though she is sick. If she is still sick after the end of the SMP period, she would not be due SSP. She would have to return to work for at least eight weeks before she would be eligible for SSP. Q: An employee is leaving, and the termination arrangements are being negotiated through a settlement agreement. The employee has incurred legal costs (solicitor fees) regarding advice in connection to the termination of the contract, which the employer has agreed to pay. Would this be considered a benefit which is subject to tax and NICs? A: This payment would come under section 401 of the Income Tax (Earnings and Pension) Act 2003. It would be exempt from tax and NICs and no reporting in the P11D return would be necessary if these conditions are met: ● ● the legal costs were invoiced directly to the company ● ● the payment was made directly to the solicitor ● ● the charges in the invoice are in connection to the termination of the employment ● ● the payment of the fees are made under a term of the settlement agreement. Q: Our company has directors who live and normally work abroad but come to the UK every three months to attend board meetings. How should we treat their NICs? A: If a director only attends board meetings in the UK (including Northern Ireland) and the board meetings are kept to a maximum of ten with each visit
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.
Advisory
*please see summary at cippmembership.org.uk for details.
Q: An employee has recently relocated to the UK and on their behalf our company has reimbursed relocation expenses which exceed £8,000. With regards to the P11D return we believe that we will need to report the qualifying costs over £8,000 and this will lead to the employer paying class 1A National Insurance contributions (NICs). Does this also mean that the employee will need to pay tax on this amount or will it be exempt as they are expenses incurred in relation to their relocation of employment? A: If you reimburse exempt/qualifying expenses that are above the £8,000 limit then these are reportable in the P11D return and class 1A NICs are due for the employer. The excess is also taxable for the employee – use box J. If you reimburse relocation expenses that are not exempt (e.g. non-qualifying expenses) these are reportable in the P11D; they will attract tax for the employee and class 1A NICs as well for the employer – use box M. Q: My employer, which has just changed its sickness absence policy to remove the need to submit self- certificate forms, wants to ensure that this will not impact on our ability to pay statutory sick pay (SSP) to employees further down the line. We have a contractual sick pay scheme and often have employees who go on long-term absence. Can you confirm that for the first week of absence, employees do not have to provide a self-certification form in order for us to pay SSP?
A: Under section 14 of the Social Security Administration Act 1992 employees who claim SSP must provide evidence of incapacity if required by their employer. Your revised policy will not impact on SSP being paid alongside the company sick pay scheme under this new policy. If you decide to ask for evidence this should be in accordance with regulation 2(1) of the Statutory Sick Pay (Medical Evidence) Regulations 1985, which requires that evidence shall be in the form of a statement given by a doctor, or by such other means sufficient in the circumstances of a particular case. Q: Can a company claim employment allowance for a payroll that only has two directors and no other staff? A: Yes, I can confirm that as such a company can claim the employment allowance even where all employees are directors and where both of earn above the secondary threshold for class 1A NICs. This is covered in guidance at item 3 – The additional employee test – found in the following link: http://bit.ly/2QzCs4Z. Q: A new employee has complained about his student loan repayment. Plan 1 was applied as it was not specified in the starter checklist which plan he had. If I change the plan to the correct plan 2 next month, he won’t reach the threshold to pay any student loan. Can I reimburse the amount paid in the previous month? A: You operated the student loan plan 1 correctly as that is the default if the employee does not indicate which loan
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| Professional in Payroll, Pensions and Reward | July/August 2019 | Issue 52
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