MEMBERSHIP INSIGHT
curtailed her SML at the end of October 2018. The following link explains about pay rises during SML and the relevant period: https://bit.ly/1fZJ02h. Q: We have a contractor, age 65, who works for us and falls within the ‘IR35’ rules. Are National Insurance contributions (NICS) due? A: If the contractor has reached state pension age (SPA) at the time of payment and you have also verified their date of birth, I can confirm that there will be no NICs due when doing this calculation for IR35. Please be mindful that there is a sliding scale for SPA for both men and women; information can be found here: https://bit.ly/2tKHuBz. Q: After a request from an employee who is disabled our company has provided her with an automatic car because of the disability. The list price of the automatic was more than a manual therefore giving a higher tax bill. The employee says that because she is disabled, we should use the list price of the manual car. Is this correct and do we have to amend the P11D return? A: There are special rules for employees who have a Blue Badge as a disabled individual. Firstly, equipment which is provided in the car for a disabled employee is disregarded when calculating the cash equivalent. Secondly, if the carbon dioxide (CO2) emissions are higher for the automatic car than the manual transmission car you use the manual car’s emission value. Further, where the list price for a manual car is less than the automatic car you use the manual car list price. Q: My company gives half their NICs savings arising under the salary sacrifice pension scheme arrangement back to the employees by paying the appropriate amount into their scheme funds. For example, an employee earns £8,333.33 per month and salary sacrifices 7%. How would you calculate the employer savings? A: I would calculate the employer NICs on the pre- and post-sacrifice salary. So, using your example, £8,333.33 is basic salary pre-sacrifice which is multiplied by 7%. This equates to £583.33 which is subtracted from £8,333.33 producing post-sacrifice salary of £7,750.00. Therefore, to calculate the employer’s NICs, deduct
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Q: An employee is asking for a loan from the employer to buy an annual season rail ticket and an annual parking pass for the railway station he will travel to and from. A: An employer can offer a loan up to £10,000 with nothing to report to HM Revenue & Customs (HMRC) which can generally be for anything they wish; for example, for an annual train or bus pass, or something completely non-work related. This could include a loan you provide in the normal course of a domestic or family relationship as an individual. So, if an employer provided a loan of, say, £11,960 then it would be reportable. You should always check what the combined outstanding value would be to the employee. If it is less than £10,000 throughout the whole tax year, there is nothing to report; otherwise there is a reportable beneficial loan. Q: I would like advice on salary sacrifice for buying annual leave and whether this is a taxable benefit in kind or would fall under optional remuneration arrangements (OpRA)? A: Employers can offer this kind of arrangement which HMRC has stated is perceived as helping employees maintain a good work/life balance. There is nothing to report regarding salary sacrifice or OpRA, as the purchasing of additional annual leave is classed as an intangible benefit in kind. Is there any taxable benefit in relation to this loan of £1,196? The following link gives further guidance: https://bit.ly/1FSIsee.
Q: I have a situation where an employee has been overpaid a bonus during her qualifying period for statutory maternity leave (SML). She is repaying this overpayment, but should we recalculate the month the overpayment was paid in order to correctly calculate her statutory maternity pay (SMP) payment or does her SMP have to be based on what was actually paid? A: HMRC guidance states that if incorrect earnings have been paid, which would produce a situation that worked to the disadvantage of either the employer or employee, and there is documentary evidence of an agreement between both parties as to the actual earnings that should have been paid, you should use the earnings agreed to calculate an employee’s average weekly earnings (AWE). Where there is no evidence of an agreement, you should calculate the AWE using the earnings that were actually paid. Please see https://bit.ly/2VesTto. Q: One of our employees has curtailed her SML at the end of October 2018 and returned to work. She opted for statutory shared parental leave (SShPL) which she began during January 2019 for three weeks. On 28 January 2019 she was awarded a pay rise back-dated to 1 January 2019. Would the Alabaster ruling apply to this scenario? A: I can confirm that the Alabaster ruling does not apply in this scenario as the pay rise did not fall anywhere during period from the employee’s relevant period for SMP to the end of her SML. The pay rise fell outside of the period because she
| Professional in Payroll, Pensions and Reward | April 2019 | Issue 49 8
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