MEMBERSHIP INSIGHT
A: Class 1A NICs are excluded from the calculation to determine whether an employer is classed as a small employer for SMP purposes. A small employer is defined as being one which has total class 1 primary and secondary NICs below the annual threshold. The qualifying year is defined as the last complete tax year before the employee’s qualifying week. Q: I process a pension payroll with private medical insurance. Should the values be reported in a P11D return? A: No. Regulations 85 to 96 of the Income Tax (Pay as You Earn) Regulations 2003 determine what an employer must report in a P11D. But regulation 11(2), which applies to pensioners and pension payers, states that regulations 85 to 89 do not apply to pensioners and pension payers. Therefore, a P11D is not appropriate for pensioners. It would be best practice to inform HM Revenue & Customs (HMRC) that the pensioner is receiving this benefit, but the pensioner should also inform HMRC as there could be a tax liability for them. Q: We have a new director who is coming to the UK for twelve board meetings. Will NICs be applicable? A: As the visits for board meetings are more than ten in a tax year director class 1A NICs must be applied. The administrative concession for directors of a UK/NI company who are not UK resident only apply if: ● ● the director only attends board meetings in the UK or Northern Ireland ● ● the maximum board meetings are ten in a tax year ● ● the duration of the meetings are no more than two days, or if only one meeting is held in a tax year the duration of that meeting is no more than two weeks. Q: If an eligible jobholder wants to opt out of automatic enrolment does the opt-out period start from the date of re-enrolment or when the pension provider is notified? A: The opt-out period is from the start of re-enrolment into the pension scheme (i.e. it is from the moment the employee is re-enrolled into a pension scheme). It is the same period that you used originally for automatic enrolment, so the processes in place for enrolment could be also utilised for re-enrolment.
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: None of our employees were advised about the annual tapered allowance changes which came into effect in April 2016. So, as the employer, we wish to support employees who now have a substantial tax liability and have incurred fees for pension advice. Are we allowed to provide £500 worth of pension advice free of income tax and National Insurance contributions (NICs)? A: The statutory exemption of pension advice will only apply to employees who meet specific criteria and to the first £500-worth of pension advice provided in a single tax year. The criteria are: ● ● Condition A – availability – The relevant pensions advice or reimbursement or payment is provided under a scheme that is open to all of an employer’s employees generally or generally to an employer’s employees at a particular location. ● ● Condition B – age, ill-health – The relevant pensions advice or reimbursement or payment is provided under a scheme that is open to all an employer’s employees, or all the employees at a location where the employees: have reached the minimum qualifying age (with respect to the employer’s registered pension scheme); meet the ill-health condition. Employers can, therefore, provide advice to specific employees who are nearing retirement or are about to retire on ill-health grounds, if the advice is available to all employees in the same situation. ‘Minimum qualifying age’ means the employee’s relevant pension age, less five years. ‘Relevant pension age’ is usually the normal minimum protected pension age, or their
normal minimum pension age as defined by section 279(1) of Finance Act 2004. From 6 April 2010, the normal minimum pension age has been 55, although some pension scheme members may have protected rights to a different age (see the Pensions Tax Manual at PTM062210 (http://bit. ly/2jZYe68). For example, if the employee’s normal minimum pension age is 55 the minimum qualifying age is 50. The ‘ill-health condition’ is met by an employee if the employer is satisfied, based on evidence provided by a registered medical practitioner, that the employee is (and will continue to be) incapable of carrying out their occupation because of their physical or mental impairment. Q: We are transferring employees between entities that have different pay as you earn (PAYE) schemes. The employment will be deemed as continuous and not subject to the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE). Will the employees who are transferring be able to continue receiving childcare vouchers under the current salary sacrifice scheme? A: If there is a merger or acquisition or TUPE situation then yes, they can remain in the scheme. If this situation is not a merger or acquisition or TUPE situation they cannot remain in the scheme. Guidance can be found at page 9 at http://bit.ly/2jS0Rqq. Q: When calculating the total NICs for a company do you include class 1A NICs when determining whether you are a ‘small’ employer for purposes of statutory maternity pay (SMP)?
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| Professional in Payroll, Pensions and Reward | October 2019 | Issue 54
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