Policy hub
Q: Our organisation payrolls our benefits instead of completing P11D returns each year. We have a new employee who has chosen to take a company car over a car allowance. How would we process the car on our system for payrolling purposes? A: Your first point of call would be to look at the annual P11D value of the vehicle and compare it to the annual amount of cash ‘forgone’ under the optional remuneration rules. Once you have the annualised figures for both, you will need to pro rata the values by the days in the year (365) and calculate the number of days left in the tax year to confirm the days available and the cost of the benefit for the remainder of the tax year. Both figures will need to be entered into your system and sent to HMRC via real time information. (You would not send a P46Car return as you currently payroll this benefit.) The payrolled amount will be the higher of the two values when pro-rated for either the cash forgone or the P11D value of the vehicle for the remainder of the tax year or available days if this is lower. This value will then need to be divided by the amount of pay periods left in the tax year and added to the employee’s taxable pay for each of these pay periods. Q: One of our employees wishes to purchase some old office furniture (chairs). Could you please confirm how this should be reported to HMRC? A: If the employee pays the full second- hand value of the item to the employer, there will be nothing to report in the P11D return. If you give the asset to the employee this will be a reportable benefit in kind in the P11D under box A, ‘assets transferred’. Q: As part of our termination package we offer employees the opportunity of a retraining package which would also include accommodation and travel costs. Would such provision be deemed as a reportable benefit? A: An employer can offer retraining packages to employees who are being terminated as long as the following criteria has been met: ● ● The employee must be about to leave or has left within the previous year. ● ● The course must be to enable to assist the employee in getting another job. ● ● The course starts before the employee leaves employment or within one year of the leave date.
● ● The exemption will be withdrawn if they are re-employed within two years by the same employer. ● ● The employee must have had two year’s employment with the employer. ● ● Duration of the course is no longer than two years. ● ● Must be open to all employees in the same position. If the conditions have been fulfilled, the employer can also reimburse accommodation and travel costs in the form of the actual travel or by payment of mileage allowance payments. If the conditions are not met, any cost incurred or reimbursed to the employee will be fully taxable and NICable and should be processed through PAYE as a gross payment. Q: A company director has requested that his November bonus payment be paid into his pension scheme via salary sacrifice. Is this possible? A: Yes, it is possible, as one-off payments, such as a bonus, can be sacrificed (http:// bit.ly/2lM9QKk). There are, however, complications and implications that must be understood. Entitlement to future remuneration must be given up before it is treated as received for employment income purposes. Once earnings have been ‘received’ for employment income purposes they are taxable (http://bit.ly/2kENSJd). ‘Received’ is not always the same as actually ‘paid’. In respect of company directors, money earnings are treated as received for assessment purposes, and paid for PAYE purposes, on the earliest of the following: ● ● the date when earnings are credited in the company’s accounts or records, or ● ● where the amount of the earnings is determined before the end of the period to which they relate, the date that period ends, or ● ● where the amount of the earnings is determined after the end of the period to which they relate, the date the amount is determined. A slightly different set of rules apply to employees: money earnings are treated as received for assessment purposes, and paid for PAYE purposes, on the earlier of: ● ● when a payment of earnings is actually made or when a payment on account of earnings is made, or
Payroll Assurance Scheme Don’t wait until it’s too late
With penalties for non- compliance of up to £10,000 per day * , can your business afford not to be CIPP Payroll Assurance Scheme accredited.
For more information: Visit: cipp.org.uk/PAS Email compliance@cipp.org.uk Call: 0121 712 1000 Live chat with us
● ● the time when a person becomes entitled to payment of earnings or a payment on account of earnings. n
cipp.org.uk @CIPP_UK
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| Professional in Payroll, Pensions and Reward |
Issue 54 | October 2019
*correct at time of publication
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