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HM Revenue & Customs’ (HMRC’s) guidance. Is this correct? A: The guidance that your payroll provider is quoting is in relation to employees in respect of whom there has been an under- deduction of primary class 1 NICs. The rules for company directors are, however, quite different. You are advised to look at section 7, page 2 of the CA44 booklet, National Insurance for Company Directors (https:// bit.ly/2MoFqIf). This clearly states that where the alternative method for NICs is used, a recalculation should be done at the end of the tax year or at the end of the employment or directorship (whichever occurs first). Any underpayment of class 1 NICs must be recovered from the final pay and any shortfall must be paid by the employer. Q: An employee was pregnant at the time she joined our organisation in September 2019, which meant that she was not entitled to receive SMP from us. She also failed her probationary period and we then terminated the contract of employment as of 31 May. The birth is expected on 27 July.
Is it correct that we do not have to issue her with a form SMP1 now as she is no longer our employee? A: As this employee was in your employment during her qualifying week but did not meet the service criterion to be entitled to SMP, you would still have to issue to her a form SMP1 and return to her the MATB1 document. You would complete form SMP1 by ticking the box that states ‘You were not employed by me for long enough’, in order for her to claim maternity allowance. Form SMP1 can be found here: https:// bit.ly/36XbKvt. Q: My question is in relation to the non-taxable additional expenses for employees working from home, currently set at £6 per week. Is this allowance pro-rated for part-time employees? A: The allowance is the same for all employees who work from home, regardless of whether they are full- or part-time workers. It is not mandatory or compulsory for employers to pay this allowance, but they can choose to do so with no tax and NICs implications. n
● the employer has not given the employee a long-service award in the last ten years. For example, you can give a non-cash award with a value of up to £1,000 for twenty years’ service. If the award equates to more than £50 per each year of service, you will need to report this in a P11D return and pay class 1A NICs on the amount over this limit. Note that long-service awards have to be reported if they are a part of a salary sacrifice arrangement. Q: A company director who left the company last year had opted for class 1 NICs to be calculated on a monthly basis (the ‘alternative method’) instead of the annual cumulative calculation. The director left in August last year and an additional payment in relation to untaken annual leave was paid to him in September. Our payroll provider did not deduct from final payments to the director the full value of primary class 1 NICs due based on the annual recalculation. The payroll provider has advised that this is because they were following
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| Professional in Payroll, Pensions and Reward |
Issue 62 | July/August 2020
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