MEMBERSHIP INSIGHT
A: If the employee does not operate their right to take paid statutory leave (5.6 weeks entitlement which equals 28 days for a five-day week worker), the employer can allow the carryover of 1.6 weeks’ leave into the new holiday year (which equates to eight days for a five-day week worker). An employer should only pay holiday pay for one of three reasons: the employee is taking holiday; the employee is sick and wants to be paid holiday; the employee has taken 5.6 weeks’ holiday and has contractual holiday outstanding. The following links to GOV.UK provide additional information: ● https://goo.gl/PhlfiL – provides general information on holiday calculations and on carrying over leave ● http://bit.ly/1picPiR– a holiday entitlement calculator ● http://bit.ly/2iDIa7K – explains about paying for statutory holiday when the employee leaves. Q: What level/value of childcare vouchers can we allow an employee who is a higher rate income tax payer? A: An employee who is a higher rate taxpayer will only be entitled to £28.00 in childcare vouchers per week (£110.00 monthly) tax free. This amount is derived from the statutory tax-free amount of £55 for basic rate taxpayers (i.e. £55 × 20% = £11 ÷ 40%, rounded up). For additional rate income tax payers, the tax-free amount is £25 (i.e. £ £11 ÷ 45%, rounded up). Employers can provide childcare vouchers above these amounts, but the excess would be taxable and liable to Class 1 NICs. Q: If it is possible to pay for an employee’s health visa, what are the reporting requirements? A: If a visa application is made whilst the employee is outside the UK and the health visa is part of the process then it could be classed as part of the extra cost of foreign travel. However, the following conditions have to be satisfied: ● The employee was not resident in the UK in either of the two tax years which ended before the tax year in which he or she came to the UK to work. ● The employee has not been in the UK, for any reason, at any time in the two years ending on the day immediately before he or she came to the UK to work. If the above conditions apply, HMRC may regard this as part of the travel cost to the UK
Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m.
to 4.30p.m. on Fridays. It is free to all CIPP members * , students and attendees of approved CIPP courses and conferences in the last six months. Call 0121 712 1099 , email advisory.service@cipp.org.uk or visit cipp.org.uk for frequently asked questions.
Advisory
*please see summary at cippmembership.org.uk for details.
Q: An ex-employee has asked whether it would be possible to issue a duplicate P45 form as she has lost the original. Are we able to do this? A: The employer cannot issue a duplicate P45 to an ex-employee under any circumstances. Unlike the P11D return and P60 certificate which can be duplicated a P45 can never be. For further information, use this direct link to the GOV.UK website – https://goo.gl/8VyJj7 – which confirms that an employee or ex-employee cannot get a replacement P45. Q: An employee has requested reimbursement for a congestion charge. Can this be processed through the payroll? A: It will depend on whether the car belongs to the employer or the employee as to whether there is a benefit. Where the employee has the use of a company car there would be no benefit to the employee when this is reimbursed. Where the car actually belongs to the employee then there will be a benefit. It also depends on how the congestion charge has been paid as to how it should be reported or whether it would be paid through the payroll. Where the employer pays the relevant authority directly then it should be reported in the P11D return for income tax purposes, but Class 1 National Insurance contributions (NICs) applied through the payroll. However, when the employee pays the congestion charge and the employer reimburses the employee this amount then it should be processed via the payroll so both pay as you earn (PAYE) and NICs can be operated. This link – https://goo.gl/b3LU3t – to GOV.UK explains that if the employee is using a company car there would be no
reporting requirements. It also confirms that if the employer meets the cost of the congestion charge when the employee is using their own car it will be classed as a benefit. Q: We have an ex-employee who has been overpaid for the last nine years. The former employee wants to pay back the net amount from his private company pension. Should we ask the ex-employee for the net overpayment rather than the gross overpayment? A: The employer should request the net amount rather than a gross amount, as the overpayment arises from a previous tax year. As this is an ex-employee the employer may have difficulty in recovering this overpayment as there is no longer a contract between the parties anymore. The employer should consider the court case Keenan v Barclays Bank where the employee was overpaid about £20,000.00 over a two-year period. The court found in Mrs Keenan’s favour and she stayed on her new salary plus did not have to repay the overpayment. There is also estoppel by representation that could be applicable in this situation as the employee may state that he did not know he had been overpaid; had spent the money; and it wasn’t his fault the overpayment had occurred. Q: When an employee has an entitlement to 28 days’ annual leave, but does not wish to take all this entitlement within the current holiday year, can the employer pay the employee for any untaken holiday at the end of the holiday year if both the employee and employer are in agreement?
| Professional in Payroll, Pensions and Reward | February 2017 | Issue 27 6
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