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Gain a detailed overviewof national minimumwage (NMW) and national livingwage (NLW) including the current rates payable. Learn to identify who is eligible, the calculation steps needed, record-keeping and compliance activities required. National minimumwage and other worker entitlements
A: The apprenticeship levy charge is based on the employer’s ‘pay bill’ once this has reached £3 million. The annual 'pay bill' is all the payments to employees that are subject to employer class 1 secondary NICs. The levy allowance works much like a cumulative tax code. For each month following the first month of the tax year, take the following steps: ● calculate your total pay bill for the year to date (YTD) ● total your monthly levy allowances for the YTD ● subtract your levy allowance for the YTD from 0.5% of your total pay bill for the YTD ● subtract the amount of the levy you’ve paid in the YTD ● pay over the difference. For more information on what a ‘pay bill’ is, see: https://bit.ly/3sgbELt. For further guidance on how to calculate the apprenticeship levy figure, go to: http:// ow.ly/IcQ630scukk. Employment allowance eligibility – company directors Q: A client has a company which only has two directors on the payroll. The directors earn £12,000 per annum and £36,000 per annum respectively. Would the business be entitled to claim the employment allowance? A: From 6 April 2016, limited companies where the director was the only employee paid earnings above the secondary threshold (ST) for class 1 NICs were no longer able to claim employment allowance. To establish entitlement for a company with more than one director, the additional employee test would need to be applied. If both directors earn above the £8,840 ST limit for NICs for 2021/22, the company will be eligible to claim the employment allowance for the whole tax year. The employment allowance for tax year 2021/22 is £4,000 and can be offset against any employer’s secondary class 1 NI due in the year. For reference, see: http:// ow.ly/rNqy30scuiv. Employment allowance eligibility – domestic staff Q: A client employs domestic staff for their family and household. Would they be eligible to claim the employment allowance in this situation? A: HMRC guidance states that employers of domestic staff (e.g., cleaners, gardeners or nannies) will be unable to claim the
employment allowance, as the employees are all being employed in a personal capacity, to support the running of a household. Other guidance on employing personal and domestic staff indicates the allowance is only available where the employee is providing personal care to someone who needs support due to age or physical / mental illness. For reference, see: http://ow.ly/NNCJ30sf1j1. Caps on pension contributions Q: Employees are enrolled into the company’s workplace pension, but their contributions are capped at a pensionable pay of £3,669 per month which is £4,189 less £520. As a result, the maximum 5% employee contribution is £183.45 per month. What is this cap and what exactly does it mean? A: These are the earning levels for automatic enrolment ‘qualifying earnings’. Employers may choose to use this definition of qualifying earnings for their workplace pension scheme. Under this definition of qualifying earnings, employees won’t begin paying a pension contribution until they’ve earned £520 of pensionable earnings in a month (the qualifying earnings band lower level for 2021/22), and these pensionable earnings are also capped at £4,189 (the qualifying earnings band upper level for 2021/22). Therefore, if an employee earns more than £4,189, then pension contributions from both employee and employer are based on the difference between the limits, and so pensionable pay would be a maximum of £3,669. For reference, see: http://ow.ly/ F2q230se2gK. Coronavirus-related SSP Q: As the country has ended isolation requirements, has the waiver of statutory sick pay (SSP) waiting days for Covid- related absences ended? A: It was announced that the SSP waiting days amendment would end on 24 March 2022, when the Coronavirus Act provisions end. From 25 March 2022, those who are off work with Covid-19 will receive SSP under the normal statutory conditions. Employers should also be aware that SSP can no longer be reclaimed through the coronavirus SSP rebate scheme for coronavirus-related absences or periods of self-isolation that occur after 17 March 2022. Claims must be submitted by 24 March 2022. n
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CPD 7 points
7
| Professional in Payroll, Pensions and Reward |
Issue 79 | April 2022
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