POLICY HUB
Gain a detailed overview of National Minimum Wage (NMW) and National Living Wage (NLW) including the current rates payable. Learn to identify who is eligible, the calculation steps needed, record-keeping and compliance activities required. National Minimum Wage and other worker entitlements
to HMRC and pay over the PAYE and class 1 National Insurance contributions (NICs) due immediately. For reference, see: https://bit. ly/3JbiY08. Travel costs for interviewees Q: Following a recruitment drive, a client has informed us that travel costs incurred by all candidates to attend interviews were paid for by the company. How should this be treated for the purposes of tax and NI? A: The interviewees will not be regarded as employees for tax purposes, so any payments they receive won’t be subject to tax and NICs, as directed under section 62 of ITEPA 2003. For reference, see: https://bit. ly/3j85GHh. Rules around salary sacrifice arrangements and bonuses Q: We process a weekly payroll for a client, which sometimes includes bonuses. Employees often ask if their salary sacrifice amounts can be increased when bonus payments are made. Is it acceptable to vary the salary sacrifice amount each time bonus payments are paid? A: A salary sacrifice is a contractual arrangement, in which an employee gives up the right to cash in exchange for a non-cash benefit. Where employees ask for an increase to the amount of cash to be sacrificed from a fixed salary, restrictions under HMRC’s approved lifestyle changes limit the amount of times such changes can be made. However, for variable pay, such as bonuses, providing salary sacrifice arrangements are actively in place prior to the time a bonus becomes due for payment, an employee can request that any future bonus payment is also sacrificed. This must be done under an amended contractual arrangement, under which the right to the bonus is given up in exchange for the non- cash benefit. For reference, see: https://bit. ly/3KqtMZF. Lumpsum payments under a company life assurance policy Q: An employee has recently passed away. Under the terms of the company life assurance policy, a lumpsum payment has been paid to the nominated beneficiary. Are there any requirements to notify HMRC of this payment please? A: Any payment made in respect of a
group life policy is regarded as an excluded benefit and will be payable free of tax. In such situations, payment is made directly to the beneficiary from the company, and not via payroll. For reference, see: https://bit. ly/3NRYywU.
Freeport sites and National Insurance (NI)
Q: Our payroll bureau has been asked to run a payroll for a freeport. We’re aware the NI rules will be slightly different, but we’re struggling to find a simple explanation as to how the NI thresholds will affect freeports. A: A freeport tax site is an area of land where businesses can claim certain tax reliefs. From 6 April 2022, a reduced rate of employer NICs will be available to businesses with premises in a designated freeport tax site. Tax sites are independent and separately authorised from freeport customs sites but can cover the same area of land. This will mean eligible employers can apply a zero-secondary rate of employer NICs for employees’ earnings above the secondary threshold, up to and including, a newly established freeport upper secondary threshold (FUST). Anything above this rate will be charged at the rate of 15.05% for 2022/23, and the FUST for that tax year will sit at £25,000. To be eligible, the employee must: ● ● be a new hire from 6 April 2022 ● ● not have worked for that employer (or a business connected to that employer) in the previous 24 months ● ● spend at least 60% of their working time within the freeport tax site. Not one, but four, new Freeport NIC category letters have been introduced: ● ● F – standard category letter ● ● I – married women and widows entitled to pay reduced NICs ● ● S – employees above state pension age ● ● L – employees who defer paying 12% NICs, only paying 2%, because they’re paying it in another job The new category letters reflect existing NIC category letters A, B, C and J. In the extremely rare circumstance that the employer has an employee for whom they would use a different NIC category letter (the example of mariners is provided), they would need to contact HMRC at the end of the tax year to establish a manual process for calculating and claiming the relief. For reference, see: http://ow.ly/Jrev30sh1r8. n
Visit cipp.org.uk/training to book your place
CPD 7 points
7
| Professional in Payroll, Pensions and Reward |
Issue 80 | May 2022
Made with FlippingBook - Online magazine maker