MEMBERSHIP INSIGHT
missed the payroll deadline for May’s payment. They are due back-pay for the period 23–31 May which will be included in their June payment. What is the rule for the tax and NICs due on their May payment? A: The tax calculation is normal: a single tax allowance for June is due, but this is dependent on whether the employee provided a form P45 or signed a new starter declaration. The NICs in this scenario should always be calculated over two months; for example: calculate the NICs that should have been paid for the May and June earnings separately. This may mean you have to do a manual override if your system cannot do this for you. Guidance can be found in the CWG2 guidance: see 3.1.5 Working out National Insurance contributions when you first pay an employee, at the following link: http://bit. ly/2GrBbcq. Q: As a company, we offer our employees personal loans, with repayments for the loan occurring via payroll deduction each month. Could you please advise if we would report the loan as a BiK via a P11D return? A: Whether the loan is a reportable BiK or not would depend on the value of the loan that is given to the employee by the employer. The threshold for small beneficial loans is now £10,000 and providing that the loan is no higher and the repayments are made via a net deduction, there would be nothing to report in a P11D return. Keep in mind that if an employee has more than one loan these would need to be aggregated to determine whether the total exceeds the £10,000 limit. This link is to a working sheet that can assist you in finding the value that would need to be reported if the above applies: http://bit.ly/2Y1Pdw1. Q: We currently have an employee who unfortunately didn’t qualify for statutory maternity pay (SMP) and is therefore in receipt of maternity allowance (MA) whilst she takes her statutory maternity leave (SML). I have been asked if the normal rules around keeping-in-touch (KIT) days would still apply. Are you able to offer any guidance? A: Whilst an employee is in receipt of MA (as she does not qualify for SMP) she is entitled to work up to ten KIT days without
Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m. to 4.30p.m. on Fridays * . Call 0121 712 1099 , email advisory.service@cipp.org.uk or visit cipp.org.uk to live chat.
Advisory
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Q: We have an employee who has been in receipt of a fuel benefit paid by the employer. I would normally expect to report this in the P11D return, but the employee’s earnings for tax year 2018–19 were under £8,500. My understanding is that there is no requirement to submit a P11D to HM Revenue & Customs (HMRC) for all expenses and benefits that are paid to UK-based directors or employees earning under £8,500.00 per year. Is this correct? A: The £8,500 threshold was abolished along with the P9D return a few years ago and now all employees who receive a benefit in kind from their employer must have it reported via a P11D return, regardless of the amount of their earnings. HMRC will assess everything and will determine if tax is or is not due on the benefits reported. Guidance can be found at the following link: http://bit.ly/32OZz12. Q: Can you please clarify if the 50% regulatory limit for tax applies to all taxable earnings, including benefits in kind (BiKs), or should it only be applied to the employee’s taxable salary excluding payrolled BiKs? A: I can confirm that HMRC guidance states that the 50% regulatory limit does not include taxable BiKs and it is only the other elements of taxable pay that count towards this check. Q: Please can you advise if employer’s National Insurance contributions (NICs) are due on termination payments above £30,000? I can recall that there
was something mentioned in the HMRC guidelines that this had changed but I am not sure if this has been implemented or deferred. A: The new NICs rules for termination payments above the £30,000 threshold have not yet changed, but they are due to change with effect from 6 April 2020. From this date termination payments above the £30,000 threshold will attract employer’s class 1A NICs only, alongside the normal taxable element for the employee. Q: I currently have an employee on long-term sick, who has exhausted their company sick pay as well as their statutory sick pay (SSP). In-order to help him back to work we have investigated the option of paying for some medical treatment and the cost for this has been quoted as £2,167. I understand that there will be tax implications – a reportable BiK for the employee. Are you aware if this can this be covered under an exemption? A: We can confirm that if your scenario meets HMRC criteria, then the first £500 of this can be paid free of income tax and NICs with the balance reported as a BiK . You must ensure that this meets the criteria set out by HMRC: please use this link http://bit.ly/2LDzsoG. It would also be helpful for you to check the subsequent pages EIM21775, EIM21776 and EIM21777 which should help with your scenario. Q: An employee started with our organisation on 23 May 2019 and will not be paid until June 2019 as they
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| Professional in Payroll, Pensions and Reward | September 2019 | Issue 53
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