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and NICs – which can be found at https:// goo.gl/aVJQDR (see paragraph 1.10). Q: Several employees have queried that their cumulative earnings for the tax year 2017–18 are less than their actual annual salary and I would like advice on how I can explain the answer to these employees? A: You will have to carefully explain that an employee‘s annual salary is based on the first day they are employed by the company to 365 days later and not the tax year/tax basis. For example, a new employee joins the company on 22 August 2017, so the end of their contractual year will be 21 August 2018. To check whether the employee has received the correct annual salary, add together August 2017 pro-rata pay, then the monthly salary for the next ten months and lastly the pro-rata pay for August 2018. Q: We have an employee who has requested a loan of £1,500, which has been agreed by our human resources (HR) team and passed through to payroll to process. Are you able to advise how this would be treated in regard to benefits in kind (BiKs)? A: An employer can provide loans to their employees with no reporting requirements to HMRC providing they are £10,000 or less. If the total loans over the year are in excess of £10,000, then this will become a reportable BiK and will need to be reported via a P11D return. Please follow this link http://goo.gl/wCqcA7 which offers guidance on reporting requirements when offering loans to employees. Q: As an organisation we offer company cars to certain employees. One of the employees who drives a company car has been involved in a non-fault accident, and it is more than likely that the company car will be written off. The third party insurer has provided our employee with a hire car and so far they have had the hire car for six weeks. Given the length of time the employee has had the hire car should the benefit in kind be switched over to the hire car? A: The guidance from HMRC states the following in regard to replacement cars: “If the normal car is not available for a period of less than thirty days, there is no reduction because the car is not deemed
to be ‘unavailable’ during that period. If during that period the employee is provided with a replacement car, it is not also charged as a benefit if it is not: (a) materially better than the normal car, or (b) provided as part of an arrangement whose purpose was to provide the employee with a materially better car then the normal car.” Taking this guidance from HMRC on board, the car has now been provided in excess of the thirty-day period so you would need to report the replacement vehicle details if the replacement car is ‘materially better than the normal car’. Q: I have an employee for whom we are currently making a deduction for a Scottish earnings arrestment (SEA). We have now received an additional SEA from a different creditor and the employee has stated to us that we are legally only able to process one of the SEAs as a deduction through the payroll. I have not heard of this before and I wondered if this was correct. A: Scottish attachments of earnings are slightly different to attachments of earnings orders within England and Wales. In Scotland, an attachment of earnings is called an earnings arrestment. SEAs require the employer (like in England and Wales) to make deductions from the employee’s earnings every pay day until the debt is repaid in full. A single creditor may enforce payment of more than one debt payable to them by the same debtor by means of a single SEA. If an employee (as in this scenario) has two SEAs payable by different creditors, you will be unable to operate/action both: you will continue to action the first one received but unable to action the second one. The creditor of the second SEA will have to contact the courts to apply for a conjoined arrestment order (CAO). By doing this it will allow both creditors to enforce more than one earnings arrestment at the same time. Our advice in your situation would be to return the second SEA to the creditor and advise them that they will need to apply for a CAO as you are already enforcing a SEA for this employee from another creditor. As previously stated, you should continue to deduct monies for the first SEA until you receive further notification of a CAO. n
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Issue 39 | April 2018
| Professional in Payroll, Pensions and Reward |
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