MEMBERSHIP INSIGHT
Q: Members of staff on business have to buy their lunch. Can this expenditure be reimbursed free of tax and NICs, and do they have to provide receipts? A: Yes, they can be reimbursed free of tax and NICs providing they are genuine business expenses. Receipts for genuine business expenses will no longer be required by HMRC from April 2019 but your company’s individual expenses policy may still require receipts. It was announced at Autumn Statement 2017 that from April 2019, receipts for subsistence reimbursement will no longer need to be checked by employers. Also, the concessionary accommodation and subsistence overseas scale rates will become statutory. Please see http://bit.ly/2UNIX4B. Q: Please can you advise if the apprenticeship levy is based on the gross pay bill or taxable pay bill? A: The apprenticeship levy is calculated on your pay bill which means all payments to employees that are subject to employer class 1 secondary (employer) NICs, such as wages, bonuses and commissions; see http://bit.ly/2ZNMV12. Q: The company I work for are currently offering a ‘loan’ of up to £2,400 which will be repaid over twelve months. Is the repayment of a loan from net pay excluded from the national minimum wage (NMW) regulations? A: A ‘loan’ must fall within the exceptions (see below). If so, they will not reduce the employee’s pay for purpose of determining whether the NMW has been paid. (The ‘NMW’ references are to sections/pages in HMRC's National Minimum Wage Manual – http://bit.ly/2WlxJG8.) ● Contractual deduction relating to misconduct and discipline (NMWM11060). ● Contractual deduction for conduct relating to ‘any other event’ (NMWM11065). ● Deduction to repay a loan or advance of wages (NMWM11150). ● Deduction to recover an overpayment of wages (NMWM11140). ● Deduction to purchase shares, other securities or share options or to purchase any share in a partnership (NMWM11190). ● Deductions made by an employer that is a local housing authority or registered social landlord for the provision of living accommodation and the accommodation offset does not apply (NMWM10180).
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
*please see summary at cippmembership.org.uk for details.
Q: We currently offer our employees the choice of a company car or a car allowance. Most employees are in receipt of a car allowance in lieu of a company car. Can they only claim the advisory fuel rates (AFRs) or would the mileage allowance payments (MAPs) be applicable? If the AFRs apply but they have been paid using MAPs rates, will they then either need to pay it back or will it need to be reported as a taxable benefit in a P11D return? If the AFRs have been applied, would we then owe the employees more money for any miles claimed? A: The AFRs are the maximum payable to those employees who have use of a company car. In the situation of the employee choosing an allowance over the physical car, the employee is then expected to provide their own vehicle which can then be used for business purposes. As the employee will be using their own vehicle for business travel (even though they have been provided with an allowance to supply this), they will then be entitled to claim the maximum as advised in the MAPs. MAPs are the maximum an employee can claim per business mile which will have no benefit attracted. If your mileage reimbursement scheme offers more than the MAPs, the difference between what is paid and what is allowed will attract both tax and National Insurance contributions (NICs). Best practice would be to collect this via pay as you earn (PAYE), collecting both the tax and class 1 NICs. If this is not an option, you will need to add the value to your employees’ NIC-able
pay and report via a P11D return for the collection of the tax due. If you reimburse your employees less than MAPs, your employee can claim tax relief from HMRC directly. Please see this link: http://bit.ly/2GRm6Qy. Q: One of our clients has enquired whether their employee would be able to ‘freelance’ whilst she is receiving statutory maternity pay (SMP) and whether this would affect her rights? The employee has asked if she could undertake freelance work as a ‘sole trader’ for one day a week outside of her contract, during maternity leave. A: Yes an employee can work as self- employed basis without affecting her SMP and maternity rights as per the extract below (see http://bit.ly/2GVOpPa): “3.12 Working in your maternity pay period If you are getting SMP from one employer and, before your baby is born, you do some work for another employer, your SMP is not affected. Your SMP will stop if after the baby is born, but before the end of the maternity pay period, you work for an employer who did not employ you in the qualifying week. It is your responsibility to tell the employer paying you SMP about your new job. You must do this as soon as possible, and make sure you return any SMP payment you get that covers the week you started work and any part of the period after you resumed work. If you do any work in a self-employed capacity during your MPP, then such work will not affect your SMP."
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| Professional in Payroll, Pensions and Reward | June 2019 | Issue 51
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