Payroll: need to know (Latest version)

cases of non-compliance. The LPC states that there is still work to be done in relation to strengthening worker confidence in the enforcement system, in assisting employers to ensure that they comply with NMW rules and in ensu ring that HMRC’s resources are used in the most effective way. The creation of the Coronavirus Job Retention Scheme (CJRS) has caused problems in relation to producing accurate estimates of the issue of underpayment in 2020 for comparison against earlier years. If, for example, a worker has been furloughed and paid at 80% of their usual wages, then, on the surface, it may appear that they have been underpaid, but NMW rules do not apply to any time that an individual spends on furlough. The report also explores the prevalent issue of labour market abuse specifically within the textiles industry in Leicester. The LPC has collected wide-ranging data that clearly highlights the problem, which has been ongoing for years, but also recognises that there is no easy solution for enforcement bodies in this area.

CIPP comment

The LPC is currently consulting on what the NMW rates should be from 1 April 2022. The CIPP’s Policy team are submitting a written response to this consultation and are currently running a survey so that we can include the views of you – the payroll professionals. The survey should take roughly 15 minutes to complete, and we thank you in advance for your input.

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Off-payroll Working

Off-payroll working and statutory payments 8 April 2021

If a worker receives some earnings that have been subject to deductions under the off-payroll working rules, and some that have not, for the purposes of establishing entitlement to statutory payments, all earnings must be considered.

A worker’s earnings period for the purposes of statutory payments is based on when their intermediary m akes payments of earnings to them, not when the deemed employer makes payment to the worker’s intermediary or when that intermediary receives that payment. To avoid double taxation, payments from the intermediary already subject to tax and NICs by the deemed employer are reported in data item 58A on the Full Payment Submission (FPS) submitted by the intermediary. The payments from the deemed employer will have been made to the intermediary net of Income Tax and National Insurance Contributions (NICs), so the worker needs to locate a payslip, remittance notice or other payment document received to gather information relating to the original gross pay. If the worker does not have access to this, they should request it from the deemed employer. Where a worke r’s intermediary receives figures relating to off -payroll working engagements, and only a portion* of that is paid as a net amount to the worker, then a ‘just and reasonable apportionment’ must be made for the attribution of tax and NICs on that net amount .” Example Smiths Ltd. receives £1,000 in relation to an off-payroll working engagement. Smiths Ltd. then pays Mr. Smith 60% (£600) of the amount received and keeps the remaining 40% (£400). **

The £1,000 was already subject to tax deductions of £200 and NICs of £120.

A reasonable apportionment could be to apportion £120 to tax (60% of £200 tax) and £72 to NICs (60% of £120 NICs). Therefore, the gross amount for use in statutory payment calculations would be the £600 received + £120 tax + £72 NICs = £792

The Chartered Institute of Payroll Professionals

Payroll: need to know

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