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Does this mean that the apprenticeship levy will be applied to the larger company only? A: The apprentice levy will be payable by all employers in the UK at 0.5% of paybill, through PAYE, alongside income tax and NICs on a monthly basis from April 2017. However, as employers are given an annual allowance of £15,000 to offset against payment of the levy this means that only those employers with a paybill in excess of £3million will be required to pay the levy. Where several employers are connected as a group, they will only be able to use one £15,000 levy allowance across all the connected companies regardless of the paybill size of each. Within a group of connected employers, the group must decide what proportion of the levy allowance every employer in the group will be entitled to. This decision must be made at the beginning of the tax year and will be fixed for that tax year, unless a correction is necessary because the total amount of the levy allowance claimed across the group exceeds £15,000. Each employer in the group will then calculate what they have to pay through the same processes set out above, but using only their portion of the £15,000 levy allowance. The government has published guidance in regard to the apprenticeship levy located here: https://goo.gl/RthrYZ. Q: If an employer signified to HMRC that the employment bill for the company was in excess of £3million (in regard to the apprenticeship levy), but in actual fact part-way through the tax year it turned that it would be less, would this impact on the amount of levy to be paid over to HMRC each tax month? A: Because the apprenticeship levy is going to be calculated on a cumulative basis, the first step is to calculate 0.5% of the monthly pay bill. The pay bill is all earnings subject to Class 1 secondary NICs. Once you have calculated this figure you reduce it by the monthly allowance (based on one twelfth of £15,000.00) of £1,250.00. The residue is the levy which is payable for the tax month. If the difference between the monthly allowance and the 0.5% of the pay bill means that not all the allowance is used,
then the balance would be available in the next tax month. Where the company for one reason or another ends up with a pay bill of less than £3million, then any overpaid levy will be refunded to the employer. Q: Would providing a Christmas gift to employees of a hamper costing less than £50 be exempt from tax under the trivial benefits exemption? A: The guidance on the changes to the provision of trivial benefits by the employer which are exempt from tax and NICs can be found via this link: https:// goo.gl/J7mXya. What an employer will need to prove is: the gift is not given based on the employment of the individual; and the employer is providing the gift as a personal gift, not as a reward in recognition of the employment duties carried out. For the exemption to apply, specific conditions must be met; these are that the benefit: ● must not be cash or a cash voucher ● must cost £50 or less ● must not be provided as part of a salary sacrifice or other contractual arrangement, and ● must not be provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services. Q: An employer usually arranges for a nurse to come into the work place to inoculate employees with the flu jab. The company is considering changing this instead to providing employees with a voucher to enable them to go to the chemist to have their flu immunisation. This would be a cheaper option as the vouchers would cost the employer £7.50. Would the employer have to report the benefit in a P11D return due to the new legislation? A: Nothing has changed in regard to the exemption for flu jabs, as they are still classed as a trivial benefit even if provided in the form of a non-cash voucher. This link – https://goo.gl/ElUo4U – to HMRC’s Employment Income Manual confirms HMRC’s view in regard to flu jabs provided by the employer. The exemption applies to seasonal flu inoculation only, not for any other immunisation or to prevent pandemic flu. n
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Issue 26 | December 2016/January 2017
| Professional in Payroll, Pensions and Reward |
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