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It depends on the how the employer pays the personal bill as to how the employer has to treat it. If the employer pays the Student Loan Company directly, the amount would be reported in a P11D return at box B for tax, but if the employer reimburses the employee it is subjected to PAYE. In each case, the amount is liable to Class 1 NICs through the payroll. To a prospective employee it could be classed as a ‘golden hello’ which would be both subject to tax and Class 1 NICs. You also have the issue of whether you are restricting their employment by making them stay with the company for a period of time as a condition of the payment; or making a request for payment if the contract is terminated by the employee within a timeframe; or, lastly, the employer could make the payment without putting any conditions in place. Although it doesn’t relate directly to student loan repayment, this useful link https://goo.gl/UvgYTo relates to the employer paying the employee’s personal bill. Q: A temp, who my company has just taken on for four weeks, has provided me with her Canadian social security number and said that a UK national insurance number (NINo) is not needed as we have a bilateral agreement with Canada. Can you advise on whether she is correct? I can’t record her Canadian social security number as it’s not in the same format as a UK one, so presumably I leave that field blank? A: It is correct that a Canadian who has been given right to work in UK can be exempt from NICs, as long as they have been given a certificate of coverage by the Canadian Revenue Agency. It is issued by the Social Security Unit after the employer has applied for the certificate.
Unless the employee has provided you with this certificate you must apply UK NICs. This link to the Canada Revenue Agency takes you to an explanation of who can apply for the certificate http://goo. gl/81LOJZ. If the employee does not have a certificate she will need to get a UK NINo from Jobcentreplus. This link – https:// goo.gl/aGbq9l – explains exactly what the employee needs to do to obtain a NINo. The employer should still pay the employee even though you may not immediately have the NINo, but you will need details of the name, address, date of birth and gender. Q: We have a client who has resigned as a director but is remaining employed by the company although he/she is resuming the position they had before becoming a director. How do we treat his/her NICs calculation; would it continue under the NICs annual earnings period, or do we change him/ her to the normal earnings period i.e. weekly or monthly? A: If the directorship finished in this tax year, 2016/17, and the person then reverts to their original job, all earnings are processed using the annual earnings period for this tax year. You would add the earnings of the employment after the directorship ends to the earnings under the directorship, as the Class 1 NICs must be calculated on an annual earnings period. Booklet CA4, National Insurance for Company Directors , which covers how to process director’s NICs can be downloaded from https://goo.gl/TLluMM. Please refer to point 34 as this relates directly to your scenario. Q: An employee reached state pension age in March, but they did not provide the employer with the relevant proof in time for the March pay run. Is it possible to refund the primary NICs for March? A: This occurred in a closed tax year so the employer has to amend the payroll and complete an earlier year update and indicate that the employee has not been refunded the NICs. Direct the employee to this webpage – https://goo.gl/pllUBM – as this explains how an employee can obtain a refund of NICs. n
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Issue 23 | September 2016
| Professional in Payroll, Pensions and Reward |
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