MY CIPP
The CIPP’s Advisory Service team provides answers to popular questions
Reimbursing training costs from a previous employment Q: We’ve agreed to reimburse some training costs to a new employee to repay their previous employer. The previous employer funded the training, but an agreement was in place stating that the employee would need to repay this if they were to leave the employment within a certain period. How should this payment be treated for tax purposes? A: The employee is receiving the cash by reason of their current employment. It isn’t a business-related expense or training cost, as any agreement with the previous employer cannot be carried forward into their new employment. If the company reimburses the employee in cash, the employee is free to use that cash however they wish. For these reasons, the cash payment is regarded as additional earnings under sections 7(3)(a) and 62 the Income Tax (Earnings and Pensions) Act (ITEPA) 2003 and is subject to tax and Class 1 National Insurance via the payroll. This is confirmed here: https://ow.ly/veiW50W3amP. If the employer would like the individual to receive a set sum of money to pay the training costs, they could consider grossing the amount up through the payroll.
A: For the week that started on Sunday 30/03/2025 and ran until Saturday 05/04/2025, the pay day was Friday 11/04/2025. Was this week 53 of tax year 2024/25 or week one of tax year 2025/26? The taxable pay tables (https://ow.ly/ SvO250W3aVS) show you that if a payment date falls between 6 and 12 April, that would be classed as sitting in tax week one. It’s not about the dates worked – it’s the pay date that determines the tax week. Salary advances and impacts on national minimum wage (NMW Q: Is there any HM Revenue and Customs (HMRC) guidance regarding paying someone a salary advance which is paid back over several months? Would this reduce their salary for NMW purposes? A: An employee is protected from an unlawful deduction of wages under the Employment Rights Act 1996. To make a deduction, the employee must have previously agreed to this in writing – this could be through their contract of employment or a repayment plan. An advance or loan will not reduce pay below NMW as per Regulation 12(2)(b) of The National Minimum Wage Regulations 2015 (https://ow.ly/ aYMf50W3aC3): “Deductions or payments for the employer’s own use and benefit 12.(1) Deductions made by the employer in the pay reference period, or payments due from the worker to the employer in the pay reference period, for the employer’s own use and benefit are treated as reductions except as specified in paragraph (2) and regulation 14 (deductions or payments as respects living accommodation). (2) The following deductions and payments are not treated as reductions—
(a) deductions, or payments, in respect of the worker’s conduct, or any other event, where the worker (whether together with another worker or not) is contractually liable; (b) deductions, or payments, on account of an advance under an agreement for a loan or an advance of wages; (c) deductions, or payments, as respects an accidental overpayment of wages made by the employer to the worker; (d) deductions, or payments, as respects the purchase by the worker of shares, other securities or share options,
or of a share in a partnership; (e) payments as respects the
purchase by the worker of goods or services from the employer, unless the purchase is made in order to comply with a requirement imposed by the employer in connection with the worker’s employment.”
How do you make corrections to BiKs that have been payrolled incorrectly?
Corrections to payrolled benefits in kind (BiKs)
Q: There are some instances where we we’ve processed incorrect amounts through payroll in relation to payrolled BiKs. This has happened for both current employees and leavers. How do we deal with this? A: The guidance tells you to carry forward a change to the next tax year. And if you’ve made your final full
How do you establish whether a tax year has 53 weeks?
53-week tax years Q: Did tax year 2024/25 have 53 weeks?
| Professional in Payroll, Pensions and Reward | July-August 2025 | Issue 112 8
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