MEMBERSHIP INSIGHT
Revenue & Customs’ (HMRC’s) National Insurance Manual https://goo.gl/NASCWk which explains the criteria that must be applied to use the table letter for an apprentice under 25. Q: It has come to light this month that an employee (who is aged 38) was placed on the wrong NI category four years ago by mistake. We have corrected the category going forward, but I would like advice on how we can correct the class 1 NICs for those four years? A: You will now have the correct category for this current year, so you can collect anything owed for this current year by collecting up to double their normal employee deductions, if you can show this is a good faith error. You will not be able to collect arrears for previous tax years in the current year. To correct the previous years’ NICs that have been incorrectly taken or not taken you would use an earlier year update (EYU) return via real time information and you should pay over all the unpaid NICs (both primary and secondary) to HMRC as soon as possible. See GOV.UK https://goo.gl/ tvNFV1. You would also have to re-issue the employee’s P60 certificate for these amended tax years to show the correct figures once you have reported the corrections to HMRC. Q: Please can you advise what the average weekly earnings value needs to be when calculating statutory maternity pay (SMP) for a baby born after April 2018? A: In order to qualify for SMP the employee needs to have average weekly earnings (AWE) of at least the class 1 NICs lower earnings limit (LEL) in force on the last day of the qualifying week (QW). The weekly LEL of £116 (being the LEL for 2018–19) applies for the purpose where the baby is due on or after 15 July 2018. The LEL figure of £113 (being the LEL for 2017–18) applies where the baby is due on or before 14 July 2018. Q: Under the transfer of undertaking protection of employment regulation (‘TUPE’) we have an arrangement in place for a few employees, one of whom is in receipt of SMP. Does the outgoing employer have to pay all the remaining SMP?
Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m.
to 4.30p.m. on Fridays. It is free to all CIPP members * , students and attendees of approved CIPP courses and conferences in the last six months. Call 0121 712 1099 , email advisory.service@cipp.org.uk or visit cipp.org.uk for frequently asked questions.
Advisory
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Q: I must make a payment regarding shares to a former employee, in respect of whom a student loan deduction operated. Would the student loan deduction have to be applied to this payment? A: Firstly, you will need to decide whether this payment after leaving will attract class 1 National Insurance contributions (NICs) or not. If the payment after leaving attracts class 1 NICs liability then you will need to apply the student loan deduction. Please see the following link: https://goo.gl/aDI845. Then it will be dependent on whether the payment after leaving exceeds the student loan threshold for the pay period as to whether a deduction would be taken. Q: During the earlier really bad weather some of our employees were unable to get home from work, so they had to buy additional clothing. The company would like to reimburse the employees for the clothing they bought. Would this be considered as a taxable benefit? A: Unfortunately, this kind of reimbursement would be classed as a benefit in kind, as it is not classed as protective clothing or a uniform. Any clothing that an employee would wear for common decency and normal protection against the elements would not be exempt from tax and NICs. Also, as you are reimbursing the cost of the clothing to the employee you should do so through the payroll and the payment would be subject to pay as you earn (PAYE) income tax and class 1 NICs.
Q: I’m seeking clarification on company cars and capital contributions from employees. What is the amount of the capital contribution that is reported: is it whatever the total contribution is for the tax year, or would it be the cumulative amount over the lease of the company car? A: A capital contribution is usually a lump sum paid by the employee to the employer at the start of the provision of the company car, and there is a limit of £5,000 that can reduce the cash equivalent of the benefit. So, if the employee makes a capital contribution of £3,000 this means for each year the employee has the use of the car that will reduce the cash equivalent of benefit reportable in the P11D return accordingly. Q: We have several employees who are apprentices and are being paid the national living wage. Do we use National Insurance (NI) category H or do these employees have to actually be paid on the apprenticeship pay rates to use it? A: To use the apprenticeship NI table letter H the employee must have a contract for ‘apprenticeship’. They must also be under 25 years of age and be taking appropriate training. If the employees concerned are apprentices over age nineteen who are in their second or third year of apprenticeship you would need to pay them the appropriate national minimum/living wage (NM/LW) rate. So, the actual apprenticeship rate of pay is not a factor in the NI category you choose. Please use the following link to HM
| Professional in Payroll, Pensions and Reward | June 2018 | Issue 41 6
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