Professional June 2017

MEMBERSHIP INSIGHT

period then they would be included in the reporting. This link – https://goo.gl/0Plwjd – to guidance on GOV.UK details what an employer should do in the circumstances where a new employee joins part-way through the pay period, or an existing employee has changed their working hours in the pay period. This explains that if the employee has changed their hours you would calculate the hours over a twelve- week average. ● For new employees and changes in role: Where a new employee joins or an existing employee changes their role and they have worked less than twelve weeks in the new position, you must use a figure that fairly represents the hours worked. ● For new employees: You can use an average over a shorter period if you believe it fairly represents their working hours. If they have replaced someone who was previously working longer or shorter hours you can create a twelve-week total by using a mixture of the old and new employees’ hours. For employees changing role you would take a twelve-week average, even if the period covers more than one role. Q: We would like to know if the tax exempt amounts of childcare vouchers (CCVs) an employee can receive have changed in any way? Also, will the limits be different between England and Scotland now that their tax thresholds are slightly different? A: The tax exempt amount of CCV an employee can receive for each tax bracket has remained the same, but you would have to consider which tax bracket the employee falls into. The thresholds can change each year; the current thresholds for 2017/18 tax year are: ● basic rate up to £33,500 – CCVs up to a maximum of £243.00 ● higher rate from £33,501 to £150,000 – CCVs up to a maximum of £124.00 ● additional rate over £150,000 – CCVs up to a maximum of £110.00. The eligibility criteria for employer- provided CCVs are not devolved to the Scottish parliament and therefore the basic and higher income tax rates mentioned above are for the whole of the UK including Scotland. This means that Scotland has the same limits as the rest of the UK in regards to CCVs and the annual assessment.

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

*please see summary at cippmembership.org.uk for details.

Q: Within our company we have an employee who is provided with hire vehicles instead of a company car. The hire period can be for two to three days every week and can span a weekend. How would this be reported in a P11D return? A: This will depend on the conditions the hire car has been provided to the employee. If a hire car is made available to an employee who does not have the use of a company car, then there will be no benefit in kind arising; this would include if the car was only provided for business travel with only ‘incidental’ private use. HM Revenue & Customs’ (HMRC’s) guidance states that incidental private use is not measured by the number of private miles driven, but rather in the proportion of the private element of the journey when viewed as a whole. A hire vehicle provided for a business journey which is taken home overnight to serve this purpose the following morning will be classed as incidental private use, but if the vehicle was taken for private use over a weekend that would not be considered incidental. If the hire car is used for more than incidental private use, a benefit in kind charge will arise, which is calculated using the normal rules i.e. using the list price and CO2 emissions of the vehicle provided. This will be apportioned in the tax year according to the time it was available to the employee and reported in the P11D return. Where a hire or relief vehicle is used as a replacement for both business and private use during periods of unavailability, the company car benefit will still apply when this is for a continuous period of less than thirty days.

Q: I believe that for employees who have passed away, no Class 1 National Insurance contributions (NICs) should be calculated on their final payment. Does this rule apply the same for a recently deceased director or should we pro rata his final payment up until the tax week of death? A: A director’s NICs have to be calculated on an annual basis when they leave/ or pass away. If you have been using the alternative method then in March or when a director ends the employment (or dies) the calculation reverts to an annual calculation. To clarify, when a director passes away you should calculate the NICs due on the final payment in the following way: the director will pay NICs as normal on earnings paid or due to be paid before death but no NICs will be due on earnings due to be paid on or after the date of death. Further guidance can be found in the CA44 National Insurance for company directors (http://bit.ly/2oIzVcw). Q: Can you clarify the guidance on two questions regarding gender pay gap reporting: ● Do we include new starters who have not worked the complete pay period (April 18) in the reporting, or would we pro rata their pay over the time they have been employed? ● If an employee has changed role/ hours or pay within the snap shot period does this data also need to be manipulated to give a more accurate figure? A: Where the new employee has worked for a full pay period (month) at the snapshot date, and the employer is going to pay them for a complete pay

| Professional in Payroll, Pensions and Reward | June 2017 | Issue 31 6

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