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Q: My team has received a form P45 from an employee who joined our company on 12 April 2017, showing leaving date of 31 March 2017 and tax code 1100L on the cumulative basis. What tax code should I use and what starter declaration should I report? A: As the employee joined the company on 12 April 2017 and the tax code ends in ‘L’ the employer will use the code from the P45 but will also need to add ‘50’ to the tax code and report starter declaration code B. Had the employee joined the company after 25 May 2017 you would have used 1150L on a non-cumulative basis and again report starter declaration B. In the same scenario a new employee without a P45 would have to complete a new starter declaration and if they had ticked box B this would indicate that this is their main job and they have had another job or claimed job seeker’s allowance, employment support allowance or incapacity benefit in the current tax year. In this scenario you would use the emergency code 1150L on a non-cumulative basis and report starter declaration B. (See https://goo.gl/ im45C8.) Q: We have an employee within our company who takes home the ‘pool car’. How does this affect the status of the car benefit? A: Section 167 of the Income Tax (Earnings and Pensions) Act 2003) (ITEPA) explains the conditions that have to apply for the car to be considered a pool car. All these conditions have to be satisfied: ● the car must be available for use by several employees in a tax year ● by reason of their employment ● was not used by one employee to the exclusion of the other employees ● any private use was ‘merely incidental’, and ● the car was not normally kept overnight on or in the vicinity of any of the employees’ homes. Section 167(3)(e) states that the pooled car cannot be taken home by the employee. There is a rule of thumb that HMRC can (but do not have to) apply, which is that if the car is taken home by the employee more than 60% of the time then it would no longer be considered
a pool car. This is because HMRC would consider it unlikely that all the home- to-work journeys would be ‘merely incidental’. Q: Our organisation has an employee who has requested to take statutory adoption leave (SAL) and pay (SAP) under the ‘foster to adopt’ scheme. Do we need a matching certificate before we can pay SAP? A: The employee would need to provide evidence in the form of a letter from the local authority to prove to the employer that he or she was claiming SAP under the ‘foster to adopt’ scheme as not all fostering to adopt will attract adoption leave and pay. The employee can commence SAP and SAL up to two weeks before the child is placed with the employee under ‘dual approved prospective adopters’ under section 22C of the Children Act 1989. The employee must be a local authority foster carer who has been approved as suitable to adopt the child, and will have been notified by the local authority that it has decided to place a child with them in accordance with section 22C. Q: We are going to provide healthcare cover for an employee who is leaving the employment under a compromise agreement beyond the leaving date. employment but has not yet retired the medical benefit provided continues to fall under section 403 ITEPA. However, it should be noted that the provision of medical benefits to former employees does not attract Class 1A NICs. The reporting requirements are that when the benefits are paid, the former employer (or scheme operator) must send the following information to HMRC by 7 July following the end of the tax year: ● the name, address and National Insurance number of the recipient of the benefit ● the nature of the benefit, e.g. private medical insurance ● the amount of the benefit, and ● the responsible person’s details (usually the former employer). Further guidance on these points can be found in HMRC’s Employment Income Manual at EIM15200 (http://bit. ly/2qkCqmE). n How do we notify HMRC? A: If an employee has left the
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Issue 31 | 2017
| Professional in Payroll, Pensions and Reward |
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