Frequently Asked Questions – Specific to UK Tax and Employment Legislation (UK)

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UK Tax and Employment Legislation

Although great care has been taken in compilation and preparation to ensure the accuracy of the answers given to these questions, Payroll-help.com and The Learn Centre Limited cannot in any circumstances accept responsibility for errors or omissions, or for the results of decisions taken. The information given is not legal advice and is not warranted or guaranteed. If legal advice is required, a solicitor or accountant should be consulted, or the Citizen’s Advice Bureau, or another local organisation providing advice on legal, employment or tax matters.

New Frequently Asked Questions

What date should be entered on the P45 if I am paying outstanding holiday pay? Also, what date should go on if the employee is not working their notice period?

Is anyone else still having problems trying to get their tax account to balance – i.e. the payroll figures versus HMRC’s calculation of the liability?(see page 4 of the post)

Is anybody else getting P6s and P9s for employees where you have told HMRC they have already left?!

Has anyone seen the forms that are needed for administration of Shared Parental from April 2015?

I have been asked to set up a person, who is currently self-employed under a Ltd company, on a separate payroll within our organisation so that drawings/payments already taken by the individual can be taxed and paid over to HMRC. I am not sure if this proposal is an acceptable way of dealing with the individual’s tax situation and just wondered if anyone else has had a similar experience and, if so, how they handled it

The company I have just joined processes the monthly director payrolls all at the start of the tax year – i.e. in April they process 12 payrolls rather than one every month. I have never come across this before but believe that this is dangerous.  Can anyone comment?

I believe that I have claimed the Employment Allowance by mistake for a company. Can someone please advise?!

The guidance for Student Loans on Gov.UK ignores pennies. Is this correct, as I always thought that they were taken into account at the calculation stage and it is only the result that is rounded down to the whole pound below?

We are looking to change our payroll provider. Has anyone got any experience of using Keytime or Bright Pay

We have 150 employees whom are leaving the payroll 31st March (due to a de merger therefore they are straight away going onto a new payroll with the de merged section of the company) I have advised them they will receive a P45 but not a P60 because they are not still in employment on 5th April. If this is correct is there anything that we can do so that they can have a P60

Payroll Procedures

The company I have just joined processes the monthly director payrolls all at the start of the tax year – i.e. in April they process 12 payrolls rather than one every month. I have never come across this before but believe that this is dangerous.  Can anyone comment?

Is anyone else still having problems trying to get their tax account to balance – i.e. the payroll figures versus HMRC’s calculation of the liability?

We are looking to change our payroll provider. Has anyone got any experience of using Keytime or Bright Pay

What date should be entered on the P45 if I am paying outstanding holiday pay? Also, what date should go on if the employee is not working their notice period?

Is anybody else getting P6s and P9s for employees where you have told HMRC they have already left?!

When we want to postpone a new starter, we are using General Notice B letter 5 template from the TPR website. My query is do we have to give a precise deferral date or can we say ‘in their 3rd month of service’?

I have an Short Term Business Visitor (STBV) for 3 months 75 days in total whilst here in the UK we will not receive a recharge from the France company for their salary costs. However the UK company will pick up the cost for the rental car and accommodation for the 75 days. My question is how do I treat these benefits, are they taxable or non-taxable? If taxable how would I declare then as the STBV is not on our UK payroll?

We have 150 employees whom are leaving the payroll 31st March (due to a de merger therefore they are straight away going onto a new payroll with the de merged section of the company) I have advised them they will receive a P45 but not a P60 because they are not still in employment on 5th April. If this is correct is there anything that we can do so that they can have a P60

What is the correct action when a cumulative tax code is received but with no previous tax and taxable pay figures – is it to place them on a Week 1 / Month 1 code?

When we want to postpone a new starter, we are using General Notice B letter 5 template from the TPR website. My query is do we have to give a precise deferral date or can we say ‘in their 3rd month of service’?

 

Employment Status – Employed or Self-employed?

I have been asked to set up a person, who is currently self-employed under a Ltd company, on a separate payroll within our organisation so that drawings/payments already taken by the individual can be taxed and paid over to HMRC. I am not sure if this proposal is an acceptable way of dealing with the individual’s tax situation and just wondered if anyone else has had a similar experience and, if so, how they handled it

I work for an umbrella company. Having previously been treated as self-employed I am now charged National Insurance.  Is this common practice now?

Am I committing an illegal act by working for two employers at the same time?

Can anyone tell me what steps someone needs to go through to set themselves up as self-employed?
Who are “employees” for payroll purposes?
I am self-employed. Am I entitled to holiday pay or any other benefits from my client?

Expenses and Benefits

The guidance for Student Loans on Gov.UK ignores pennies. Is this correct, as I always thought that they were taken into account at the calculation stage and it is only the result that is rounded down to the whole pound below?

Should an employee should be reimbursed for the cost of insuring their private car for business use if the need arises? Initially I thought yes on the basis that it is a purely a like for like business cost, no private benefits gained from it; business miles would also be reimbursed so Yes?

Has anyone seen the shared parental Leave and Pay forms that BIS were supposed to be issuing to help employers design their own?

We would like to payroll benefits from April 2015 but note that the ‘formal’ scheme does not start until April 2016. Do we need permission from HMRC if we are to start a year earlier?

Can you just confirm – when an employee uses their own car for work, the rate reduces after 10,000 miles in a tax year. This does not happen when you use HMRC’s Advisory Fuel Rates.  Is this correct?

I have several managers who are booked into accommodation when there is a meeting that runs late and it is too far for them to travel home.  We do not have a dispensation so am I right assuming that this is a benefit that could go on the PSA?

We are introducing a discount scheme where retail shop spending could be loaded onto a card following an award or incentive given to the employee.  Could this be covered under the existing PSA that we have?

We have an employee on an Irish payroll who is querying her car benefit saying that it should be prorated for the time of the year that she was at work?  The car was available to her all the time.  Does anyone know anything about Irish benefits and whether this is correct?

Southern Ireland benefit question – we have an employee who was sick for the majority of the year and she is disputing the way that we have calculated the mileage in her company car.  Can anyone advise?

I am reviewing the rate at which we pay first aid allowances.  Can anyone share what they pay at their companies?

We have two employees who are required to work on days when there are no childcare arrangements; therefore, we have agreed to meet this cost. They already have salary sacrifice for £243 and my understanding is that the additional amount is declared on the P11D.  Is this correct?

 

Holiday Pay

I am working on holiday pay in our company at the moment. We have some employees who provide an out of hours on call service.  They come on call at 6pm and go off call at 8am (they have opted out of the 48 hour week) and in addition to this they work a normal 37 hour week. For the purposes of holiday pay do you know which hours it is guided that you use to calculate an average pay rate?

I am trying to get my head round the new rulings for including overtime (and other allowances) in calculation of holiday pay. Is this for ALL staff when they are on holiday, or is it only applicable for employees that are LEAVING?

Is the holiday pay calculation that is done (the 12-week average) based on actual pay received, even if some of that pay relates to a holiday pay payment itself? Thanks

We have an employee who has been sick for a full year at full pay.  She is now asking for her holiday pay to be paid.  Is this right that an employee can actually be better off than her colleagues that have not been sick?

We have some seasonal staff that, generally, accrue holiday whilst they are employed for the season and then it is paid out to them when their contract finishes.  Can we pay out an accrual midway through the year if the employee wants it?

I would be grateful if someone would give me some help in explaining the holiday pay payment that my previous employer has just paid me.

We pay our casuals an hourly rate plus an additional amount for their holiday.  Our employment lawyer has said that this constitutes roll-up holiday pay and cannot continue.  Is this correct? 

Regarding a WTR calculation, a recent Tribunal case (Neal vs Freightliner Ltd) ruled that holiday pay must now also include non-contractual overtime uplift – interested in how other companies tackle this

Regarding a WTR calculation, a recent Tribunal case (Neal vs Freightliner Ltd) ruled that holiday pay must now also include non-contractual overtime uplift – interested in how other companies tackle this.


Statutory Payments; Maternity Pay, Paternity Pay and Statutory Sick Pay

It seems that although our payroll software has given us the option of choosing weekly or daily based processing for Maternity Pay but has not extended that facility to include SPL and Pay. They have coded it to do daily only.

Has anyone seen the Shared parental Leave and Pay forms that BIS were supposed to be issuing to help employers design their own?

We have tested our software for Shared Parental and it seems to be making a fundamental mistake. This is just a word of warning to people

In December we paid staff early, they were paid on 24th December. The usual pay date is the last Friday of each month, in December this would have been 26th.

When working out the relevant period for maternity pay, do I use the pay date of 26th December rather than the date they were actually paid which was 24th December?

Can I make the conclusion that Shared Parental Pay and Additional Statutory Paternity Pay is the same thing and should be handled the same way? The reason I am asking, is I saw it will get reported on the same RTI Data Item on the FPS. ASPP and ShPP amount gets reported on the same field on the FPS

We have an employee that has returned to his home country to recuperate from sickness.  Do we have to pay him SSP?

An employee took Ordinary Statutory Paternity Pay (OSPP), saying that he would return to work after two weeks.  However, he actually came into work on the weekend before that.  Has he broken his paternity leave?

We had a fixed term contract person that we left on the payroll so that we could pay her SMP after her contract ended.  Do they accrue holiday whilst they are on SMP, even though her fixed term contract had ended?

Please could someone advise on a situation where a baby was born at 22 weeks, survived for a few hours and then died?  Our occupational scheme does not cover this eventuality and I am trying to find out the Statutory rules.

My partner just took two weeks’ paternity leave but we did not realise that it would only be paid at the Statutory rate.  Is it possible for his employer to convert this to holiday pay?

 

National Insurance Numbers

ow that the HMRC have stopped automatically issuing CA140 Age Exception Certificates how are employers handling ‘Class C’ NI contributions i.e. how do they decide when to switch employees over? Do you wait until the employee approaches you or do you check against the State Pension Calculator?  I am after some advice on how other employers are handling this?

I have received two Age Exception Certificates that should have applied from last payday.  Do I have to recalculate the NI from category A to C and declare this to HMRC?

We have received a batch of NOT forms, advising us that we have some incorrect NI numbers for employees.  I am a little confused as for most of the numbers, we have been given a new number to use, but the new number has no suffix letter, and our software will not currently allow us to input an NI number without a suffix letter – e.g. original number AB123456A – provided number AB678912.  Does anyone know if a FPS will allow a NI number without a suffix letter?

Can somebody clarify the rules regarding the NT code?  Is this carried forward to the following tax year or is it changed to the Emergency Code?

Tax Codes

We have an employee who filled in the starter checklist and we put him on a non-cumulative code accordingly. Now we have his P45.  Can we use the year-to-date earnings and tax and the cumulative tax code?

I have a UK non-resident that I have to put on the payroll so that he is paid for his work as CEO.  What tax code do I put him on and is it OK to put X as the NI category?

Can someone tell me how a K code works?  

I have found the HMRC tax and NICs calculator for 14/15 but can anyone tell me where to find 13/14? 

We have employees that started on 31 March and we are considering paying them manually for one day so that a P60 is produced.  What tax code do I use? 

What does the effective date on the tax code notification mean?  Is this the date from which I have to perform the tax calculation on the new code?  

Have the tax and NI tables for 2014/15 been issued yet, if only in a draft format? 

One of our employees has been told that he has underpaid tax because his salary exceeded £100,000.  HMRC have told him that we, the employer, should have told them about it so that his tax code could have been adjusted.  Is this right? 

Handling HMRC and Payroll Forms

I have to send a corrected P11D for an employee.  How do I do this?

In April I submitted an EPS saying that P11Ds were due.  Now, in June, I find that they are not due.  What do I have to do to stop HMRC chasing me for P11Ds that they think are due?

I have been charged interest for a late payment at HMRC.  However, there was no late payment.  HMRC tell me that this is a known issue – has anyone else experienced this?

HMRC have withdrawn the E14, E15, E16 and E19 from the start of the tax year 2014/15.  Learn have recreated the tables from these for the new tax year so that they are available – as we do not know if Gov.UK will be replicating this information 
I am trying to find out where the E15 is for 2014/15 – does anyone know? 

I am trying to find out where the E15 is for 2014/15 – does anyone know? 

Are the P9s for 2014/15 coming out yet?

What is everyone’s experience of HMRC’s new voice-activated Intelligent Telephone Automation (ITA)? 

RTI

Can you confirm whether, under RTI, it is in order to use the tax code as well as the year to date figures from a P45? Pre RTI we would have used all the information on the P45?

Next year we are implementing our pension scheme through salary sacrifice. For RTI purposes, where do we report the employee contributions (even though there are actually no employee contributions to report under a salary sacrifice arrangement)?

What are the things that are causing RTI to work incorrectly for some employers?

We have received a penalty because we have not filed a paper P11D(b).  We submitted it electronically along with all of our P11D information.  Has anyone else experienced this?

Do I need to continue to submit an EPS when SMP stops and I have no other recoveries to make?

We believed that our payroll software had sent Employment Allowance claims before the start of the tax year on the EPS and all of them had failed.  Now, out of 300 clients, we find that only 1 has failed.  Apparently, it was ‘locked’ at HMRC and the technical support from our software developer indicated that they were aware of the problem.  Has anyone else had this problem?

I have just had an information request for payroll information from a local council.  However, the information that they are requesting is sent to HMRC in real time (and they are piloting the Universal Credit) so I am wondering if the information I am sending is being shared with the right people.

Our HR department wants to change everybody’s employee number due to a change in their software.  What implications could this have under RTI?

We have always split the NICs calculation over 2 months when we having something like a new joiner part-month.  I have been told by HMRC that since RTI there is no longer a need to do this.  Is this correct? 

 

Pensions

We have a low paid employee and operate a contractual enrolment scheme. Before AE we would have invited them to consider whether they wanted to join or opt out. But under AE rules we can’t ask them to opt out – they have to make that decision for themselves after being enrolled.  So do we go ahead and enrol them because of the rules of the scheme? Or do we send them the standard AE letter telling them they have the right to enrol if they want and thereby break the rules of the scheme?

I have been made aware of a temp agency who are not auto enrolling staff when I believe they should. Should I report them and if so is there a way to do this anonymously that doesn’t involve a phone call?

I run a small payroll bureau with approx 30 clients. The majority of my clients are small businesses with under 10 employees (most with only 2). This year only one of my clients is staging. I have been reading up about AE but am confused as to how much or little support other payroll bureaux are giving their clients?

We have just set up a pension scheme to work with Auto—Enrolment. However, the employees are all hourly paid with different values going through each payday.  Does this mean that the salary sacrifice will vary each payday as well?

What is a qualifying year for State Pension purposes and what happens if someone takes a break in the tax year? If the definition looks at earnings, even if they are a high earner, does this mean that there is the possibility that this year might not count towards the State Pension?

Can someone point me in the direction of the rules surrounding pension contributions in relation to company sick and SSP only. I can’t find anything on HMRC?

We have salary sacrifice for our pension scheme and one of the employees has asked if they can sacrifice their pay in lieu of notice. Is this possible?

We have an Entitled Worker who has elected to Opt-In to the pension scheme (even though they are only entitled to join our non-qualifying scheme). Next month, they will be a Non-Eligible Jobholder and will be entitled to Opt-In to our qualifying scheme.  Can I use the same Opt-In notice that they gave when they were an Entitled Worker?

Can someone point me in the direction of the rules surrounding pension contributions in relation to company sick and SSP only. I can’t find anything on HMRC.

How do you calculate the value of an employee’s Contracted-Out earnings?

When an employee opts-out of Auto-Enrolment, we tell them that they cannot opt-in again for another 12 months. However, we have been told that this may be incorrect but the employee can only opt back in again once in a 12-month period.  Is this correct?

A company pays a contribution to an employee’s private pension plan.  Should this be subject to tax and NI?

We have salaried staff paid for the calendar month on the 25th.  For Auto-Enrolment purposes, what is the date on which I have to assess them?  Our initial Staging Date was in July but we postponed until October.

Our Staging Date was 01 January and we have enrolled all eligible employees.  Our policy is to use Postponement for 3 months for all new employees.  Last month we bought another company with less than 50 employees.  They had not Staged.  Can we use Postponement on these employees?

 

Miscellaneous FAQ’s

I am employing a non-EU citizen, though they have the correct visa to work in the UK. Can they set up their own business and I use them on a ‘business-to-business’ arrangement?

I served notice to my employer and was asked to sign a letter saying that I will not work for an employer that is in direct competition.  Although I have signed it, I do want to work for this employer and now I have to repay some college fees that were paid on my behalf.  Do I have to repay these as a lump sum?

My partner has been sick for 15 months and we believe that he is going to be offered medical retirement.  Can anyone explain what his rights are? 

If someone has been issued with a risk of redundancy letter and an offer of a job as a reasonable and suitable replacement has been accepted verbally, can the letter be withdrawn? 

If you log onto HMRC’s Website this morning (07 April 2014), it is still saying in the dropdown box that the current tax year is 2012/13!

Are employer payment booklets for 2014/15 issued on request only and why are we getting booklets that advise HMRC’s bank details for clients that are not paying electronically? 

I am aware of a number of employers who are experiencing problems with HMRC’s new intelligent Telephone Automation (ITA) service.  This service responds to speech rather than asking the caller to press a series of buttons to get through to the correct person.  Has anyone had any personal experience of problems?

We have been advised that posting a payslip with personal information on it might pose an identity fraud risk to our employees.  Is there a precedent for this and should we be taking some action in regards to this communication we have received?

 

Help with My Personal Questions

As you cannot answer my personal question, who can?

How can I find the name and details of my tax office?

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Payroll Update 2013