Payroll Fact File

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Payroll Fact File provides practical information on every aspect of payroll procedures. It takes a procedural approach to the subject, with many worked examples, checklists and flow charts provided throughout to help you work logically through all your payroll queries.

There are many situations when you need to know the law as it relates to pay and benefits. You may need to assess the implications of an employee using a company car or to calculate the remuneration owing to a pregnant employee. Whatever the query, it is at times like these when you should turn to the hands-on guidance of Payroll Fact File, to ensure you are carrying out the correct procedures and calculations.

* Regular, comprehensive updates
* Checklists, tables and flow charts
* Numerous worked examples

The Payroll Fact File is designed to keep those engaged in payroll and related tasks updated with ever-changing legislation and payroll procedures.


Issue 156, February 2020

Updated six times a year. Last updated February 2020.

As a result of the UK’s decision on 23 June 2016 to leave the EU, there may be changes to payroll legislation in due course. The UK Government will have to review and amend the legislation and this may take some time. The changes will be reflected in the Payroll Fact File where applicable in due course.

Chapter 1


The procedure for handling business mergers under RTI has been added.


The new student loan thresholds for 2020/21 have been added.

Chapter 2


The link for 2019/20 student loan tables has been added. The 2020/21 tables are not yet available. Booklet 480 is no longer available as a PDF. All content is now shown as HTML.


NMW and NLW rates from 1 April 2020 have been added. Employers paying only the NLW or NMW to workers paid weekly or multi-weeks should exercise caution and ensure workers are paid for 29 February 2020, if applicable.

Chapter 3

This chapter has been generally reviewed and brought up to date.

With regard to the Construction Industry Scheme (CIS) HM Revenue and Customs CIS Online verification service or HMRC-approved commercial CIS software must be used by contractors to establish whether payment to the subcontractor should be made net or gross.


Commentary on payments to HMRC have been updated.

Chapter 4


The CEST online tool for determining employment status has been updated and redesigned.


The rules regarding Employment Allowance have changed with effect from 6 April 2020. Under original proposals, employers would be required to report the EA as a state aid via the EPS. However, HMRC has now confirmed that this reporting stipulation is no longer required.


The temporary easement granted by HMRC for employers who pay their employees early at Christmas has been made a permanent easement. Where employers pay earlier than the normal or contractual payday in December, they should ensure that the normal payment date is entered onto the FPS and the submission of the FPS is made on or before the normal payday.

Appendix 4B

A to Z of state benefits has been updated with the new rates for 2020/21.

Chapter 5


Register by 5 April 2020 to payroll new benefits from 2020/21.


Salary sacrifice arrangements and childcare vouchers have been updated.

Chapter 5A


Trivial benefits exemption and treatment of Christmas gifts have been updated.


Reporting requirement for low emission cars from April 2020 has been included.


Appropriate percentage for low emission cars from April 2020 has been added.


Commentary on very low emission cars from April 2020 has been updated.

Figure 5AF

Advisory fuel rates for company cars from April 2020 have been updated.


Commentary on trivial benefits exemption traps has been added.

Chapter 6

6.5, 6.5A

Knowledge of an employee’s Scottish or Welsh taxpayer status is important for correct employer PAYE Settlement Agreement (PSA) calculations.


HMRC has withdrawn its residence guidance Booklet RDR3. Guidance on the UK Statutory Residence Test (SRT) is now found in the online HMRC Manual Residence, Domicile and the Remittance Basis (RDRM) at RDRM11010-RDRM13000. The new RDRM references have been added to the text.

6.27, 6.27A–6.27C

Additional commentary on the revised annual PAYE arrangement for UK business visitors working ad-hoc in the UK for up to 60 days.


HMRC advice on obtaining a No Tax PAYE code quickly for a UK-outbound expatriate employee.


If it is to the employee’s advantage, HMRC accepts an alternative, non-statutory calculation of Post-Employment Notice Pay (PENP) for a monthly-paid employee with a contractual notice period expressed in weeks or months.


Annual allowance charges can be paid out of non-UK pension funds at the scheme member’s request.


HMRC’s views on the meaning of an acceptable non-UK regulated pension scheme.


Extensive commentary on HMRC’s views on the application of tax treaty provisions to pension income and pension lump sums.


The EU Settlement Scheme document scanner locations have been updated.


The National Living Wage and National Minimum Wage rates have been increased from April 2020.

Chapter 7


The weekly rate of SSP from 6 April 2020 is £95.85.

Appendix 7A

The new weekly rate of SSP has been added. The minimum qualifying average weekly earnings must be at least the lower earnings limit. The new LEL for 2020/21 has not been confirmed yet.

Chapter 8

Summary of changes, 8.27, 8.37, 8.53

The new statutory payment rates for SMP, SPP, SAP and ShPP have been confirmed as £151.20 per week from 5 April 2020. The weekly rate of SSP will be £95.85 from 6 April 2020. But the minimum qualifying earnings have not been announced yet.

8.23, 8.25 & 8.88

Form SMP 1 exclusion form is now available as an interactive form but employers must print off and sign it after completion and hand it to the employee within seven days.

Both versions of the form can be found at:

8.104, 8.105, 8.106 & 8.107

The weekly rate of SPP rises to £151.20 from 5 April 2020. The minimum qualifying earnings has not been confirmed yet.

8.121, 8.128, 8.133

The weekly SAP rate increases to £151.20 from 5 April 2020. The minimum qualifying earnings has not been confirmed yet.

Rates of Pay section has been updated with the new weekly rates of SMP, SPP, SAP and ShPP.

Chapter 9


Pension Scheme Services address updated.


Section on common errors on Forms P14 and P35 has been removed.


Section on online filing financial incentives has been removed.


Commentary on submitting and completing Form P11D has been updated.

Chapter 10


Apprentice minimum wage rates have been updated.


Update on Mencap v Tomlinson-Blake and Shannon v Rampersad ([2018] EWCA Civ 1641) case.


Table of records that employers are obliged to maintain and return to HMRC has been updated.


Student load thresholds have been updated.


HMRC interest rates for late payment are 3.25% (with effect from 21 August 2018).


NMW rate has been updated.

Chapter 11


The new proposed rate of Shared Parental Pay effective from 5 April 2020 has been added. The minimum qualifying average weekly earnings rate which is aligned with the lower earnings limit has not been announced yet.

Chapter 12


Principles for calculating pension loss have been added.


New ACAS Guidance on the Menopause.

Chapter 13


Non-UK public service pension schemes have been brought within the FA 2004 UK registered pension scheme legislation, following the case of BAV-TMW-Globaler-Immobilien Spezialfonds v HMRC.


The correct method must be used to add administrators and assistants to a pension scheme registered under the HMRC Managing Pension Schemes online service, or all access under the original scheme ID may be barred.

Pension scheme practitioners must use only one ID when included in the HMRC Managing Pension Schemes online service. HMRC Pension schemes newsletter 115 sets out the information required from practitioners.


The government has announced that the NHS in England and Scotland can reimburse certain clinical staff for the 2019/20 excess annual allowance charge on their pension fund benefits.


Pension schemes newsletter 115, November 2019 confirmed that many individual members failed to declare their annual allowance charge on their self-assessment tax returns.

13.18D, 13.18E

New HMRC guidance on payment of the annual allowance tax charge by the pension scheme member and by the pension scheme trustees out of pension funds.


Pension scheme administrators can use SDES in January 2020 to download their members’ residence status report for 2020/21.


The UK state pension increase for 2020/21 is expected to be 3.9% under the ‘triple lock’ guarantee.


Guidance in HMRC Pension Schemes Newsletter 114 on procedures for a pensions payroll transfer.


A pension liberation scheme gave rise to an unauthorised payment charge and a related surcharge on a couple who were originally the unwitting victims of the scheme in West v HMRC [2019] UKFTT 602 (TC).

Chapter 14


Commentary on how vendors aim to automate as much as possible through data management and robotic process automation (RPA).


Consideration of payroll in the wider context of project strategy.

14.27, 14.34

Additional commentary on outsourcing projects and aggregator solutions.


List of payroll vendors updated.


Commentary on global payroll service providers updated.