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.

SOURCE CURRENCY

Issue 163, April 2021

A payroll-related summary of the March 2021 Budget is included.

Chapter 1

Summary of Key Points

Uber have lost their case at Supreme Court. Their drivers have been found to be workers.
CJRS extended to 30 September 2021.

1.2
Off-payroll working rules updated.

1.3
Statutory Parental Bereavement Pay has been added.

1.4, 1.5, 1.6, 1.7, 1.9 & 1.12
Off-payroll working rules have been updated.

1.11
NLW age reduced to age 23 from 1 April 2021.

1.52B
EYU no longer used for adjustments for 2020/21 onwards, only for earlier years.

1.52D
Scottish student loans added. Off-payroll working flag added to RTI list.

1.60
Class 1A and Class 1B rate for 2021/22 added.

1.65A
Details of Uber case added which gives Uber’s drivers workers’ rights including holiday pay.

1.69
The EYU can still be used for adjusting tax years up to 2019/20.

1.71
Employer checklist; payment of Statutory Parental Bereavement added.

1.86, 1.88, 1.106, & 1.106D
Statutory Parental Bereavement Pay is excluded from attachable earnings for Attachment of Earnings Orders, including Council Tax Orders, Deductions of Earnings Orders for Child Maintenance and Enforcement Commission (in Scotland, Arrestment of Earnings Orders).

1.121
Old thresholds for student loans removed. Priority of plans has been added plus thresholds for 2021/22.

1.143
GAYE maximum contribution for 2021/22 added.

1.156
Pension allowances added for 2021/22. Lifetime Allowance frozen until 2025/26.

1.170
The de minimis details for State Aid have been removed from the EPS from 2021/22. The EA continues to be £4,000 pa. Employers cannot offset EA against off-payroll workers.

1.178
Apprenticeship Levy is due on deemed payments to off-payroll workers where applicable.

1.181B, 1.181C, 1.188, 1.189, 1.190B
New extension details to the CJRS added.

1.190
Lookback table for variable pay on CJRS added.

Legislation
Coronavirus Act 2020 added.



Chapter 2

Summary of key points

New type of Scottish student loan is being introduced from 6 April 2021 and the starter checklist and expat starter checklist have been updated for use from 6 April 2021.
Pension allowances for 2021/22 have been added.
NMW accommodation rate has been updated.

2.2
BPT tool is available for download. The CJRS has been extended to 30 September 2021 and employers will have to contribute from 1 July 2021. Eligibility rules have changed for furlough from 1 May 2021.

2.3, 2.5
Expat starter checklist (new format) has been added for new starters and to the list of employee information.

2.5A
Off-payroll working for private sector has been updated.

2.8
NLW qualifying age reduces from age 25 to age 23.

2.22
Pension allowances 2021/22 have been updated. The Lifetime Allowance is frozen until 2025/26.

2.23
Form P9X (2021) can be downloaded for use from 6 April 2021.

2.23B
The tax codes to use for a new employee coming from abroad have been updated.

2.25
FOT example updated.

2.26
This section has been updated to reflect the new tax thresholds for free of tax calculations.

2.27
Reference to form P9D removed.

2.29
Scottish student loans Plan 4 have been added to the new streamlined starter checklist from 6 April 2021. The student loan questions have been reworded.

2.30
This section has been updated regarding new tax bands for 2021/22 and new emergency tax code.

2.31
The tax bands for Wales and rUK have been frozen for 2021/22 but have changed for Scotland. There is also a new emergency tax code. There is a new Scottish student loan from 2021/22 known as Plan 4. The starter checklist has been updated to reflect this. The tax code to use from 6 April 2021 for a new starter has been updated.

2.33
The tax code to use for a new employee has been updated for the new tax year.

2.34
Form P9X (2021) tax code adjustments have been added.

2.35
Example B updated where a new employee joins at the end of the tax year.

2.38, 2.39 & 2.40
Only one plan type of student loan can be deducted if the employee is Plan 1, Plan 2 or Plan 4. But a Postgraduate loan can run concurrently with one of the other plans or on its own. Details for a new employee coming from abroad have been updated.

2.42 & 2.132
Details of new veterans NIC relief have been added.

2.116
HMRC is formalising the calculation of PENP where an employee’s pay period is in whole months, but their notice pay is not. This takes effect from 6 April 2021.

Q&A
Veterans NIC relief added.

Sources of legislation
Finance Bill 2021 added.



Chapter 3


Summary of key points
References to 2021/22 added.

3.1
Reference to March 2021 Budget included.

3.2
Updated opening times of Fraud helpline and included opening times of Business Payment Support Service.

3.8
Updated dates of payrolling for new tax year.

3.9
Details of Uber Supreme Court appeal included.

3.10
Film Industry guidance is still awaited.

3.18
2021/22 added to the seafarers’ earnings deduction table.

3.19
Additional guidance on completing form P85.

3.24
Updated details of Child Trust Fund limits.

3.28A
Added fuel type E for electric cars.

3.33
P45 details updated for 2021/22.

3.34
Updated student loan limits.

3.37
Payments to HMRC updated for 2021/22.

3.41
Updated furlough scheme details.

3.44
Updated Annual Allowance table.

3.51
Updated Scottish tax rates.

3.59
Emergency tax code updated for 2021/22.

3.75
Added note on the penalty waiver for 2020/21 tax returns submitted after 31 January 2021 but before February 2021.

3.82
CIS – updated verification dates for subcontractors.

3.83
Clarification about higher rate deduction for unregistered subcontractors.

3.85
Updated details of amendment to CIS300 returns and option of submitting nil returns.

3.35
Amended telephone opening times for bereavement service helpline.

Appendices 3A, 3B, 3C. 3E & 3F
Tables updated for 2021/22.



Chapter 4

4.11
Class 3 National Insurance rate increases to £15.40 per week from April 2021.

4.13
IR35 has been postponed to April 2021 for the private sector and mainly affects personal service companies who work for medium or large organisations. It is up to the engager to determine the worker’s status and to issue a Status Determination Statement and to share that with the worker and everyone in the contractual chain.

4.28
Example B where payments cross over a tax year has been updated. EYU is no longer acceptable for amendments for 2020/21 but can be used for 2019/20 or earlier.

4.37
Further details of veterans NIC holiday have been added.

4.38A
The increase in EA to £4,000 from April 2020 has been added. The requirement to include details of de minimis State Aid has been removed from the EPS.

4.58
Advisory fuel rates from 1 March 2021 for company car users have been added.

4.76
Old details of MSCs dating back to 2007 have been removed and off-payroll working rules for the private sector have been updated as they apply from 6 April 2021.

4.81
Class 1B percentage rate for respective years up to 2021/22 has been added.

Appendix 4A
NIC thresholds for 2021/22 have been updated. Apprentice Upper Secondary Threshold for 2021/22 has been amended.





Chapter 5

5.7
Class 1B NIC rate for 2021/22 added.

5.24
Lower earnings limit for 2021/22 added.

5.24
Statutory payments standard rate for 2021/22 added.



Chapter 5A

5A.37
Car fuel benefit multiplier for 2021/22 added.

Figure 5AF
Advisory fuel rates from 1 March 2021 added.

5A.43
Van benefit charge and van fuel charge updated.

5A.96
Application of exemption for annual functions to virtual events.



Chapter 6

General
The Chapter has been updated for the Budget changes for 2021/22.

6.5A
Welsh tax rates for 2021/22.

6.22A
New HMRC guidance on the split of non-residents’ earnings between UK and non-UK duties in COVID-19 situations.

6.23
A non-UK contract is not accepted by HMRC as within ITEPA 2003, s 22 (duties performed wholly abroad) where UK duties are performed under the contract due to coronavirus travel restrictions.

6.25
Basic PAYE code has been updated to 1257L for 20210/221.

6.32A
A maximum of 60 days of UK presence in each tax year can be ignored, which are UK days in exceptional circumstances beyond the individual’s control (defined as including a local or national emergency, or a sudden serious or life-threatening illness or injury). This maximum is not increased by any exceptional coronavirus-related days.

6.38
Example of earnings split between UK and non-UK workdays updated to 2020/21.

6.39
HMRC has confirmed that qualifying mixed funds account nominations on delayed self-assessment tax returns for 2019/20 were accepted up to 28 February 2021.

6.38
Employers can make an amended request to HMRC for PAYE operation on an employee’s earnings for UK days where duties are performed in the UK, rather than abroad, because of inability to travel during the coronavirus pandemic.

6.54
Example of applying a split year NT (no tax) code updated to 2020/21.

6.60E
HMRC has confirmed that the 184-day rule in tax treaties is unaffected by the coronavirus pandemic (see RDRM13410 Annex D).

6.87B
UK-inbound employees from the Isle of Man must obtain a UK NI number, due to post-April 2016 differences in the two countries’ state pensions.

6.92A. 6.92B
All the EU member states have accepted the detached worker rules in the UK/EU co-ordination protocol from 1 January 2021.

6.116
Class 2 voluntary NICs for the tax year should be paid by set-off against previously-paid self-assessment liabilities for a state pension payable before the final payment date.

6.122B, 6.124
Gibraltar is a recognised qualifying overseas location for pension schemes, allowing transfers of the funds in UK-approved schemes without an overseas transfer charge.


Chapter 7

7.12E
The current CJRS extended scheme which was due to close on 30 April 2021 has been extended to 30 September 2021.

7.44
The example showing the calculation of four days SSP based on a six-day qualifying week has been corrected. HMRC’s original publication of the daily rates contained a rounding error which has now been corrected.

Appendix 7A
HMRC has republished the daily rates of SSP as the original rates contained two errors for 2021/22 and these have been corrected.

Appendix 7B
SSP tables for linking periods of incapacity for work have been updated until the end of 2021/22.



Chapter 8

Summary of key points
New statutory payment rates have been added. Retrospective legislation has been added to the Finance Bill 2021 to exclude SPBP from OpRA legislation for 2020/21.

8.5
SER for 2021/22 continues to be 3% where the previous tax year’s total Class 1 does not exceed £45,000.

8.44
Expected date in Example B amended to 30 October 2021.

8.71B
A warning has been added for employers where the employee changes their hours from full time to part time on return from family leave and is then furloughed.

8.71C, 8.105D, 8.145B & 8.158C
Details of the extended CJRS announced on 3 March 2021 have been added and new qualifying conditions for furlough from 1 May 2021.

8.159
Retrospective legislation has been added to the Finance Bill 2021 to exclude SPBP from OpRA legislation.

8.159D
Brief details of the CJRS extension to 30 September 2021 have been added.

Sources of legislation
Finance Bill 2021 added.

Appendix 8B
SMP tables 2021/22 have been added as well as SPP, SAP and SPBP tables.




Chapter 9

The Chapter has been updated across the board for the 2021/22 tax year.

9.12
Note on EYU withdrawn from April 2021.

9.18
Payrolling registration deadlines and car allowance example updated.

9.31
Car benefit details updated.

9.31C
Car fuel details updated.

9.32
Company van benefit details updated.

9.42
Reference to HMRC acceptance of ‘virtual’ annual staff functions included and Budget 2021 announcement of easement on cycle to work schemes.


Chapter 10

General updating of dates and changes of tense where necessary.

10.1
Link to HMRC’s latest annual report added and details of latest Basic PAYE Tools.

10.12
NMW rates updated.

10.40
NMW rates updated.



Chapter 11

11.8
Qualifying tax year for SER for babies expected on or after 17 July 2021 has been added.

11.15
National Living Wage has been added.

11.22
Employment Allowance increased to £4,000 from April 2020.

11.28
It was confirmed in the Budget on 3 March 2021 that the CJRS will run until 30 September 2021 at 80% of pay for the hours not worked. Employers will be required to contribute 10% towards furlough pay from 1 July 2021 and continue to meet the cost of employer’s National insurance and pension contributions.



Chapter 12

12.42
Updated HMRC guidance on employees eligible for furlough.



Chapter 13

General
The Chapter has been updated for Budget changes for 2021/22.

13.18
HMRC PTM042100 guidance on SAYE share scheme transfers allowed as pension contributions. PTM044100 includes detailed guidance on scheme member contributions.

13.30B
The UK state pension rates for 2021/22, based on the CPI and earnings figures in September 2020.

13.35
Class 2 voluntary NICs may need to be paid by self-assessment set-off where a state pension is payable before the 31 January tax payment date for the previous tax year.

13.74A
Pensioners’ tax allowances for 2021/22 added.

13.87, 13.90
The contributions and earnings levels for stakeholder pensions are unchanged for 2021/22.

13.92. 13.92D
SI 2021/89 enables UK-approved pension scheme funds to continue to be transferred to qualifying schemes in Gibraltar.


Chapter 14

There are no changes to this chapter.