Payroll & Reward Brunch – February 2021
- Date: 25 February 2021
- Duration: 40 minutes
- Cost: On Demand
‘Finishing the tax year 2020/21 and starting the tax year 2021/22’ was our topic in focus for the month – always a good subject for discussion as year-end comes around only once every 12 months and a reminder of what needs to be done is always useful!
As promised, a number of downloads for you this month:
- Webinar slides
- The Basic Earnings Assessment – Tax Year 2021/22
- Which Tax Code should I use? 2021/22
- IR35 with Kate Upcraft and Ian Holloway
Questions and answers from the end of the brunch are available below after the video.
Join us on Thursday, March 25th when special guest Kevin Waller will be joining our own Ian Holloway to talk all things payroll following the budget and looking ahead to the new tax year.
Questions & Answers
Regarding the Employment Allowance, in tax year 20/21 we were not connected to any other company. Now we have been taken over and are part of a group of companies. Is this what you mean about assessing eligibility?
Yes, from your question it would appear that last year you could claim the Employment Allowance but in 2021/22 you will have to consider the other companies in the group. It may be that one of them is going to claim it.
We pay on the 25th of the month and there is every possibility that we will have a new starter before the start of the tax year that is not paid for the first time until the 25th. Do we really have to produce a blank P60 for them?
The thing is that the legislation says a P60 must be produced for people in your employment on 05 April. So, someone starting on, say, 01 April is employed by you on that date, even if they haven’t been paid. They will not get a P60 from their old employer so should get one from you. It will be blank in terms of ‘this employment’ earnings and tax but should contain their P45 pay and tax details if they were on a cumulative tax code.
We payroll most of our benefits, apart from accommodation. I know we can’t payroll accommodation benefit in 2021/22 but can we collect and pay over Class 1A National Insurance in real time?
No. It remains an annual process whereby you will have to take the value of payrolled benefits out of the system, multiply by the appropriate percentage (13.8) and that is how you get to the value of Class 1A NICs. These are payable by 22 July if paying electronically. The only real time NICs in 2021/22 are on certain termination awards and sporting testimonials. This is new from 2021/22.
I always say that the Emergency tax code can be applied cumulatively or non-cumulatively depending on what statement the employee ticks on the Starter Checklist. Am I right?
Yes. In 2021/22 you will use 1257L on a cumulative basis if the employee ticks statement A but on a week 1 / month 1 basis if they tick statement B.
Does the New Starter Checklist make provision for someone to say that they are a high earner and should be placed on a D0 (40%) code?
The Checklist has not changed in this regard, so employers of new employees only have the option of allocating an emergency tax code or using code BR (25%). The best option here is for employees who recognise they should be paying a higher rate of tax to not complete the form at all. Then, the employer can put then on tax code 0T which at least means that they will not get any tax-free allowances and Income Tax will be paid through the tax bands depending on the earnings. It doesn’t sort the issue out but it is the better option.
A question was asked about gender pay gap reporting and companies needing to report when they are part of a group…
Ian has posted an article on LinkedIn here. Alternatively, here is the link directly to the Gov.UK resource ‘Who needs to report their gender pay gap‘ – please do get in touch if you’d like us to look at this further!