Guidance: Tax credits: disability helpsheet TC956

Updated: The TC956 disability helpsheet has been updated to reflect the October 2017 changes.

This helpsheet explains in detail the 3 conditions you must meet to qualify for the disability element of Working Tax Credit.

The conditions are, you:

  • usually work for 16 hours or more a week
  • have a disability that puts you at a disadvantage in getting a job
  • currently get, or have been getting, a qualifying sickness or disability benefit

Helpsheets are for guidance only and reflect the HM Revenue and Customs position at the time of writing.

Source: HMRC

Guidance: Class 1A National Insurance contributions on benefits in kind (CWG5)

Updated: New paragraph about how to calculate Class 1A NICs added in Section 9 of Part 3 and new paragraph about optional remuneration arrangements added in Part 5.

This guide tells you what you need to know and do about Class 1A National Insurance contributions (NICs). It explains when Class 1A NICs are due and how they are worked out, reported and paid.

Source: HMRC

Guidance: Taxable pay tables: Calculator method

Updated: HM Revenue and Customs is no longer producing 2017 to 2018 and any further versions of the taxable pay tables.

HM Revenue and Customs (HMRC) has rationalised some payroll products that are produced predominantly for employers who have an exemption from filing payroll information online. As a result HMRC is no longer producing this version of the taxable pay tables.

Use these tables to complete your payroll manually.

Source: HMRC

Detailed guide: Annual Tax on Enveloped Dwellings

Updated: Section added on penalties and appeals.

Overview

ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000.

You’ll need to complete an ATED return if your property:

  • is a dwelling
  • is in the UK
  • was valued at more than:
    • £2 million on 1 April 2012, or at acquisition if later, for returns from 2013 to 2014 onwards
    • £1 million on 1 April 2012, or at acquisition if later, for returns from 2015 to 2016 onwards
    • £500,000 on 1 April 2012, or at acquisition if later, for returns from 2016 to 2017 onwards
  • is owned completely or partly by a:
    • company
    • partnership where one of the partners is a company
    • ­collective investment scheme – for example a unit trust or an open ended investment vehicle

Returns must only be submitted on or after 1 April in any chargeable period.

There are reliefs and exemptions from the tax, which may mean you don’t have to pay.

Meaning of ‘dwelling’

Your property will be a dwelling if all or part of it is used, or could be used as a residence, for example a house or flat. It includes any gardens, grounds and buildings within them.

Find out about valuing different types of properties for example mixed use, more than one dwelling and multiple interest properties.

Some properties aren’t classed as dwellings. These include:

  • hotels
  • guest houses
  • boarding school accommodation
  • hospitals
  • student halls of residence
  • military accommodation
  • care homes
  • prisons

Section 19 of the ATED technical guidance explains more about the meaning of ‘dwelling’.

Value your property

To work out what you need to pay you’ll need to value your property.

In some circumstances you can also ask HM Revenue and Customs (HMRC) for a Pre-Return Banding Check (PRBC).

What you need to pay

The amount you’ll need to pay is worked out using a banding system based on the value of your property.

Chargeable amounts for 1 April 2017 to 31 March 2018

Property value Annual charge
More than £500,000 but not more than £1 million £3,500
More than £1 million but not more than £2 million £7,050
More than £2 million but not more than £5 million £23,550
More than £5 million but not more than £10 million £54,950
More than £10 million but not more than £20 million £110,100
More than £20 million £220,350

Chargeable amounts for 1 April 2016 to 31 March 2017

Property value Annual charge
More than £500,000 but not more than £1 million £3,500
More than £1 million but not more than £2 million £7,000
More than £2 million but not more than £5 million £23,350
More than £5 million but not more than £10 million £54,450
More than £10 million but not more than £20 million £109,050
More than £20 million £218,200

Chargeable amounts for 1 April 2015 to 31 March 2016

Property value Annual charge
More than £1 million but not more than £2 million £7,000
More than £2 million but not more than £5 million £23,350
More than £5 million but not more than £10 million £54,450
More than £10 million but not more than £20 million £109,050
More than £20 million £218,200

Chargeable amounts for chargeable period 1 April 2014 to 31 March 2015

Property value Annual charge
More than £2 million but not more than £5 million £15,400
More than £5 million but not more than £10 million £35,900
More than £10 million but not more than £20 million £71,850
More than £20 million £143,750

Chargeable amounts for chargeable period 1 April 2013 to 31 March 2014

Property value Annual charge
More than £2 million but not more than £5 million £15,000
More than £5 million but not more than £10 million £35,000
More than £10 million but not more than £20 million £70,000
More than £20 million £140,000

Section 6 and 7 of the ATED technical guidance tells you more about how to work out the charge if:

  • you only own the dwelling for part of a year
  • you claim a relief for part of the year

When you buy your property you may also have to pay Stamp Duty Land Tax. There’s a higher rate for corporate bodies.

If you sell your property you may also have to pay ATED-related Capital Gains Tax.

Submit your return and pay

You can use the ATED online service to submit your return and appoint an agent.

You’ll then need to pay anything you owe.

Other ways to submit your return

If you’re unable to use the new ATED online service, you can access the old return or the Relief Declaration Return through the Returns Notice.

Penalties and appeals

Penalties

You could be charged a penalty and interest if:

Appeals

If you disagree with an HMRC decision about your return, for example a penalty or determination, you may be able to challenge it by appealing.

You have 30 days from the date of the decision to write and tell HMRC the grounds on which you’re appealing.

Write to:

ATED Processing Team

5th Floor

Crown House

Birch Street

Wolverhampton

WV1 4JX

Get help

If you need any help or further information you can call the ATED helpline.

Source: HMRC

Detailed guide: Statutory Maternity Pay: employee circumstances that affect payment

Updated: Section ’Employee works for another employer’ has been updated to clarify when to pay Statutory Maternity Pay before and after a baby’s born.

Employee earnings affected by a backdated pay rise

A pay rise mustn’t be withheld because of maternity leave. You must recalculate the Average Weekly Earnings (AWE) to take account of pay rises awarded, or which would have been awarded had your employee not been on maternity leave. This applies if the pay rise was effective from anytime between the start of the 8 week relevant period for Statutory Maternity Pay (SMP) and the end of the statutory maternity leave.

If a pay rise is awarded after you’ve calculated your employee’s earnings, and that pay rise is effective from a date before the start of the relevant period and before the Maternity Pay Period (MPP) ends, you must:

  • recalculate the AWE to include the pay rise as though it was effective from the beginning of the relevant period
  • pay any extra SMP due

If a pay rise is awarded which when recalculated means that earnings are now high enough for your employee to get SMP when they couldn’t before, you must:

  1. Work out 90% of the AWE.
  2. Take away the standard rate of SMP.
  3. Pay the difference for 6 weeks.

If 90% of the AWE is less than the standard rate you may not have to pay your employee anything.
This is because they may have received the balance of SMP due from the Jobcentre Plus or, in Northern Ireland, the Jobs and Benefits office as Maternity Allowance (MA).

Not all women are entitled to MA, or the MA may be less than the SMP your employee is now entitled to. You should therefore ask them to get a letter from the Jobcentre Plus or, in Northern Ireland, the Jobs and Benefits office, to confirm how much MA was received.

If your employee gives you a letter from the Jobcentre Plus office or, in Northern Ireland, the Jobs and Benefits office, showing how much MA was received:

  1. Work out the total amount of SMP they’re entitled to.
  2. Take away the MA that was paid.
  3. Take away any SMP you’ve already paid.
  4. Pay your employee the difference.

Your employee should still benefit from a pay rise even if they don’t intend to return to work with you after their maternity leave has ended.

If a pay award is made after they have terminated their employment and the pay rise is backdated into a time when they were working for you or was on maternity leave with you, they may be entitled to benefit from the pay rise. You must check the terms of their old contract of employment.

If more than one pay rise has been awarded during the above period you’ll need to perform separate calculations for each.

Underpayments and overpayments

If there are over or underpaid earnings affecting the AWE which disadvantages either you or the employee, check if there’s documentary evidence of agreeing to the amount that should have been paid. If there is, use the agreed earnings to calculate the AWE and if not, use the actual earnings.

Employee becomes sick

If the employee:

  • becomes sick during the SMP pay period don’t pay Statutory Sick Pay (SSP) but continue to pay SMP as normal
  • returns to work within the MPP and then goes sick during that period, SMP is payable not SSP

Keeping in touch days

To keep in touch during maternity leave and ease your employee’s return to work, an employee can work for you during their SMP pay period for up to 10 days without ending their maternity leave or losing their SMP for any weeks that they do some work. These 10 days are called ‘Keeping in Touch’ (KIT) days and allow your employee to undertake the odd day’s training or do some occasional work for you.

The employer has no right to demand that KIT work is undertaken and your employee has no obligation to undertake such work. Before any work is done, you must agree with your employee:

  • what work they’ll be doing
  • whether the KIT days are used in a row, singly or in blocks, but any work on any day (even an hour) will count as a whole KIT day
  • how much they’ll be paid for work done

You may count the amount of SMP towards the contractual pay agreed with your employee but you must pay the weekly SMP rate the employee is entitled to and comply with your statutory obligations, for example paying at least the National Minimum Wage.

If your employee works more than 10 days for you in their SMP pay period:

  • you can’t pay SMP to your employee for any weeks where they work
  • their maternity leave will come to an end

Once your employee has used their 10 KIT days, they’ll lose one week’s SMP for each week or part week they work for you.

The SMP pay period isn’t extended to take account of any such weeks. Any SMP lost in this way is always at the standard rate first, or 90% of the AWE if this is lower than the standard rate.

An employee must take 2 weeks (or 4 weeks if working in a factory) compulsory maternity leave immediately after the date the child is born and can’t work or use a KIT day during that time.

Employee returns to work then goes off sick

Where your employee has returned to work within their MPP, and goes off sick, they can’t get SSP from you. You should consider paying SMP. Their husband’s or partner’s employer will continue to pay them SPP during both the sickness and the remaining MPP period.

Employee isn’t returning to work

If your employee isn’t returning to work you must still pay SMP that they’re entitled to.

You can’t ask them to repay it.

Employee works for another employer

It’s up to your employee to tell you that they’re working for another employer and when they stop working for that employer.

Before the baby’s born

If your employee works for another employer during the MPP before the baby’s born, carry on paying SMP.

After the baby’s born

If your employee works for another employer after the baby’s born, check if they were employed by them during the Qualifying Week (QW).

If your employee works for an employer who employed them in the QW, you should continue to pay SMP as normal.

If they work for an employer who employed them after the QW, you don’t have to pay SMP for any weeks they work for that employer.

For any full weeks that they don’t work whilst employed by that employer, you must pay SMP.

If your employee’s contract with that employer ends during the MPP, entitlement to SMP ends on the last day they worked for them and can’t resume. You must give your employee form SMP1 within 7 days of the decision being made.

You can’t pay SMP for any SMP pay week your employee is in legal custody or for any week in the pay period after that. You must give the employee form SMP1 within 7 days of the decision being made. This must be done within 28 days from the date the employee gave notice of absence (or the date they gave birth if this had occurred earlier).

It’s your employee’s responsibility to tell you if they’re detained in legal custody usually this means if they’re arrested or in prison.

They aren’t in legal custody if they’re:

  • voluntarily helping police with their enquiries
  • out on bail
  • serving a suspended sentence

Employee dies

If your employee dies during the MPP, you should pay SMP for the week in which they die, but not for any week in the MPP after that.

Baby dies

If the baby dies during the SMP pay period, payment should continue as normal.

Stillbirth

Your employee is entitled to SMP and maternity leave if the baby’s stillborn.

A stillbirth occurs if the baby’s stillborn after the 24th week of pregnancy. You’ll need evidence before making payment, for example a stillbirth certificate issued by the registrar or certificate/notification for the registration of a stillbirth issued by the attending midwife/doctor.

If a baby’s born alive but survives only for an instant, it’s a live birth whenever it’s born and you must apply the rules for a live birth.

Break in employment

Some breaks between periods of employment won’t interrupt a period of continuous employment for SMP purposes. Employees with an ongoing contract of service during the following breaks remain continuously employed:

  • temporary cessation of work – including short-term contract or agency workers
  • public holidays – the employee can still get SMP
  • sickness or injury – the employee can get SMP if the total period of incapacity is 26 weeks or less
  • paternity, parental and adoption leave – if the employee took paternity leave when they were adopting a child or when a baby was born and they worked for you before and after the break they’ll satisfy the employment rule
  • pregnancy – if your employee wasn’t working for you because of a birth, and they worked for you before and after the break, and the break is not more than 26 weeks

Non-cash payments and contractual benefits

You may normally pay some of your employee’s earnings as a non-cash payment, for example, providing board and lodging or giving them goods or services. However, you must pay any SMP in full. SMP can’t be sacrificed or offset against other benefits, it must be paid in cash.

All non-pay contractual benefits must continue during statutory maternity leave. These may include any childcare vouchers, company car or mobile phone provided to the employee as part of their contract of employment.

Lump sums

If you decide to pay the SMP as a lump sum, you and your employee could pay more National Insurance contributions (NICs) than if you paid it on their normal payday.

Reinstatement after dismissal

If your employee didn’t work for you during the relevant period because you dismissed them, they’re entitled to SMP as if they hadn’t been dismissed, if:

  • they’re reinstated because an employment tribunal decides that you dismissed them unfairly
  • you reinstate them as a result of a statutory grievance procedure

Reinstatement after armed forces service

If the employee didn’t work for you during the relevant period, because they were serving in the armed forces but they returned to work for you within 6 months of the end of their service in the forces, they may still be able to get SMP.

For SMP the employee must have been continuously employed by you for at least 26 weeks by the end of the QW. The period they served in the armed forces won’t count as part of the 26 weeks but the period they were employed with you before and after their service in the armed forces will count.

Trade disputes or industrial action

Your employee must have been continuously employed by you for at least 26 weeks by the end of the QW. Don’t count the period they were on strike, even for one day, as this week won’t count as part of the 26 weeks. Your employee must have been employed for 26 weeks from the start of their employment into the QW.

Employee leaves job

Your employee can’t get maternity leave if they have left their job but may still qualify for SMP.
It doesn’t matter why they left or that they’re not coming back – they’re entitled to SMP if they satisfy the qualifying conditions.

If your employee starts work for a new employer before their baby’s born, you’re still liable to pay SMP. There are special rules for when you start to pay. Work out the date of the Sunday of the 11th week before the week the baby’s due.

If they leave before that date, the SMP pay period will start on the earlier of the following dates:

  • the Sunday of the 11th week before the baby’s due
  • the day after the baby’s born

If they leave their employment after the start of the 11th week, and before any other event which may trigger their pay, then the pay period starts the day following the day on which they left their employment.

Premature or early birth after QW

If the baby’s born early, there are special rules for when your employee needs to give you evidence and when you start to pay. All the other terms and conditions apply.

Your employee won’t have been able to give you advance notice, but they must tell you the date of birth as soon as possible.

Your employee should give you medical evidence (usually form MATB1 maternity certificate) of the date the baby was due and the date of birth. You can accept a birth certificate as evidence of the date of birth.

Your employee should give you the evidence within 21 days after the date of birth, or as soon as they can if this is not possible and no later than 13 weeks after the start of the SMP pay period.

The maternity leave and SMP pay period starts on the day after the date of birth.

Baby born in or before the QW

If the baby’s born in or before the QW, there are special rules for all 4 of the terms and conditions.

The employee must:

  • give you medical evidence of the date the baby’s due
  • have been continuously employed by you for 26 weeks
  • have AWE high enough in the relevant period
  • give you acceptable notice for start of SMP

Your employee should give you medical evidence (usually form MATB1 maternity certificate) of the date the baby was expected to be born as well as the actual date of birth. You can accept any document signed by a doctor or midwife as long as a date or expected date is provided. You can accept a birth certificate as evidence of the date of birth.

Your employee should give you the evidence within 21 days of the start of their SMP pay period or as soon as they can but no later than 13 weeks after the start of the SMP pay period.

If the baby’s born before or during the QW, the continuous employment rule is satisfied if they would have completed 26 weeks continuous employment with you had it not been for the baby’s early birth.

If your employee has earnings which vary from week to week, you must work out the AWE using the baby’s date of birth instead of the baby’s due date and the Saturday before the date of birth instead of the Saturday in the QW. This is because you must pay 90% of the AWE for the first 6 weeks. The total AWE should be compared to the Lower Earnings Limit (LEL) on the Saturday before the actual date of birth.

If the employee is absent from work because of their pregnancy and the absence continues into or starts within the 4 week period starting on the Sunday of the 4th week before the week baby due, there are special rules for when leave starts and when you start to pay.

The SMP pay period and their maternity leave start on the day after the first complete day of absence from work because of their pregnancy within the 4 week period. This may mean that you have to pay a mixture of wages and SMP at the beginning or end of the period.

If you aren’t sure whether the employee’s absence is caused by their pregnancy contact the Employer Helpline for advice.

Employee doesn’t qualify for SMP: PAYE Settlement Agreements

You must recalculate your employee’s AWE if all of the following apply:

  • their AWE are less than the LEL in force at the end of the qualifying week
  • they received any expense payments or benefits in kind in the relevant period
  • the expenses or benefits were included in a Pay As You Earn (PAYE) Settlement Agreement

You must recalculate their AWE if you had to recalculate your employee’s earnings because they didn’t qualify and both the following apply:

  • some of their earnings were included in a PAYE Settlement Agreement
  • they get a backdated pay rise that’s effective during or before the start of the relevant period which you hadn’t included in the original calculation

If they don’t intend to return to work after the birth they may still be entitled to benefit from the pay rise. You must check the terms of their old contract of employment.

Salary sacrifice

If an employee has entered into a salary sacrifice their AWE is calculated using the amount of earnings actually paid to them during the relevant period. SMP can’t be sacrificed, it must be paid in full.

To calculate AWE for SMP, base the calculation on earnings subject to NICs. See expenses and benefits for more information.

Some schemes for childcare support provided by you and made available to your employees may be exempt from PAYE tax and Class 1 NICs.

The value of the childcare vouchers provided during the MPP may not be deducted from the SMP.

Where an employee agrees to accept childcare vouchers as part of a salary sacrifice their SMP entitlement will be assessed on their gross earnings on which NICs are payable.

  1. Work out the total amount they’re now entitled to.
  2. Take away any SMP you’ve already paid.
  3. Pay any extra SMP due.

If the new AWE are less than the LEL they can’t get SMP. If you haven’t already done so give the employee form SMP1 within 7 days of the decision being made. This must be done within 28 days from the date the employee gave notice of absence (or the date they gave birth if this had occurred earlier). Take a copy of the form MATB1 maternity certificate, and give the original back to your employee.

Source: HMRC