Payments in lieu of notice – an update

Since 6 April 2018, employers have been required to pay Income Tax and Class 1 National Insurance Contributions (NICs) on certain parts of termination payments made to employees whether or not these payments are contractual. The element that is liable to taxation is the amount of the termination payment that represents a payment in lieu of notice commonly referred to as ‘PILON’. The measure means that all PILONs rather than just contractual PILONs (as was historically the case) are treated as taxable earnings.

In addition, all employees are required to pay Income Tax and Class 1 NICs on the amount of basic pay that they would have received if they had worked their notice in full, even if they are not paid a contractual PILON. This means that the tax and NICs consequences are no longer dependent on how an employment contract is drafted or whether payments are structured in some other form, such as damages.

The changes apply to payments, or benefits received on, or after, 6 April 2018 in circumstances where the employment also ended on, or after, 6 April 2018. Foreign service relief on termination payments has also been removed for all UK residents, apart from seafarers from 6 April 2018.

If an employee is on gardening leave, then the payment for the period to the termination date cannot properly be described as made in lieu of notice as the employment continues to the termination date whether the employee works or not.

Planning note

The introduction of employer NICs on termination payments above

Read more
29
May

GDPR and Data Protection Act 2018 now in force

The EU General Data Protection Regulation (GDPR) came into force on 25 May 2018, along with most of the provisions in a new Data Protection Act 2018 (including those provisions relevant to processing in the employment relationship). The previous Data Protection Act 1998 has now been repealed. The new data protection laws give people more control about how their personal data is used, shared and stored and they require organisations to be more accountable and transparent about how they use such data.

As well as producing a wide range of new and updated guidance for organisations to assist them with their GDPR compliance, which is all available on its website, the Information Commissioner’s Office (ICO) has launched a long-term campaign, “Your Data Matters”, to help people understand why their personal data matters and how they can take back control.

The ICO’s resources for organisations include:

  • Guide to the GDPR
  • More detailed guidance on specific GDPR areas, covering: determining what is personal data; the right to be informed; legitimate interests; consent; documentation; automated decision-making and profiling; data protection impact assessments (DPIAs); and children and the GDPR
  • Data protection self-assessment toolkit
  • GDPR FAQs
  • GDPR myth-busting blogs
  • Lawful basis interactive guidance tool
  • Personal data breach reporting resources
  • Guide to the data protection fee (see below).

The Data Protection (Charges and Information) Regulations 2018 also came into force on 25 May 2018 and they have introduced a new data protection charging structure for data controllers. There is no longer a requirement to pay the ICO a notification fee. Instead, there are three tiers of charges which apply unless all processing undertaken by the data controller is exempt. For very small organisations with no more than ten members of staff or which have a maximum turnover of

Read more
23
May

New advisory fuel rates published

Advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. The rates can be used by employers who reimburse employees for business travel in their company cars or where employees are required to repay the cost of fuel used for private travel.

HMRC accepts there is no taxable profit and no Class 1A National Insurance on reimbursed travel expenses where employers pay a rate per mile for business travel no higher than the published advisory fuel rates.

Employees can also use the advisory fuel rates to repay the cost of fuel used for private travel. In this case, HMRC will accept there’s no fuel benefit charge. The advisory rates are not binding if you the employer can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile.

The latest advisory fuel rates become effective on 1 June 2018. Fuel rates are reviewed four times a year with changes taking effect on 1 March, 1 June, 1 September and 1 December. You can use the previous rates for up to 1 month from the date the new rates apply.

The rates are as follows:

Engine size Petrol – amount per mile      LPG – amount per mile
1400cc or less  11p 7p
1401cc to 2000cc  14p 9p
Over 2000cc  22p 14p

      

Engine size  Diesel – amount per mile
1600cc or smaller  10p
1601cc to 2000cc  11p
Over 2000cc  13p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Read more
  • ABOUT US

    the accountancy practice kent logo

    The Accountancy Practice is a Kent based firm specialising in small and medium sized businesses. We provide a friendly, professional service and regard our smallest client as important as our largest.
  • Latest News

    12-12-2018
    VAT on property service charges

    A new Revenue and ... read more

    12-12-2018
    Are you ready for VAT filing changes April 2019?

    The introduction of ... read more

    12-12-2018
    Is your income approaching £100,000?

    For high earning ... read more

    More news

  • CONTACT US

    The Accountancy Practice
    10 Churchill Square
    Kings Hill
    West Malling
    Kent ME 19 4YU

    01732 897929

    Fax: 01732 897939
    info@theaccountancypracticeltd.co.uk


    Facebook
    Twitter
    Linkedin
  • Why choose us

    By working more closely with you than traditional accountants, The Accountancy Practice is able to gain a deeper understanding of your individual business needs. We are then on hand to support you with day to day issues and provide ongoing financial and taxation expertise. You can think of us as your virtual Financial Director.