Veterans’ NIC relief
A new relief for employer’s class 1 NIC comes into effect on 6 April 2021, that applies only to employees who are in their first 12 months of civilian employment after serving at least one day in the armed forces, including in the Ministry of Defence or NATO.
The relief applies a zero rate of employer’s class 1 NIC up to the upper secondary threshold (£50,720 pa for 2021/22). In future years it will be possible to apply this relief at the point the employee is paid, but for 2021/22 employers need to pay the class 1 NIC due then claim it back after the end of the tax year.
There is a new form of student loan which has to be deducted from salaries exceeding £25,000 per year. This plan 4 loan applies to anyone who took out an award from the Students Awards Agency Scotland. However, plan 4 loans can apply to employees located anywhere in the UK, it is dependent on where the person was living when they first took out the loan. Employers may receive switch notices to change employees to plan 4 loans.
Note that an employee can only have deductions for one undergraduate loan made at one time, so if they do have more than one undergraduate loan the employer should default to the loan plan with the lowest earnings’ threshold for the tax year.
The new version of the starter checklist should be used for employees that start their employment on or after 6 April 2021. This takes into account the new plan 4 loans.
Many employers have provided benefits to employees to allow them to work remotely or to travel to or from work safely where public transport was not available.
If the employer is making a payroll settlement agreement (PSA) for those benefits HMRC will automatically consider a category of Covid-19 to justify expenses being included in the PSA as “minor, irregular or impractical”.
Benefit in kind rules which were flexed to allow the goods or services to be provided to the employee tax free during the pandemic (eg broadband, reimbursement of office equipment costs), can continue to be provided tax free in 2021/22.
Written by the Tax Advice Network