I have just one further point to add to the excellent advice already offered.
As the director is a sole employee of the company, he is not eligible this year to claim the Employment Allowance which rose to £3,000 from 6 April.
HMRC issued additional guidance in the April Employer Bulletin stating that sole directors are not eligible to claim EA even if they have several employees, where the director is the only one paid above the Secondary (NIC) Threshold. This change has caught a number of people out.
I have just one further point to add to the excellent advice already offered.
As the director is a sole employee of the company, he is not eligible this year to claim the Employment Allowance which rose to £3,000 from 6 April.
HMRC issued additional guidance in the April Employer Bulletin stating that sole directors are not eligible to claim EA even if they have several employees, where the director is the only one paid above the Secondary (NIC) Threshold. This change has caught a number of people out.
I agree, the employer is meeting the employee's debt or pecuniary liability therefore it is earnings. As the holiday contract is presumably in the employee's name then there is also Class 1 National Insurance as well as being a taxable benefit. See page 35 of the CWG5 2016. So grossing up the payment as suggested is an excellent idea.
I have come across this on a number of occasions on training courses I have presented as well as on our Technical Helpdesk which we run for our members.
I was speaking at a conference once and one of the delegates said she had a pregnant female director on the payroll who had received a £1million bonus during the period used to calculate the SMP average!
I agree with earlier posts that the employee must be paid Statutory Maternity Pay, if she qualifies, as a minimum and that she should not receive full salary plus SMP. However, do bear in mind that the first 6 weeks of SMP is 90% of average weekly earnings (no maximum) and this can be much more than basic pay. This is because it is based on NI'able earnings paid (rather than earned) during the relevant period (used to calculate the average weekly earnings) up to the payday at the end of 15th week before the baby is expected. It is not unheard of for women to plan their pregnancy around their annual bonus payment! This would then provide them with average weekly earnings that are far in excess of their basic pay. Therefore, the earlier advice of showing the woman's contractual entitlement and her SMP separately is an excellent idea. Not only will this make it clear to the employee but it will also ensure that you reclaim the correct amount from HMRC.
My answers
I have just one further point to add to the excellent advice already offered.
As the director is a sole employee of the company, he is not eligible this year to claim the Employment Allowance which rose to £3,000 from 6 April.
HMRC issued additional guidance in the April Employer Bulletin stating that sole directors are not eligible to claim EA even if they have several employees, where the director is the only one paid above the Secondary (NIC) Threshold. This change has caught a number of people out.
I have just one further point to add to the excellent advice already offered.
As the director is a sole employee of the company, he is not eligible this year to claim the Employment Allowance which rose to £3,000 from 6 April.
HMRC issued additional guidance in the April Employer Bulletin stating that sole directors are not eligible to claim EA even if they have several employees, where the director is the only one paid above the Secondary (NIC) Threshold. This change has caught a number of people out.
I agree, the employer is meeting the employee's debt or pecuniary liability therefore it is earnings. As the holiday contract is presumably in the employee's name then there is also Class 1 National Insurance as well as being a taxable benefit. See page 35 of the CWG5 2016. So grossing up the payment as suggested is an excellent idea.
SMP and full salary
It is more common than you might think.
I have come across this on a number of occasions on training courses I have presented as well as on our Technical Helpdesk which we run for our members.
I was speaking at a conference once and one of the delegates said she had a pregnant female director on the payroll who had received a £1million bonus during the period used to calculate the SMP average!
SMP and full salary
I agree with earlier posts that the employee must be paid Statutory Maternity Pay, if she qualifies, as a minimum and that she should not receive full salary plus SMP. However, do bear in mind that the first 6 weeks of SMP is 90% of average weekly earnings (no maximum) and this can be much more than basic pay. This is because it is based on NI'able earnings paid (rather than earned) during the relevant period (used to calculate the average weekly earnings) up to the payday at the end of 15th week before the baby is expected. It is not unheard of for women to plan their pregnancy around their annual bonus payment! This would then provide them with average weekly earnings that are far in excess of their basic pay. Therefore, the earlier advice of showing the woman's contractual entitlement and her SMP separately is an excellent idea. Not only will this make it clear to the employee but it will also ensure that you reclaim the correct amount from HMRC.