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Peter Arrowsmith FCA highlights a selection of NIC matters, and provides a helpful tip regarding the non-means tested Winter Fuel Allowance.

NIC Holiday for New Employers

The number of successful applications has (as of 5 September) reached 6,316, said Mark Hoban in a Commons Written Answer.

A Handy 'Tip'

In Knowledgepoint 360 Group Ltd v HMRC (TC 1291), after the sale of the business, one of two employee benefit trusts made, to those former employees who remained, non-contractual cash payments in gratitude for their contribution to the business.

HMRC claimed Class 1 NIC from the employer. However, the Tribunal accepted the company's contention that the payments were gratuities within SSCR 2001 Sch 3 para 5; noting also the decision in the Channel 5 TV case in 2003.

Here the trustees had, it is true, started with the company bonus structure as a basis, but then elaborated - of their own initiative and independent consideration, and without any participation of the employer in the decision - by skewing the amounts paid based on length of service. The trustees had written to employees before the first payment setting out a payment schedule (which would only be carried out in full if the employment continued). This had come close to undermining the voluntary nature of the second and subsequent payments, but the link was held to be insufficient to find that all the payments in the series were other than voluntary.

Of course, it should be noted that the transactions took place after a sale of the business and also before the introduction of the 'disguised remuneration' provisions. Though the latter are now effective for tax purposes, the NIC regulations are still awaited, a draft having been recently exposed.

Tip of the Month - October 2011

I have previously reminded contacts of the non-means-tested Winter Fuel Allowance or Winter Fuel Payment (which is different and additional to the Cold Weather Payments made to claimants of weekly means-tested benefits). This year the Winter Fuel Allowance is worth £200 (tax free) per household to your elderly clients - £300 if one of the partners is aged 80+.

A key point to note is that the qualifying age for both men and women is no longer 60 but is related to the current (and now constantly increasing) female Sate Pension Age. The relevant date of birth for this year's Winter Fuel Allowance is 5 January 1951 (and this will change, increasing the eligible age, each future year).

Men under their own state pension age but born on or before the above date qualify to receive this winter's payment, but will need to claim (Winter Fuel Payment).

Advisors may wish to point this out to male clients in the appropriate age range - they may not realise that they are entitled to this money and may not also appreciate that they need to make a claim if this is their first year (women do not need to claim, as being of state pension age they are already on the DWP radar).

The above is taken from 'NIC Newsletter' (03/10/2011), and is reproduced with the kind permission of Peter Arrowsmith FCA, who retains the copyright.