Payroll Update- Changes to SSP reimbursement

Tax Comments Off on Payroll Update- Changes to SSP reimbursement

From 6 April 2014, employers will no longer be able to claim the Percentage Threshold Scheme (PTS) reimbursement for Statutory Sick Pay (SSP).

Employers will have until the end of the 2015-16 tax year to recover SSP paid before the end of the 2013-14 tax year.  Employers will still be required to maintain SSP records for Pay As You Earn (PAYE) purposes and will still have the obligation to produce SSP records to meet the legal SSP obligations, should HMRC require them.

This move is as a result of a Government review which showed PTS has not encouraged employers to actively manage sickness absence in the workplace.  Instead, the Government is to reinvest the money into funding the new Health and Work Service.

The service will provide an occupational health assessment and advice as an alternative form of support that will enable employees on sickness absence, where possible, to return to work more quickly and support employers to better manage sickness absence.  It will benefit those employers who currently have no or limited in-house occupational health services; and complement and work with employers’ existing in-house occupational health provision to help facilitate a return to work.

The Health and Work Service

There are two elements to the service:

  • Advice: Employees, employers, and GPs will be able to access a web and phone-based health and work advice service at any point.
  • Assessment: When an employee has reached, or is expected to reach, four weeks of sickness absence they can be referred by their GP for an assessment by an occupational health professional.  Employers will also be able to refer employees after four weeks, if they have not been referred by their GP.  Where appropriate, the service will produce a return to work plan and signposting to interventions.

Tax Exemption  

Budget 2013 announced the Government would introduce a tax exemption for amounts up to £500 a year paid by employers for medical treatments for employees recommended by the Health and Work Service.  In response to the consultation, the Government decided that in addition to the medical treatments recommended by the new service, it will extend the exemption to those recommended by employer arranged occupational health services.  Without such tax exemption, the payment would be liable to income tax, employer National Insurance contributions, and Student Loan deductions.

So what do employers need to do?

From 6 April 2014, employers will no longer be required to report details of SSP paid to employees to HMRC.

If employers have any outstanding claims for reimbursement of SSP that has been paid for sickness periods up to 5 April 2014, these claims can be made until the close of the 2015-16 tax year.  This can be done by either completing an EPS and EYU for a year employers were reporting under RTI or completing form SP32 for non-RTI years.

Although the Government is abolishing specific regulations for SSP record keeping, employers will still have the obligation to produce SSP records to show they are meeting the legal SSP obligations, should HMRC require them.  However, employers will have the freedom to keep these records in a more flexible manner.

If you have any queries regarding this please give Maureen Owens or Helen Miller a call in our Payroll Department.