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OHFBNPE02 - Define Flexible Benefits Plan General Attributes for Pension Plan (FLEX)
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Define Flexible Benefits Plan General Attributes for Pension Plan (FLEX)
In this step, you define certain general attributes for each of your benefit plans. These are:
- P11D Relevant: The field P11Dis relevant if the benefits received by employees in the benefit plan are, due to their nature, not taxed on issue. Set the indicator in field P11D for reporting purposes only, to ensure these benefits-in-kind are included on a P11D form for employees, for later submission to the Inland Revenue.
- Employer National Insurance (NI) Contribution Neutrality: In the field ER NI, you define the nature of NI Neutrality within the benefit plan. You must select one of three possible options for NI Neutrality using the on-screen input help:
- NI Cost neutrality required for both over and underspending
- NI Cost neutrality required for overspending only
- NI Cost neutrality required for underspending only
,,Leave the field ER NI blank if NI Neutrality does not apply to the benefit plan you are defining.
Note :
An employee "overspends" when he chooses benefit options within any specific benefit plan that are more expensive than the standard benefits provided by the employer for that particular plan. Conversely, "underspending" occurs when an employee takes benefit options within any specific benefit plan that are less expensive than the standard benefits provided by the employer for that particular plan.
All required benefit plans must have been created before you carry out this step. In addition, to apply NI Neutrality attributes to any benefit area, you must also have already carried out the activities in the step Define Flexible Benefits National Insurance Neutrality.
Execute the activity and maintain the settings for P11D relevance and NI Neutrality as described above.
Two possible scenarios are outlined below, illustrating the application of the NI Neutrality principle to an employee's holiday plan choices:
1. Employee "overspends" during holiday plan enrollent (holiday buy)
Pre-enrolment holiday value (25 days),,,,,,= GBP 1153.75
Post-enrolment holiday value (30 days),,,,,,= GBP 1384.50
Value of adjustment before NI Cost Neutrality is applied,,,,= GBP -230.75
Value of NI Cost Neutrality,,,,,,,,,,= 230.75 - (230.75 / 1.128*)
,,,,,,,,,,,,,,,,= GBP 26.18
Value of adjustment after NI Cost Neutrality is applied,,,,= GBP -230.75 + GBP 26.18
,,,,,,,,,,,,,,,,= GBP -204.57
Therefore, in this scenario, the employee has overspent and a saving of GBP 26.18 in employer National Insurance Contributions (NICs) is produced. These employer NICs savings will be refunded to the employee, and employer NICs remain as before enrolment.
2. Employee "underspends" during holiday plan enrolment (holiday sell)
Pre-enrolment holiday value (25 days),,,,,,= GBP 1153.75
Post-enrolment holiday value (20 days),,,,,,= GBP 923.00
Value of adjustment before NI Cost Neutrality is applied,,,,= GBP 230.75
Value of NI Cost Neutrality,,,,,,,,,,= 230.75 - (230.75 / 1.128*)
,,,,,,,,,,,,,,,,= GBP 26.18
Value of adjustment after NI Cost Neutrality is applied,,,,= GBP 230.75 - GBP 26.18
,,,,,,,,,,,,,,,,= GBP 204.57
In this case, the employee sells holiday and "underspends", and an extra GBP 26.18 of employer National Insurance Contributions (NICs) are produced. These additional employer NICs will be deducted from the employee, and employer NICs remain as before enrolment.
* The employer NICs rate for the tax year 2003-2004 is 12.8%. Therefore, the factor used to calculate the value of the change in employer NICs is 1.128 (1 + 12.8% ).
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Length: 4685 Date: 20240523 Time: 154321 sap01-206 ( 78 ms )
