Basically I have a client, who took on an employee from JC Plus and the client has been awarded a subsidy payment from DWP.
My question is, does anyone know if this is a taxable miscellaneous income? There are plenty of references to various work related subsidy payments from the employee point of view but I can't find any reference on HMRC, DWP, or JC+ website regarding the tax status from an employers point of view
try the new deal employers helpline on 0845 601 2001.
I'll have a search around to see if I can find anything whilst you give that a go.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Seems to talk about the new deal from the employers perspective.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Had a look at the PDF but unfortunately it's not for that type of payment.
The new employee is able bodied but was out of work for more than six months on job seekers allowance. The payment received is for getting the person off the JSE and into full employment (16 hours or more). It is paid in two installments, the first almost straight away, the second six months later, if the person is still employed.
I'll keep looking and will give them a call on Monday if I have no luck.
Seems pretty typical that job seekers are told all of these things that they can have but somehow employers get missed out of the loop!
From an accountancy perspective this has all of the feel of a grant (See SSAP4 accounting for Government Grants).
It seems to be a revenue rather than capital based grant so the money from the government should be taken straight to the P&L as other income (it's not trading income).
You need to know if there are any circumstances under which the grant might be repaid and if so whether there is a time limit on any requirement to repay as such the grant would become a liability for the duration of the period in question.
The grant would seem to be compensation for the salary born which makes it tax free in that it's money that is earmarked for paying out in salary. As such no further tax adjustments would be necessary.
Hope that this helps,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Non of the documents my client received really define what it is.
To me it appears to be an incentive payment, to encourage employers to take on staff. They get them on a "Sale or Return" basis initially to see if it works out for both parties (JC+ foot the bill with JSA + travel expenses, initially)
Morning Rob
No, it's a payment from DWP to the employer, for taking someone off JSA. It's paid direct to the employer.
I would agree with Shaun then and plonk it straight to other income. I have heard of similar schemes before where there was a monthly subsidy for taking a long term unemployed on and it was tax free subsidy without the need to repay.
I know there are different types of subsidy at the moment. One is for long term JSA which is £60 per week, the other is around £1000 paid part on starting the job and part if it lasts (I think) six months.
I would not treat this as "other income" but as a reduction in wages because it isn't income it is a wages subsidy.
I think it is probably the same as your second example, as he get £500 more or less up front then another £500 six months later (if the person is still employed).
You, Shaun and Rob have all pointed to it being a subsidy towards the employees wages (suppose the clue is in the title). So I will treat it as such, until I've done a bit more rummaging.
This is useful to know as I have just had to complete the claim form for a clients new employee, and they will get £500 soon(ish) and another £500 in 6 months. Now I know how to deal with it.
