PAYE72059 - PAYE operation: payments for PAYE purposes: accidents: sick pay (Action Guide)

If you receive a tax repayment claim from an employer or an enquiry from an employee regarding payment of sick pay where the employee has been involved in an accident, follow steps 1 – 3 below as appropriate. The guide is presented as follows

Employee retains sick pay and hands over compensation

Where the employer’s sick pay rules show that the employee keeps their full sick pay but has to hand over any compensation they receive for loss of earnings

1. Advise the employer / employee that the full amount of the sick pay paid by the employer remains assessable pay for PAYE purposes
   
   
2. Confirm that no repayment of tax is due to either the employer or employee for the amount of sick pay not covered by the compensation

Sick pay is abated to the extent of the compensation

Where the employer’s sick pay rules show that

• The amount of the employee’s sick pay is abated to the extent of the compensation which may be received
• The employer advance over and above the sick pay is refunded to the employer by the employee out of the compensation

3. Ask the employer and / or employee for the following information

If the absence falls in two tax years, you need separate figures to 5 April and from 6 April.