Lost-time payments
Definitions or restrictions
You pay an employee on behalf of a third party (or the third party
pays directly) to compensate the employee for loss of earnings while
attending:
- jury service
- trade union meetings
- meetings of public bodies – for example, NHS consultative groups
What to report, what to pay
As long as the lost-time payment is calculated to do no more than
replace the earnings that the employee would otherwise have received,
you have:
- no reporting requirements
- no tax or NICs to pay
If you pay a lost-time payment that does more than replace the employee’s
earnings then the excess amount counts as earnings, so:
- add it to the employee's other earnings
- deduct and pay PAYE tax and Class 1 NICs using your usual payroll
procedures
Technical guidance
EIM01120: Employment income
- financial loss allowances
NIM02220: Class 1 NICs -
lost-time payments
