Fri 07 Apr 2017
6 April, the start of the tax year and there are some significant changes to the employment tax rules, as well as the usual changes to tax rates, allowances etc, which are effective from today. It’s crucial that all employers are aware of these and consider the impact they may have on their internal processes and controls environment.
Here are some of the changes:
Changes to Salary Sacrifice arrangements – Tax relief is restricted for the majority of benefits provided through a salary sacrifice arrangement, although “core” benefits will be protected. The protected benefits are death and retirement schemes, pension savings and company funded pension advice, cycle to work schemes, childcare vouchers, ultra-low emission cars and Holiday trading.
More detailed information and commentary about the changes and how these could affect you can be found on our website here and also in our earlier blog optional remuneration salary sacrifice changes what does this mean for employers
Off-payroll working in the Public Services sector – New rules have come into force today for workers who provide their services to the Public Services sector through their Personal or Managed Service Company (PSC/ MSC).
Responsibility for deciding whether engagements with the PSC/ MSC are caught under the new rules falls on the Public Sector body. Where an employment relationship would otherwise exist without the PSC/ MSC in place, payments to the PSC/ MSC should be put through the payroll for PAYE and NIC withholding. Where the PSC/ MSC is paid via an agency or another person, the Public Sector must notify the agency or person that the engagement is caught under these new rules. HMRC has provided an Employment Status Service tool to help employers determine the employment status of the worker and whether the new rules apply.
Our blog off payroll workers in the public sector time is running out and there’s still much to do provides more information and also includes links to the HMRC website.
Apprenticeship Levy – Employers with a payroll bill of more than £3m are now required to begin making contributions to the Apprenticeship levy regardless of whether they intend to take on apprentices or not. However, all employers (irrespective of their size or payroll bill) will be able to apply for funding for the training costs of apprentices who are under a registered apprenticeship programme.
Our blogs draft legislation published on apprenticeship levy and the apprenticeship levy: what you need to know provide further commentary and background.
Employer bulletins and updates – For further information relating to other employment tax and payroll changes effective from today, together with topical advice and comments including preparing for year-end reporting, please see HMRC’s bulletin Employer Bulletin: February 2017 and also our own publication Inside Payroll – Legislative update April 2017
Please contact me if you’d like to discuss how these impact your business.
Glen Huxter, Employment Taxes Manager
glen.huxter@mazars.co.uk / T: +44 (0)20 7063 4483
In our blog of August we set out the proposed changes to salary sacrifice arrangements as detailed in HMRC’s consultation document. The Chancellor today provided certainty of these changes from April 2017. What’s the issue? Employers choose to remunerate their employees in a range of different ways in addition to a basic cash salary and there […]
6 April has introduced a number of changes in the employment tax arena including new legislation in public services which means that intermediaries (agencies mainly) or public sector bodies will be responsible for deducting the income tax and NICs from payments made to public sector workers who provide services via a personal service company (“PSC”) […]
As you may be aware, from autumn this year (date to be confirmed), the existing childcare voucher scheme that we are familiar with will no longer be available for new entrants. Employers who currently provide childcare vouchers can continue to do so for employees who are already members and the Government will be introducing a […]
With a number of discussion documents issued by HMRC which would impact employment taxes, I was expecting more… Following the Summer Budget earlier in the year, HMRC issued a significant number of discussion documents and ‘calls for evidence’ as a result of suggestions made by the Office of Tax Simplification (OTS) to simplify the income […]
HMRC has published an ‘off-payroll’ working in the public sector page providing guidance for ‘fee-payers’ (the public authority (defined here), agency, or other third party paying the intermediary ), Personal Service Companies (PSCs) and public authorities in respect of the forthcoming changes from April 2017 . It also provides links to information such as the draft […]
In our last blog on optional remuneration arrangements, we discussed the draft legislation which was published on 5 December 2016 and what employers need to know. However, we discussed a number of areas where the meaning and application of the draft legislation was unclear. We met with HMRC earlier this month, as an opportunity to […]
The Government for some time has been concerned about the way in which the provision of benefits has evolved over the years with a growing market for flexible benefits, often combined with salary sacrifice arrangements. It recognises that such arrangements allow employers to attract and retain employees as part of their overall remuneration package in […]
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Chancellor of the Exchequer Phillip Hammond presented the Autumn Statement on 23 November 2016 outlining key facets of the government’s plans following the Brexit referendum result. While the focus was on productivity and investment there were a number of updates in the employment tax arena. In this article we highlight the key changes and opportunities […]
Following the announcement by the Chancellor recently (see here for more details), further clarification has been announced on the CJRS arrangements available to employers to help fund employment costs and reduce the need to make redundancies during these strange and unprecedented times. What was the update? The Government amended previously published guidance to help clarify certain […]
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As HMRC launch a new initiative what does this latest campaign mean for football clubs? What is the background to this news and how can employers prepare for a visit from HMRC? How will the football compliance project be delivered? HMRC football compliance project The UK tax authorities have a long history of paying close […]
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Employers can now voluntarily collect the tax via payroll on benefits provided to employees/Directors without having to submit forms P11D to HMRC. This process will cover most benefits except for living accommodation and beneficial loans. It remains possible to continue to deal with employee benefits through forms P11D (we understand that forms P11D will be […]
Salary sacrifice: optional extras to come at a tax cost Henry Ford offered “any colour you like, as long as it’s black” and the Draft Finance Bill clauses recently issued offer a similarly dull, monochrome prospect for salary sacrifice arrangements, although the draft legislation avoids ‘the “SS” words’ and introduces the (new, improved?) term of […]
The band, 2Unlimited’s single “No Limits” was number 1 in the UK in 1993 now 23 years later The Chancellor has made his own hit on the Limitation Act allowing collection of NIC beyond 6 years together with other tweaks: End of Limitation Act 1980 for NIC National Insurance Contribution (“NIC”) arrears are governed by […]
The new Apprenticeship Levy will be a significant cost to many employers but what benefits can be realised and what challenges lie ahead? Employers are required to begin making contributions from April 2017 (via the PAYE system) so now is the time to consider the implications and ensure that the benefits outweigh the costs. A […]
In the Autumn Statement 2015 the government announced that it would be monitoring the use of salary sacrifice arrangements and at Budget 2016 said it was considering limiting the range of benefits that attract tax and National Insurance Contributions (NICs) savings. So it’s no surprise that HMRC has issued a Consultation Document in which it […]
The Chancellor’s Budget speech did not “go to town on” or even explicitly mention employment status. This may appear odd at first sight given all the indications in the run up to the Budget. However, the Red Book, as ever, showed that the devil is in the detail and did not disappoint, especially when read […]
6 April, the start of the tax year and there are a number of significant changes to the employment tax rules which are effective from today. It’s crucial that all employers are aware of these and consider the impact they may have on their internal processes and controls environment. Here are some of the changes: […]
In their consultation document in the summer last year, the government estimated that non – compliance with the intermediaries legislation (commonly known as IR35), will cost the Exchequer £430m in tax and NICs receipts in the year and without reform, it expects this loss to continue to grow. The Chancellor announced at Budget 2016 that […]
The Chancellor in his Budget 2016 made a short reference to terminations payments and the use of personal service companies under tax avoidance measures. We’ve summarised some of the employment tax changes worthy of note: From April 2018 employers will now need to pay National Insurance Contributions (NICs) on termination payments above £30,000 where tax […]
Two schemes designed to enable employees to realise significant cash sums without suffering income tax or PAYE have been ruled ineffective by the Supreme Court (SC), overturning the surprising judgment of the Court of Appeal in the companies’ favour. Redeemable shares were issued by offshore companies created by UBS and DB specifically and solely for […]
At the Summer Budget 2015, the Chancellor announced the introduction of the Apprenticeship Levy. The policy idea is to that the levy will be used to fund new apprenticeships, and also improve their quality in order to better develop vocational skills. It is not clear at present precisely how the funding of appropriate training out […]
Many companies are still finding that funding auto-enrolment is their biggest objective and challenge. The Funding Problem It is clear that many FDs are very concerned about how to fund the obligatory contributions. With cash flows under strain it is not enough to know what you need to pay under auto-enrolment there is also a […]
In April the Government will introduce an apprenticeship levy of 0.5% of an employer’s wagebill (see below) which will be collected through PAYE. Each employer will receive an allowance of £15k to offset against their levy payment. This means that the levy will only be paid on any wage bill in excess of £3 million. […]
Vaneeta Khurana highlights a few more employment tax points from the July Budget 2015: • Salary sacrifice arrangements can allow some employees and employers to reduce the income tax and National Insurance that they pay on remuneration. They are becoming increasingly popular and the cost to the taxpayer is rising. The government will actively monitor the growth […]
The Office for Tax Simplification (OTS) recommendations to exempt trivial benefits and reimbursed expenses as well as abolishing the obsolete £8,500 dividing line on benefits in kind and expenses will be acted on. Employers are mainly likely to welcome most of the changes which will reduce compliance burdens overall. Employees may see simpler P11Ds. From […]
The Government is proposing to stop tax relief advantages being claimed by workers engaged by ‘Umbrella’ companies on reimbursed business expenses that are not generally available to other workers. This will affect those workers who provide their services via employment intermediaries (umbrella companies) and who have put in place ‘salary sacrifice’ arrangements in order reduce […]
You may have seen last week that, Vince Cable launched an employment review to help clarify and potentially strengthen the employment status of up to a million workers in the UK. This fits in with the Government’s agenda for making the labour market more flexible, efficient and fair together with introducing measures to “simplify” many […]
HMRC, who ‘police’ the application of the NMW legislation, have up until now focused their attentions on particular sectors such as catering, hospitality, retail and charities where long hours are a characteristic feature of the business. However, increasingly they base their enquiries around complainants who are encouraged to log their claims via the gov.uk portal. […]
The Chancellor has announced measures to reduce the administrative burden for employers in respect of checking employees’ expenses claims. From April 2019 employers will no longer be required to check receipts when reimbursing employees for subsistence using HMRC approved benchmark scale rates for UK and overseas travel. This announcement does not apply where the employer […]
The Chancellor announces the “Plan for People’s Jobs and Incomes” and provides further support for business as the pubs close for last orders.
The start of a new tax year and the true cost of saving for retirement – pension contributions increasing from April 2019 for many individuals in the UK In preparation for the coming mandatory pension contribution rises coming into force from April 2019, there have been some interesting articles (including https://www.bbc.co.uk/news/business-47269042), social media comments and […]
Tuesday 17 March was a busy day for the Government. From the growing threat Covid-19 is bringing to the UK and Europe as a whole, to the £330bn financial support announcement for businesses and individuals, it was a day of emotion and bold, unprecedented action. As we were all digesting the announcements made earlier in […]
HMRC has now concluded its review into the implementation of the off payroll workers legislation from 6 April 2020. As anticipated, no delay has been announced and the legislation will take effect from 6 April 2020. In order to ensure a ‘smooth’ implementation the following announcements have been made by HMRC: HMRC will not issue any […]
The Employment Allowance currently allows certain businesses to reduce their Class 1 Secondary employer National Insurance Contributions (NICs) bill by up to £3,000. As of April 2020, there are going to be changes to those businesses that can claim the allowance. The relief is being removed from larger employers (those that incur employer Class 1 […]
With the imminent extension of the Off-Payroll Working (OPW) rules to the private sector from 6 April 2020, our clients are seeking our advice to confirm or dispel the myths they are hearing in the marketplace. HMRC recently released its draft “Off-payroll working legislation” guidance in relation to the OPW rules and whilst this does […]
Alongside the scheduled UK changes to taxation of contractors (and the IR35 legislation), termination payments and electric cars, there are some more traditional updates to be mindful of. These concern changes to the national insurance (NI) thresholds for employees and changes to the rates for the national minimum wage (NMW) rules and the way the […]
Now that the UK parliament has passed the EU withdrawal agreement, UK employers should start to consider how they will deal with the additional social security costs and administration that may arise in respect of:- their employees working in the EU, EEA and Switzerland; and the EU, EEA and Swiss nationals it hosts, when the […]
We are now less than six months away from the introduction of the new off payroll “IR35” legislation, and even with the postponement of the 6 November budget, there is no sign of any delay. Therefore, it is imperative that medium and large sized organisations plan their controls and processes now to ensure they are […]
Why is this an issue? Have you ever come across the situation where an US company identifies some UK based IT workers that they want to employ? Due to the nature of the work the employees don’t need to relocate to the US and so continue to work in the UK as employees of the […]
highlightsThis article provides a short summary of some recent indirect tax cases. Please get in touch with a member of the Mazars indirect tax team to discuss issues arising from any of the points discussed. Employment tax and VAT on workers travel expenses and the UT decision in Pertemps The Upper Tier Tribunal (UTT) has […]
If you have 50 employees or more, you are likely to receive the following from HMRC as they begin their knowledge sharing of the off-payroll changes for medium and large organisations in the private sector effective from April 2020: a questionnaire to complete; and an opportunity for an educational telephone discussion with HMRC. These are […]
The latest annual Labour Market Enforcement Strategy was published on 22 July 2019. The Executive summary contains 12 broad recommendations on improving enforcement of employment rights including measures taken by three labour enforcement bodies cited below. These recommendations will need to be considered by the Government. Summary of the Labour Market Enforcement Strategy 2019-2020 The […]
The Upper Tier Tribunal (UTT) has ruled that Pertemps Ltd (Pertemps) did not make a supply for VAT purposes by operating a salary sacrifice arrangement relating to travel and subsistence expenses for temporary staff through its business. Background Pertemps operated a salary sacrifice scheme for temporary workers, whereby the workers agreed to sacrifice salary for […]
The Finance Bill was published on 11th July. It was eagerly anticipated, mainly due to an expected update on how the off- payroll working rules introduced to the public sector in April 2017 were to be extended to the private sector, following the recent consultation. So what happened? Despite rumours and parliamentary questions seeking a […]
On 4 February 2019 an agreement between the GMB and Hermes was announced, offering Hermes courier drivers a minimum level of pay across the year at a rate above the national minimum wage, and 28 days holiday. While it is maintained this remains a self-employed arrangement for tax purposes, some are wondering whether HMRC will […]
Whilst the main headlines coming out from the Budget include Stamp Duty for first time buyers, VAT registration thresholds and further investment in R&D, infrastructure and skills across the country, there were many important announcements impacting Employment Taxes, published in the ‘small print’. The highlights are… Employment Status Expected to be front and centre but […]
The Court of Appeal has rejected Uber’s appeal by a 2 to one majority concerning the employment status of three of its UK drivers. Uber has been given permission has been given to appeal to the Supreme Court. ‘Workers’ for employment rights purposes The Court of Appeal held that the drivers were ‘workers’ within the […]
Following the Chancellor’s announcements in the Autumn Budget 2018 we highlight below some of the key employment tax takeaways: IR35, employment status and off payroll working rules – reform of the private sector Following the changes made to how employment status needs to be governed within the public sector from April 2017, The Government will […]
It was inevitable that the Government would follow the application of IR35 to public sector employees with a similar measure for the private sector. It is estimated that without corrective action £1.2 billion a year might have been lost in taxes by 2022/23 as result of non-compliance. The IR35 Regulations aim to ensure that employees […]
Philip Hammond, Chancellor of the Exchequer, has announced “a series of measures to allow firms more flexibility in how the Apprenticeship levy is spent”. These include: an extra £90 million of government funding to enable employers to invest a quarter of their apprenticeship funds on people working for businesses in their supply chain; and a […]
The First tier Tribunal (FTT) has held that football referees engaged by ‘Professional Game Match Officials Ltd’ (PGMOL) were not employees, despite the existence of contracts of engagement. They held that the wider terms of that engagement did not meet the conditions for the engagement to be employment. Some of the main factors leading to […]
The PAYE Settlement Agreement (PSA) is an effective simplification enabling employers to pay tax and National Insurance Contributions (NIC) directly to HMRC after the end of the tax year on certain employee expenses and benefits without needing to inform employees and without the costs impacting on employee self-assessment tax returns. How does it work? A PSA […]
HMRC has issued a consultation on extending the public sector ‘off-payroll working’ requirements in respect of PAYE, to the private sector. The consultation is at stage 1 for setting out objectives and identifying options. The comment on the announcement of the consultation includes the following comment: Last April, the government reformed off-payroll working in the […]
At a Public Accounts Committee (PAC) oral evidence session on HMRC’s performance, HMRC indicated they were having to delay certain projects in order to accommodate extra workload created by Brexit. HMRC has informed the CIOT and ATT of some of the affected projects (see the link here). There is also an HMRC update that has […]
Alignment of Tax and National Insurance Contributions Have you seen the changes in the legislation for Termination Payments with regard to income tax and National Insurance Contributions (NICs)? Payments in Lieu of Notice (PILONS) Up until April 2018 the rules stated that where the employer has a right or discretion under the employment contract to […]
The potential application of IR35 legislation to deem the receipts of personal service companies to be employment income of the individuals operating through them, has been high profile news recently. Applying the IR35 legislation may not always be straight forward where the circumstances of a contract have some, but not all of the characteristics of […]
The First tier Tribunal (FTT) has rejected the contention that a BBC presenter, operating through a personal service company (PSC), Christa Ackroyd Media Ltd (CAM) was not subject to the intermediaries (IR35) legislation at ITEPA 2003 s.48-61. The case is a reminder that this legislation should be considered by contractors providing their services through limited […]
There have been some recent changes to the employment tax treatment of termination payments, and it is important to understand the commencement dates. The notes below provide some further information on the impact of the changes and the commencement dates. Termination payments and F(No2)A 2017 changes F(No2)A 2017 s.5 contained provisions amending the tax treatment […]
Although “only” a rate increase was announced at the Budget, the wider impact and context makes this much more important for employers and businesses to focus on from both a cost and compliance perspective. We explain why below. The rate increase announcement in April 2018, the NLW and NMW will increase as set out below: […]
The very lengthy (100+ pages) decision of the Upper Tribunal in Reed Employment v HMRC is a salutary reminder that for a successful salary sacrifice it is vital to establish the facts and pay attention to detail in implementation, and that a dispensation or clearance obtained with anything short of full disclosure of all relevant […]
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