The dust has now settled on another budget announcement and, despite initial indications to the contrary, the Chancellor's pronouncements do not include a wholesale change to the structure of employee pensions.  There are, however, a number of points of note for employers, of which the following are perhaps most significant:

National Insurance Contributions on settlement payments

At present, certain qualifying termination payments are free from tax to the extent they do not exceed GBP30,000, and free from National Insurance Contributions ("NICs") even if they exceed GBP30,000.  From April 2018, this will change. Payments up to GBP30,000 will continue to be paid free of tax and NICs, but anything over GBP30,000 will be subject to both tax and NICs.  Legislation will also be introduced to ensure that all payments in lieu of notice and certain damages payments are taxed as earnings.

Extension of Shared Parental Leave

It was announced that the Government will launch a consultation in May 2016 on how to implement the extension of shared parental leave and pay to working grandparents.  The consultation will also set out options for streamlining the shared parental leave system, including simplifying the eligibility and notification requirements.

Liability for personal service companies in the public sector

Last year, the Government published a discussion paper in which it suggested that it may seek to change the existing tax rules for personal service companies ("PSCs").  In particular it suggested placing the burden of determining whether tax and NICs should be deducted on the end-user company rather than the PSC as at present under the so-called "IR35" rule.  That suggestion was met with consternation in many quarters, since it represented a heavy compliance (and financial) burden on users of PSC contractors.

Private sector users of PSCs may be pleased to hear that that proposal has not been adopted for the private sector.  However, from April 2017, individuals working through a PSC in the public sector will no longer be responsible for calculating and paying the relevant tax and NICs. Instead, this responsibility will shift to the party that pays the PSC, i.e. the end-user or an intermediary (such as an employment agency) which is responsible for payment. The paying party will have to decide whether the IR35 rule applies to a particular contract and, if it does, deduct the applicable tax and NICs before making the payment to the PSC.

No change to pensions tax relief

Rumoured changes to pensions tax relief in this year's budget were finally laid to rest, with the Chancellor citing a lack of consensus on the correct approach. However, the introduction of a new form of ISA for individuals under the age of 40 which benefits those who do not access their savings until age 60 might give an indication of the Chancellor's intended direction of travel in this area.