The Chancellor has spoken and presented his first Autumn Budget.

The following changes affect employers:

Disguised Remuneration: The Chancellor confirmed today that the government will legislate in “Finance Bill 2017-18” to:

  • introduce the close companies’ gateway, to tackle disguised remuneration avoidance schemes used by close companies to remunerate their employees, and directors, who have a material interest. This change will have effect on and after 6 April 2018; and
  • require all employees, and self-employed individuals, who have received a disguised remuneration loan to provide information to HMRC by 1 October 2019.

Employment Status: The government will publish a consultation as part of its response to Matthew Taylor’s review of modern working practices, considering options for reform to make the employment status tests for both employment rights and tax clearer.

Off-payroll working: The government is to consult in 2018 on how to tackle non-compliance with the intermediaries legislation (commonly known as IR35) in the private sector. The legislation ensures individuals who effectively work as employees are taxed as employees, even if they choose to structure their work through a company. A possible next step would be to extend the recent public sector reforms to the private sector.

Termination payments to employees who have spent part or all of their service with their employer overseas: From 6 April 2018, employees who are UK resident in the tax year their employment is terminated will not be eligible for foreign service relief on their termination payment. Foreign service relief currently allows qualifying individuals to be either completely exempted from Income Tax on their termination payment or have the taxable amount reduced.

Electric/hybrid cars: In a move to promote electric and hybrid cars, the government intends to legislate in Finance Bill 2018-19 to exempt employer-provided electricity from being taxed as a benefit in kind from April 2018. This will apply to electricity provided in workplace charging points for electric or hybrid cars owned by employees.

We will keep you informed of any developments on these provisions.