The autumn 2017 budget has been announced, with no major changes to the taxation of employee share schemes or tax advantaged share plans.
There are no changes to tax rates. However, the annual personal allowance will be increased to £11,850 and the higher rate threshold raised to £46,350, from 6 April 2018.
While there were no specific measures announced in the budget, it is clear that the government is looking at the gig economy and modern working practices, both in terms of employment rights and tax. Specific consultations and papers relating to off payroll working in the private sector and employment status have been flagged for the future - see further below.
- Off pay-roll working in the private sector - The government reformed tax rules for public authorities engaging individuals through personal services companies ("PSCs") in April 2017. In short, those rules mean that public authorities must determine whether, if the PSC were taken out of the equation, the relationship between the public authority and the worker would be one of employer and employee. If so, the public authority must apply deductions for PAYE and NICs to any payments made to the PSC. The Government has indicated that it may roll out this controversial reform to the private sector. This would be incredibly burdensome, as well as shifting tax exposure from the PSC to its client. The Government is to consult on this measure before confirming whether or not it will be implemented.
- Employment status - The government has confirmed it is to release a paper addressing some aspects of Matthew Taylor's review of employment practices. This will cover options for how current employment practices can be reformed in the long-term to bring them more in line with the modern economy. The hope is for this to provide clarity on employment status tests in relation to both employment rights and tax.
- Save As You Earn contributions 'holiday' period increase - From 6 April 2018, the permitted 'holiday' period pause on minimum monthly salary contributions for employees using the Save As You Earn share schemes will be increased from 6 months to 12 months. It is expected that this will be of particular benefit to women taking maternity leave. Tax advantaged plans have often in the past set the standard for approaches in other areas. This change could be another spur to revisit the rights of employees during periods of extended leave.
- Off-shore tax evasion - The government has reinforced its commitment to tackling tax evasion, which includes a tripling of the time limits for HMRC to assess offshore tax noncompliance. Expect a consultation on this in Spring 2018. Furthermore, additional funding is to be delivered to HMRC to provide the necessary resources to tackle tax evasion.
- Taxation of trusts - A consultation paper will be published in 2018, looking into methods around making the taxation of trusts easier to understand, fairer and more transparent.
- Benefit in kind - From April 2018, charging an electric vehicles at work by employees will not be considered a 'benefit in kind'.
- Business expenses - The government has promised to work with stakeholders to improve overall guidance on employee expenses. This includes plans to legislate on concessionary travel and subsistence overseas scale rates in the 2018-19 Finance Bill with the aim of clarifying the position and to remove the requirement to check receipts when paying employees for subsistence expenses using benchmark scale rates
- Disguised remuneration - The disguised remuneration changes build on what had previously been enacted, including in relation to close companies and the loan charge. We are planning a further update on this area. Companies with any concerns, please do contact us.