The chancellor delivered his autumn 2017 budget speech yesterday and we have picked out some of the key highlights for employers:
Extension of off-payroll working to the private sector
There will be a consultation on the possible extension of off-payroll working to the private sector (a new tax regime introduced in the public sector in April 2017). Currently, when public sector bodies hire consultants via personal service companies (or chains of intermediaries), the off-payroll working rules may operate to create a ‘deemed employment’ relationship (for tax purposes). The public body is then either, itself responsible for accounting for PAYE (and some other payments), or has a duty to provide specified information to the relevant fee payer (e.g. an agency). The consultation on the possible extension of the off-payroll working regime to the private sector is likely to take place sometime in 2018.
Employment status discussion paper
The government intends to publish a discussion paper as part of the response to Matthew Taylor’s review of employment practices in the modern economy (which we reported). This will explore the case and options for longer-term reform to make the employment status tests for both employment rights and tax clearer.
National insurance contributions (NICs) on termination payments
We recently reported on plans to change the tax treatment of termination payments. Whilst most of the proposed changes are still expected to come into force in April 2018, the government has announced that it will delay – by one year – its plans to subject all termination payments above the £30,000 threshold to class 1A NICs (employer liability only). That specific change is therefore now expected to come into force in April 2019.
Tax treatment of employees pay and benefits
In addition to the usual rises from April 2018 to the personal tax allowance (up from £11,500 to £11,850) and the higher rate tax threshold (up from £45,000 to £46,350), a number of other less significant measures were promised:
- Subsistence benchmark scale rates: from April 2019, employers will no longer be required to check receipts when reimbursing employees for subsistence using benchmark scale rates
- Guidance and claims process for employee expenses: HMRC will work with external stakeholders to improve the guidance on employee expenses, particularly on travel and subsistence and the process for claiming tax relief on non-reimbursed employment expenses
- Self-funded training: there will be a consultation in 2018 on extending the scope of the tax relief currently available to employees and the self-employed for work-related training costs, and
- Electric vehicles: from April 2018, there will be no benefit in kind charge on electricity that employers provide to charge employees’ electric vehicles.