Employment taxes

Multiple changes to employment taxes

There were yet again a myriad of small yet important tax changes affecting employers.

Off-payroll workers

Initial indications are that the recently-introduced public sector rules on off-payroll workers have resulted in increased compliance and they are being considered for adoption in the private sector. A discussion paper is due on a potential reform of existing employment-status tests (see below).

Employment status

The Government will publish a discussion paper to review employment practices in the modern economy, exploring the case and options for longer-term reform to clarify the employment status tests for both employment rights and tax purposes.

Cars and vans

The Budget included increases in the van, van fuel and car fuel rate multipliers in line with the retail prices index. There will also be an increase from 3% to 4% to the diesel supplement for those not meeting the higher Real Driving Emissions Step 2 (RDE2) standards. There was a welcome removal of a benefit-in-kind charge where employees charge their own electric cars at their place of work.

Other expenses and benefits

The Government will hold a consultation on extending tax relief for employees and the self-employed who self-fund work-related training. It is also removing the requirement to check receipts where scale rates for subsistence are claimed, with overseas scale rates to be legislated. In a specialist change, the seafarers’ earnings deduction will be extended to the Royal Fleet Auxiliary.

Share schemes

The allowable break for employees in SAYE schemes who take maternity or parental leave is increasing from six months to 12 months.

Payroll issues

HMRC will be able to recover self-assessment debts through PAYE codings from April 2019. The Budget also announced the closing of a potential loophole using offshore arrangements for claiming the national insurance employment allowance. In addition, the abolition of foreign service relief for termination payments has been confirmed.

Disguised remuneration

There will be new provisions intended to put beyond doubt when the disguised remuneration rules apply to the remuneration of owners of close companies. New legislation will also confirm that a charge under the disguised remuneration rules can apply regardless of whether contributions to disguised remuneration avoidance schemes should previously have been taxed as employment income.