Policy hub
Intermediaries legislation The government reformed the off-payroll working rules (known as ‘IR35’) for engagements in the public sector in April 2017. Within the Budget document it states that early indications show that public sector compliance is increasing as a result, and therefore a possible next step would be to extend the reforms to the private sector, to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company. The government will be consulting on how to tackle non-compliance in the private sector, drawing on the experience of the public-sector reforms, including through external research already commissioned by the government and due to be published in 2018. ...a reform of the current system for charging penalties and interest... Pensions ● Lifetime allowance – The lifetime allowance for pension savings will increase in line with consumer price indexation, rising to £1,030,000 for 2018–19. ● Life assurance and overseas pension schemes – From April 2019, tax relief for employer premiums paid into life assurance products or certain overseas pension schemes will be modernised to cover policies when an employee nominates an individual or registered charity to be their beneficiary. Tax administration ● Late submission penalties and late payment interest – There will be a reform of the current system for charging penalties and interest on late submissions and payments. The new system will be on a points-based approach. Also under consideration is the simplification and harmonisation of the current penalty and interest schemes. Final decisions on both schemes will follow consultation. It is not yet clear whether this affects all tax regimes. ● Making tax digital – As previously announced and legislated for in the Finance (No 2) Act 2017, making tax digital will not
existing concessionary accommodation and subsistence overseas scale rates will be placed on a statutory basis m HM Revenue & Customs (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. National Insurance contributions (NICs) ● Reforms – As previously announced, to ensure that there is enough time to work with parliament and stakeholders on the detail of reforms that will simplify the NICs system, the government has announced that it will delay implementing a series of NICs policies by one year. These are the abolition of class 2 NICs, reforms to the NICs treatment of termination payments, and changes to the NICs treatment of sporting testimonials, which will all now take effect from 6 April 2019. ● Class 4 – As announced earlier this year, the government will no longer proceed with an increase to the main rate of class 4 NICs from 9% to 10% in April 2018, and to 11% in April 2019. ● Employment allowance – The government has found evidence of some employers abusing the employment allowance to avoid paying the correct amount of NICs, often by using offshore arrangements. To crack down on this, from April 2018, HMRC will require upfront security from employers with a history of avoiding paying NICs in this way. NMW/NLW Alongside the Budget the government’s response to the Low Pay Commission’s autumn 2017 report was published, accepting the following recommendations for hourly rate increases to the national minimum/living wage (NMW/NLW) from 1 April 2018: ● from £7.50 to £7.83, for workers aged 25 and over (the NLW) ● from £7.05 to £7.38, for 21–24-year olds ● from £5.60 to £5.90, for 18–20-year olds ● from £4.05 to £4.20, for 16–17-year olds ● from £3.50 to £3.70, for apprentices aged under-19 or in the first year of their apprenticeship. The daily accommodation offset rate will increase from £6.40 to £7.00 (weekly £49.00).
become mandatory until April 2019, and then only for businesses with a turnover at or above the VAT (value added tax) threshold. The government is committed to ensuring that the system is robust before rolling it out further; the earliest date for any further rollout is April 2020. ● Faster recovery of self-assessment debt – HMRC will use new technology to recover additional self-assessment debts closer to real-time by adjusting the tax codes of individuals with pay as you earn income. These changes will take effect from 6 April 2019. ● Security deposit legislation – To ensure the collection of debt in cases of insolvency, the government is expanding the security deposit legislation to cover construction industry scheme deductions. The change, which will take effect from 6 April 2019, will be included in Finance Bill 2018–19 and there will be a consultation on its implementation. Tax avoidance and evasion ● Further measures – The government has introduced over 100 measures to tackle tax avoidance, evasion, non- compliance and aggressive tax planning between 2010 and 2017. A policy paper was published alongside the Budget which includes the work that has already taken place and which details eighteen further measures, including extending HMRC’s powers to hold online marketplaces jointly and severally liable for the unpaid VAT of all traders on their platforms. ● Disguised remuneration – The government will also tackle disguised remuneration avoidance schemes used by close companies (companies with five or fewer participators) by introducing the close companies’ gateway, and measures to ensure liabilities from the new loan charge are collected from the appropriate person. Modern working practices The government is to publish a discussion paper as part of the response to Matthew Taylor’s review of employment practices in the modern economy, exploring the case and options for longer-term reform to make clearer the employment status tests for both employment rights and tax. The government recognises that this is an important and complex issue, and so will work with stakeholders to ensure that any potential changes are considered carefully through consultation. n
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Issue 37 | February 2018
| Professional in Payroll, Pensions and Reward |
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