Payroll insight
Employment allowance proposals
SamanthaMannMAATMCIPPdip, CIPP senior policy and research officer, reveals how the CIPP has effected government policy change
T he Budget announcement that from April 2020 employers with class 1 secondary National Insurance contributions (NICs) in excess of £100,000 in the preceding tax year would no longer receive the £3,000 annual amount for the employment allowance was met with little response. A shrug of the shoulders at most, with many commenting “don’t know why it took so long”. The policy intention of the employment allowance has always been to encourage growth in business and thus increase employee numbers – and so the ultimate beneficiaries have always been seen to be micro and small businesses. The impact (also known as ‘unintended consequence’) of making this change means that, by restricting the amount to one group of ‘economic entities’ to the exclusion of others no matter how large they may be, HM Revenue & Customs (HMRC) has to account for these annual amounts as de minimis state aid. There are various types of state aid, ‘de minimis’ being the category that requires the least reporting to the European Union by the UK. However, for the public sector body that provides such funding it still requires records to be maintained by that public sector body for ten years – in this case, that public sector body is HMRC.
Draft regulations The draft Employment Allowance
● ● Indicate in each tax year if the employment allowance is to be claimed. ● ● Account for a three-year financial period to consider whether there is sufficient space to accommodate a claim of £3,000 in the coming tax year (regardless of the intention to claim the whole £3,000 or not). ● ● Indicate which sector the employer is in which could include agriculture, fisheries and aquaculture, road transport and industry. ● ● Account for de minimis state aid received in the three-year period in euros. As this was the first time that we had been asked to consider this subject, we took many of the same steps that we would with a public consultation held at an earlier stage of policy development. Think tank roundtable Our think tank roundtable meetings are proving to be a very useful tool to gather views and experiences from the membership. They provide us with an opportunity to drill down to the finer valuable detail that is often needed in order to gather an informed view as to the impact that new or amended policies will have. The roundtables also provide valuable opportunity for government officials to meet with employers and professionals to gain a real insight into the workings of busy payroll operations. As we know well, no one size fits all. The CIPP thanks Karen Thomson, partner at Armstrong Watson, for providing
(Excluded Persons) Regulations 2019 were published for technical consultation during the summer months – a summer which proved for many not to be ‘balmy’ but ‘barmy’. The proposed policy seemed to be asking UK employers to account for an item in euros through their payroll system – surely, this proposal topped the charts for being the barmiest. ...draft regulations, published for public review, were met not with indifference but with howls of indignation But on a more serious note, their publication meant that the draft regulations, published for public review, were met not with indifference but with howls of indignation. The key features of the draft regulations called on employers to:
Clarification The ‘Policy team update’ (see page 6 of Issue 53, September) omitted to mention that different caps to the de minimis state aid apply according to the industry sectors. Thankfully, payroll will not need to be aware of these caps when completing EPS returns.
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| Professional in Payroll, Pensions and Reward |
Issue 55| November 2019
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