Policy News Journal - 2016-17

The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal

Arrangements relating to employer-provided pensions (including advice), childcare, Cycle to Work and ultra-low emissions cars will be excluded.

This change will have effect from 6 April 2017, although the government will protect those contracts that are already in place on this date until the earlier of:

 a start, end, variation, renewal or auto-renewal of the contract,  or 6 April 2018, except for cars (with emissions above 75 g CO 2

per kilometre), accommodation and

school fees when the final date is 6 April 2021.

Ultra-low emission vehicles A clause amends the appropriate percentage for ultra-low emission vehicles (cars with CO2 emissions of 0-75 grams per kilometre) for the purpose of calculating the taxable benefit of a company car. It also makes related changes to the appropriate percentage for conventionally fuelled cars. The effect of the changes is that the appropriate percentage for cars in the lowest CO2 emissions category (1-50 grams CO2 per kilometre driven) will be based both on CO2 emissions as well as on the electric range of the car, which is the distance the vehicle can travel in pure electric mode. For cars with emissions of 51 grams CO2 per kilometre and upwards, the appropriate percentage remains based on CO2 only.

The changes have effect for the tax year 2020-21 and subsequent tax years.

Associated documents The government has published a summary of responses document and tax impact and information notice (TIIN) which you can find at section 1.13 in the overview of legislation in draft . Draft legislation has also been published and can be found at page 100 and the explanatory note can be found from page 12 .

The government would welcome any technical comments you have on draft legislation by 1 February 2017.

Please send your comments by e-mail, if possible, to: employmentincome.policy@hmrc.gsi.gov.uk or alternatively, by post to: Alex Raisen, Room 1E/08, 100 Parliament Street, Westminster, London, SW1A 2BQ.

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Time limit for ‘making good’ on benefits-in-kind 7 December 2016

Draft legislation has been published to ensure an employee who wants to ‘make good’ on a non-payrolled benefit in kind will have to make the payment to their employer by 6 July following the end of the tax year.

Geographical extent – The changes extend to all four nations of the UK. The draft legislation details the legislative amendments required for both Great Britain and Northern Ireland.

‘Making good’ is where the employee makes a payment in return for the benefit-in-kind they receive. The making good payment has the effect of reducing the taxable value of the benefit-in-kind, often to zero. This reduces the amount of the employee’s taxable earnings. The employee might make good if the employer requires the employee to make a contribution towards the provision of the benefit-in-kind; or if the employer or employee wants to reduce the tax due on the benefit-in-kind. At present, there is a range of dates for making good on benefits-in-kind and, for some benefits-in-kind, there is no date in legislation. Employers have said that the current dates cause difficulties for employers and have requested clarity. The clause sets a date of 6 July after the end of the tax year for making good on benefits-in-kind which are not accounted for in real time through Pay As You Earn (‘payrolled’). The taxable value, and the value on which Class 1A National Insurance contributions are payable, will be reduced only if the benefit-in-kind is made good by that date.

The clauses introduce amendments to legislation on specific benefits-in-kind and also to the provision on calculating the cash equivalent of benefits treated as earnings.

The change will affect making good on a tax liability arising in the tax year 2017-18 and subsequent years.


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