6
Budget 2020
Review
In January 2020, the government announced a review of the implementation of the April 2020 reform, to address concerns from affected businesses and individuals. The government has confirmed the changes will go ahead but:
y y businesses will not have to pay penalties for errors relating to off-payroll working in the first year, except in cases of deliberate non-compliance y y there will be a legal obligation on clients to respond to a request for information about their size from the worker or the fee-payer. Employer provided cars The scale of charges for calculating the taxable benefit for an employee who has use of an employer provided car is computed by reference to bands of CO 2 emissions multiplied by the original list price of the vehicle. The maximum charge is capped at 37% of the list price of the car. The government announced in Budget 2017 that CO 2 emissions for cars registered from April 2020 will be based on the Worldwide Harmonised Light Vehicles Test Procedure (WLTP). Draft legislation has been issued to amend the previously planned benefit percentages for 2020/21 through to 2022/23: y y All zero emission cars will attract a reduced percentage of 0% in 2020/21 and 1% in 2021/22, before returning to the planned 2% rate in 2022/23. y y For cars registered before 6 April 2020, the current test procedure will continue to apply and there are no further changes to percentages previously set for 2020/21. These rates will be frozen at the 2020/21 level for 2021/22 and 2022/23. y y For cars first registered from 6 April 2020 most rates will reduce by 2% in 2020/21 before returning to planned rates over the following two years, increasing by 1% in 2021/22 and 1% in 2022/23. Comment WLTP aims to be more representative of real world driving conditions, compared to the current test known as the New European Driving Cycle. The government estimates that reported CO 2 values may be on average about 20 – 25% higher under the WLTP testing standards compared to the current test. Employment Allowance The Employment Allowance provides businesses and charities with relief from their employer NICs bill. Regulations have been issued to restrict the Employment Allowance, from 6 April 2020, to those employers whose employer NICs bill was below £100,000 in the previous tax year. Employers who are connected to other employers (such as companies within a group) will need to add together all of their employer Class 1 NICs liabilities incurred in the tax year prior to the year of claim to determine eligibility. For 2019/20 the rates increased by 3% from the rates applying for 2018/19.
The maximum Employment Allowance will be increased from £3,000 to £4,000 with effect from 6 April 2020.
From 6 April 2020 the Employment Allowance will operate as de minimis State aid. This means it will count towards the total aid a business is entitled to under the relevant de minimis State aid cap.
Comment De minimis State aid rules apply if a business engages in economic activity, providing goods or services to the market. Most businesses will not have received de minimis State aid before so will not need to do further checks to determine if they are eligible for the Employment Allowance.
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