Mandating the reporting of benefits in kind via payroll software The government confirms that the use of payroll software to report and pay tax on benefits in kind will become mandatory, in phases, from April 2027. This will apply to income tax and Class 1A NICs. Tackling tax non-compliance in the umbrella company market To tackle the significant levels of tax avoidance and fraud in the umbrella company market, the government will make recruitment agencies responsible for accounting for PAYE and Class 1 NICs on payments made to workers that are supplied via umbrella companies. Legislation will be introduced to make employment agencies or end clients joint and severally liable for any amount required to be accounted for under the PAYE provisions, where an umbrella company forms part of a labour supply chain. Further legislation will be introduced which will impose an equivalent joint and several liability for NICs purposes. This will allow HMRC to pursue an agency in the first instance for any payroll taxes that a non-compliant umbrella company fails to remit to HMRC on their behalf. The end client will be liable if contracting directly with an umbrella company. Where there is no agency, the responsibility will fall to the end client business. This will take effect from 6 April 2026. The measure will protect workers from large, unexpected tax bills caused by unscrupulous behaviour from non- compliant umbrella companies. Ending contrived car ownership schemes The government is amending the benefit in kind rules so that vehicles provided through employee car ownership arrangements will be deemed to be taxable benefits when made available on restricted terms.
The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship. The NLW applies to those aged 21 and over. Taxable benefits for company cars The rates of tax for company cars are amended for 2026/27: • the charge for zero emission cars rises from 3% to 4% • the charge for other cars with emissions below 75g/km increases by 1% • the maximum benefit of 37% remains. The government has confirmed increases to the benefit in kind rates for company cars for tax years up to and including 2029/30.
The government announced that it is introducing a temporary easement to mitigate the increasing benefit in kind tax liabilities of plug-in hybrid electric vehicle (PHEV) company cars due to new emission standards. The easement will apply retrospectively from 1 January 2025 to 5 April 2028. Transitional arrangements will apply to certain PHEVs until 5 April 2031. Car fuel benefit charge The government will increase the car fuel benefit charge from 6 April 2026. Company vans The government will increase the Van Benefit Charge and the Van Fuel Benefit Charges from 6 April 2026.
Employment
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