In the Chancellor’s first (and last) Autumn Statement there were several points to take note of but here are some key points for HR teams.
The new restrictions on the use of salary sacrifice schemes have been well-publicised: from April 2017 they will be limited to pension contributions, childcare benefits, cycle schemes and ultra-low emission cars. Pre-existing arrangements will be protected until 2018 or 2012 to allow them to be unwound.
Some other noteworthy changes have had less publicity.
The Employee Shareholder Scheme (under which employees gave up certain statutory rights in return for tax breaks on shares worth up to £50,000) will effectively be ended as the tax breaks will be removed for arrangements entered into on or after 1 December 2016. This was never a very popular scheme and has probably been used more as a tax planning device in M&A/investment transactions than for its intended purpose of widening share ownership in small companies.
“Off-payroll” working in the public sector will be curbed by:
- the introduction of a rule that all payments by public sector bodies to personal service companies that provide the services of individuals will be treated as employment income for tax and NIC purposes – these will be payable either by the engager or the intermediary and the rule seeks to address significant non-compliance with the IR35 regime in this sector; and
- the removal of the 5% allowance for administrative expenses.
These changes take effect from 6 April 2017.
From April 2018, termination payments in excess of £30,000 will be subject to employer (but not employee) NICs. The complete exemption from tax and NICs for payments up to £30,000 will continue for the time being, although a formal government response to consultation on more radical changes is expected in early December.
If you have any queries on issues raised by the Autumn statement or other employment law issues please contact: