A largely choreographed political spectacle, 2017’s Autumn Budget had few game-changing announcements for employee and employers.
The speech contained the headline-grabbing set pieces: a stamp duty land tax break for first time buyers, investment in the regions, the construction and housing sector and technology industry – as well as much-cheered changes to business rates and freezing of beer duty.
There was also a sigh of relief from many who are grappling with the changes wrought by GDPR, AML and Brexit, as pension legislation, higher rate tax reliefs and salary sacrifice schemes remained untouched – for now.
However, an analysis of the documents published immediately after the Budget did contain some details that need to be flagged. What were the key changes?
Personal allowance: this rose to £11,850, with the higher rate threshold also rising to £46,350 from April 2018. Our calculations show that a basic-rate taxpayer on a £30,000 salary will save £101 per year and a higher rate taxpayer on £50,000 will be £236 better off per year.
The lifetime allowance: the amount a person can save overall in approved pension schemes will increase to £1,030,000 in line with CPI. Historically, budgets have cut rather than increased the allowance.
Save As You Earn pause: employees on maternity and parental leave will be able to take up to a 12-month (previously six-month) pause from saving into their ‘Save As You Earn’ scheme. This will be a welcome change for those employees on maternity and parental leave as it will allow continued membership of an often highly-valued savings scheme.
Off-payroll working in the private sector: following major changes introduced for public sector engagements in April 2017, the Government is to consult in 2018, on reforms to the rules on the engagement of workers via personal service companies in the private sector. HMRC’s concern is that legislation relating to these arrangements is not being complied with. Tackling issues tends to lead to more legislation and an increase in costs. Should the rules for the private and public sectors be aligned, then we expect employers to review the use of contractors all together.
Preventing abuse of NICs Employment Allowance: the Government has found evidence of some employers abusing the Employment Allowance, often through offshore arrangements, which are under ever-greater scrutiny. From 6 April 2018, upfront security will be required from employers with a past record of abuse. However, despite the headline, this measure is only expected to raise up to £15 million per year.
Vehicles at work: from 6 April 2018, employer- provided electricity for employees to charge personal cars will no longer be a taxable benefit in kind. There will also be RPI increases in the fuel and van benefit charges from the same date. As usual, the benefits are increasing slightly. The change to the tax treatment of the provision of electricity for employee vehicles is welcome, as the present calculation may cause confusion and increased administration.
Taxation of employee business expenses: from April 2019, employers will no longer need to check receipts when employees claim benchmark scale rates. This will remove a substantial administrative burden for employers, who can now decide if they require receipts when substantiating expense claims when paying benchmark scale rates.
HMRC will improve guidance on employee expenses, with a focus on travel and subsistence, and the process of claiming tax relief when an employer has not reimbursed expenses. Clearer guidance will be welcome, particularly where complex international travel is involved or where individuals inadvertently miss out on a tax relief they do not know exists.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.