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Autumn Statement 2013 – Changes to Employment tax
12 December 13 | By: Jas Jhooty
NEW RATES & RELIEFS
Firstly we will list all of the new rates and reliefs that were announced in last week’s Autumn Statement.
Increased rates & allowances
As expected the personal allowance has been increased to £10,000 with effect from 6th April 2014.
The 20% Basic rate range has been decreased to £0 – £31,865 with the 40% Higher rate range increasing to £31,866 – £150,000.
Full details of all the changes to Income Tax rates & Allowances can be found here.
Also a new transferable tax allowance of up to £1,000 for married couples and civil partners was announced to take effect in 2015/16. Further details can be found here.
Tax exemption for employer expenditure on recommended medical treatment
From 2014/15 employers can now pay up to £500 per employee (tax & NIC free) for ‘recommended’ medical treatment. Medical treatment will be ‘recommended’ where it is provided in accordance with a recommendation from an occupational health service in order to help an employee return to work after a period of absence due to ill-health or injury. Further details can be found here.
Changes to Van Benefit and Car and Van Fuel Benefit scale charges
From 2014/15 new scale charges as follows have been announced: -
- Van Benefit increased from £3,000 to £3,090
- Van fuel benefit increased from £564 to £581
- Car Fuel Multiplier increased from £21,100 to £21,700
These new charges will automatically be included in the normal 2014/15 form P6 – employee’s notice of tax coding run that usually takes place in January.
Loan benefit exemption limit doubled
As previously announced the legislation has been changed doubling the existing £5,000 interest free loan benefit-in-kind threshold to £10,000 from 6th April 2014. If a loan does not exceed this threshold at any time in the tax year it will be exempt from tax.
ANTI AVOIDANCE MEASURES
The chancellor introduced a range of anti-avoidance measures that will raise on additional £9 billion in employment taxes over the next 5 years.
Offshore employment intermediaries
The measure is aimed at ensuring the correct amount of tax and NICs is paid when UK workers are employed by offshore companies or engaged by or through offshore employment intermediaries. The measure also introduces a record keeping and return requirement for intermediaries placing workers with end clients but not deducting income tax and NICs at source.
Employers of workers on the UK Continental Shelf (UKCS) that are located outside the UK and where there is no presence, residence, or place of business in the UK may not to be liable for employers NICs (e.g. Oil & Gas workers). Some are also not making employee NICs and income tax deductions and returns to HMRC through PAYE in respect of those workers. This measure sets out who is the secondary contributor and responsible for operating PAYE for workers on the UKCS. It also introduces a certification system for employers when someone other than the deemed employer (for tax and NICs purposes) is administering and paying NICs, income tax and NICs through PAYE on the deemed employer’s behalf.
Onshore employment intermediaries: false self-employment
New anti avoidance legislation has been announced to prevent employers and employment intermediaries from avoiding employer NICs and circumventing their employer obligations.
The main points of this new legislation that will come into effect from April 2014 are that agency workers have to have PAYE tax & NIC deducted by the agency if: -
- The Worker is providing a personal service to the end Client
- A contract exists between the Client & the Agency for the provision of the Worker’s services
- Payments received by the Worker under such a contract do not already have PAYE & NIC deducted from them
This clause will not apply where the services provided by the Worker are not the subject of any control, direction or supervision by any person.
This measure will only affect those workers who are classified as being self-employed by intermediary agencies and will not affect personal service companies where existing IR35 measures already apply.
It is expected that around 200,000 workers in the construction sector, and 50,000 in other sectors will be affected by this new legislation. The Treasury expects to pull in more than £500 million in 2014/15 as a result of these new anti avoidance measures.
Full details of all of the employment intermediaries anti-avoidance measures can be found here.
Changes to Limited Liability Partnerships (LLP) legislation
A whole new raft of legislation has been announced that tackles disguised employment in LLPs and tax motivated allocations of business profits & losses within partnerships.
This is an anti-avoidance measure designed to ensure that full employment taxes are paid by salaried members of LLPs at the right time and to remove the tax advantages gained through tax-motivated:
- Profit allocations to non-partners
- Loss allocation to individual partners and
- Transfer of assets or income streams through partnerships
Further details can be found here.
How emTax can help?
If you require any further advice on how these new measures will affect you, please do not hesitate to contact us.