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Employment Tax changes announced in the 2017 Autumn Statement
24 November 17 | By: Jas Jhooty
Rates and allowances
For 2018/19, the personal allowance is increased to £11,850 and the basic rate limit to £34,500, so that the level of income at which an individual comes within the charge to income tax is extended from £45,000 in 2017/18 to £46,350 in 2018/19. The higher rate limit and the personal allowance income limit remain unchanged at £150,000 and £100,000 respectively.
The basic, higher and additional rates are all unchanged, as are the rates on dividends and savings income. The personal savings allowance, starting rate for savings and starting rate limit all stay at their 2017/18 levels but the dividend allowance is reduced from £5,000 to £2,000 for 2018/19 onwards as legislated for in Finance (No 2) Act 2017.
Other income tax personal reliefs are increased in line with inflation, as is the capital gains tax annual exempt amount which becomes £11,700 from 6 April 2018. Rates of capital gains tax are unchanged, as are income tax rates for trustees.
The increase in the personal allowance means that the transferable tax allowance for married persons (aka the marriage allowance) becomes £1,185 for 2018/19. The legislation does not currently allow transfers on behalf of deceased spouses or from a surviving spouse to a deceased spouse. With effect on and after 29 November 2017, regardless of when death occurred, an individual will be able to elect to transfer to a deceased spouse, and a deceased individual’s personal representatives will be able to make any transferable tax allowance election that the deceased could have made. Any such elections can be made at any time within the four years after the end of the tax year to which they relate, so this change is effectively backdated to 2015/16 when the transferable tax allowance was introduced.
References above to married persons and spouses include civil partners.
Car and Van Benefits
The amount to which the appropriate percentage is applied in determining the taxable benefit of company car fuel is £23,400 for 2018/19 (£22,600 for 2017/18). The cash equivalent of the benefit of a company van for 2018/19 is £3,350 (£3,230 for 2017/18). The cash equivalent of the benefit of van fuel for 2018/19 is £633 (£610 for 2017/18).
The diesel supplement for company cars will increase from 3% to 4% for 2018/19 onwards. The maximum appropriate percentage for cars (including any diesel supplement) will, however, remain at 37%.
Electricity provided at workplace charging points for electric or hybrid cars owned by employees will be exempted from taxation as a benefit-in-kind from 6 April 2018.
SAYE option schemes
Employees on maternity and parental leave will be able to take a pause of up to 12 months from saving into a Save As You Earn employee share scheme. This will take effect on 6 April 2018.
Scale rates for accommodation and subsistence
HMRC publish benchmark scale rates for accommodation and subsistence for employees’ qualifying overseas travel. These will be placed on a statutory basis on and after 6 April 2019.
Also for 2019/20 onwards, employers will no longer be required to check receipts when making payments to employees for subsistence using benchmark scale rates. This will apply to scale rates for day subsistence and also to the newly legislated overseas scale rates. Employers will be required only to ensure that the employees are undertaking qualifying travel. It will not apply to amounts agreed under bespoke scale rates or industry wide rates.
Termination payments — foreign service relief
“Foreign service relief”/blog/masterclass-on-termination-payments-part-1 is to be abolished for termination payments and benefits to employees who are UK resident in the tax year in which the employment is terminated. This will apply where the date of the termination is on or after 6 April 2018 and the termination payment, or other benefit, is received after 13 September 2017. Foreign service relief will continue in termination cases where the employee is non-UK resident in the year of termination, and will continue for UK residents where the payment or benefit is in connection with a change of duties or earnings rather than with termination of the employment. Reductions for foreign service will also be retained for seafarers.
Draft legislation published on 13 September 2017 covered the new close companies gateway intended to put beyond doubt, with effect on and after 6 April 2018, when the disguised remuneration provisions apply to remuneration of employees and directors who have a connection to a close company. Additional legislation will require all employees and self-employed individuals who have received a disguised remuneration loan to provide information to HMRC by 1 October 2019 to ensure the charge on disguised remuneration loans outstanding on 5 April 2019 is complied with.
Off-payroll working reform — extension to the private sector
The Government will consult in 2018 on how to tackle non-compliance with the intermediaries legislation (IR35) in the private sector. They state that a possible next step would be to extend the public sector reforms made by Finance Act 2017 to the private sector.
Pensions Tax – Lifetime and annual allowances
A decision had already been taken to link the lifetime allowance to inflation, which means that it becomes £1,030,000 for 2018/19. The annual allowance, money purchase annual allowance and taper limit all remain unchanged.