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Five new government consultations on changes to employment tax launched

11 August 16 | By: Jas Jhooty


The government has launched five important new consultations on proposed changes to simplify the administration of employee benefits-in-kind and expenses.

Termination payments consultation

The government has published its response to its consultation on termination payments held in summer 2015. The publication includes a consultation on draft legislation intended to give effect to changes to the treatment of termination payments. The government response and consultation can be found here.

The changes include:
  • clarifying the scope of the exemption for termination payments to prevent manipulation, by making the tax and National Insurance contributions (NICs) consequences of all post-employment payments consistent
  • aligning the rules for income tax and employer NICs so that employer NICs will be payable on payments above £30,000 (which are currently only subject to income tax)
  • removing foreign service relief
  • clarifying that the exemption for injury does not apply in cases of injured

The policy underpinning the changes is now explained in greater depth.

Salary sacrifice consultation

The government is seeking views about limiting the range of benefits-in-kind that attract income tax and National Insurance contributions (NICs) advantages when they are provided as part of salary sacrifice arrangements. Employee contributions to employer-provided pensions, employer-provided pension advice, employer-supported childcare and provision of workplace nurseries and cycles and cyclist’s safety equipment provided under the cycle to work scheme will remain unaffected by this measure. The consultation can be found here.

The purpose of the consultation is to explore potential impacts on employers and employees should the government decide to change the way the benefits code applies when a benefit-in-kind is provided in conjunction with a salary sacrifice or flexible benefit scheme.

Alignment of dates for making-good on benefits-in-kind consultation

This consultation explores the scope for aligning the ‘making good’ rules for benefits-in-kind with those which apply to ‘making good’ where the employer accounts for the benefit-in-kind in real time through Pay As You Earn (PAYE). The aim is to have a simpler and clearer system that makes it easier for employers and employees to understand their obligations. The consultation can be found here.

Simplifying the PAYE Settlement Agreement (PSA) process consultation

The government sets out proposals to simplify the process used for agreeing and reporting items in a PSA. The consultation can be found here

This consultation sets out proposals to reform the PAYE Settlement Agreement (PSA) process, to:
  • make it simpler for both employers and HMRC to administer PSAs
  • provide greater clarity about what can and cannot be included in a PSA

Extension of the voluntary framework for payrolling consultation

The government has published draft regulations and an explanatory memorandum for technical consultation. The draft regulations make changes to the Income Tax (Pay As You Earn) Regulations 2003 to allow employers to voluntarily payroll the benefit of non-cash vouchers and credit tokens provided to employees. These regulations will apply from 6 April 2017. The draft regulations can be found here.

How emTax can help

Further information about these publications can be found via the links above,

Our consultants will be attending roundtable discussions with HMRC on these new consultations in the coming months. If you have any views on any of these proposed changes to employment taxation, please do not hesitate to contact us so that we can take your queries to HMRC.


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