Employment taxes roundup
13 July 2018
Despite not addressing the employment status elephant in the room, in the Draft Finance Bill 2018-19 the Government has confirmed some measures that will simplify employment taxes.
Optional remuneration arrangements
Legislation will be introduced to remove the opportunity to apportion the car allowance otherwise available to company car drivers across the car, insurance, maintenance, etc. Under the new legislation that takes effect from 6 April 2019, the value of the company car benefit will be the higher of the ‘modified cash equivalent’ of the car benefit and the apportioned car allowance otherwise available.
Whilst this will simplify the calculation, it will result in more employees experiencing an increase in the car benefit and, therefore, employers will need to communicate with affected employees.
The Government has issued a response to the Call for Evidence regarding employee expenses. The response makes clear that there will be no fundamental changes to the underlying rule regarding expenses which qualify for tax relief but it is considering:
- A consultation on the availability of tax relief for training costs
- Improvements to HMRC’s guidance regarding availability of tax relief generally
- Introducing legislation to remove the requirement for receipts when employees are claiming Scale Rate Payments (SRP) for subsistence costs, and to place overseas SRP on statute, rather than concession.
Whilst the removal of the need for receipts when using SRP will be a welcome change, employers will still need to ensure that they have robust checking systems in place to ensure that SRP are only claimed on days for which subsistence may be claimed.
The draft legislation confirms that there will be no taxable benefit where employers provide charging points for all-electric or plug-in hybrid cars after 6 April 2018. This is specifically aimed at drivers of privately owned cars, as legislation already prevents a benefit for company car drivers of similar cars.
Life assurance and QROPS contributions by employers – tax exemption widened
Currently contributions to life assurance policies and qualifying recognised overseas pension schemes (QROPS) made by employers will not be a taxable benefit in kind (BIK) where the beneficiary is the employee or certain members of the employees family or household. Where the beneficiary is not within this definition the amount will be treated as a BIK and subject to tax and NIC.
From 6 April 2019 it is intended the tax exemption will be widened so that the provision of death or retirement benefits will not be taxable as long as the beneficiary is either any individual (ie does not have to be a family member) or a registered charity.