There is a lot currently happening in the world of employment
tax. Below are six current hot topics/risks/opportunities along
with some practical points on dealing with them.
There has been a substantial change from 6 April 2016 with
dispensations being abolished and replaced with exemptions for most
expenses and benefits in kind previously covered by dispensations
(apart from some round sum subsistence allowances which may require
HMRC approval). HMRC's Employer Bulletin at the link below has
more detail on pages 9 & 10.
An employer must register before the start of the tax year to
payroll benefits for that tax year. Consider whether payrolling
could be worthwhile for your business.
The use of self-employed workers by businesses is a hot topic
for HMRC. If a sole trader is reclassified by HMRC as an employee
the employer will be liable for his employment tax, NI, interest
and a potential penalty of up to 100%.
Review the status of any workers not paid through the payroll to
ensure that your businesses' tax and NI obligations are
correctly dealt with.
A new trivial benefit exemption was introduced from 6 April
2016. The new exemption could reduce employers' PSA liabilities
for 2016/17 onwards. The LinkedIn article referenced below has more
detail and a link to HMRC's draft guidance.
PSAs can be costly; consider having an external cold review to
ensure your calculations do not overstate liabilities and effective
use is made of the new exemption.
Significant savings may be available from using salary
sacrifice, but HMRC are considering restricting the range of
benefits that can qualify. If HMRC inspect your business they are
likely to examine relevant records. HMRC's detailed guidance on
salary sacrifice and our 2016 Budget commentary on HMRC's
latest views (point 5.1) are at the following links.
Consider whether your business is taking full advantage of
salary sacrifice arrangements and if you are, whether they are in
line with HMRC's guidance.
The tax and NI treatment of termination packages is complex.
HMRC look closely at Payment In Lieu Of Notice (PILON), both
contractual and non-contractual, as well as damages.
Changes are proposed from 2018 (see our 2016 Budget commentary
at point 5.2). Review the tax and NI treatment of your businesses
termination packages. Overcautious treatment of payments (in
particular PILON) in the past could potentially result in refunds
of employer's NI (going back up to six years).
Please note We have taken care to ensure the accuracy of
this publication, which is based on material in the public domain
at the time of issue. However, the publication is written in
general terms for information purposes only and in no way
constitutes specific advice. You are strongly recommended to seek
specific advice before taking any action in relation to the matters
referred to in this publication. No responsibility can be taken for
any errors contained in the publication or for any loss arising
from action taken or refrained from on the basis of this
publication or its contents.
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