Employees
Company cars and fuel (Table C)
The basis for taxing company cars and fuel provided for private use is set out in the Table. The Chancellor announced that the supplementary percentage applied in calculating the taxable benefit of a diesel car will increase from 3% to 4% from 6 April 2018. This means that the minimum percentage of the initial list price of the car will be 13% for petrol cars and 17% for diesel cars with emissions ratings up to 50g/km, but the maximum charge remains 37% for either petrol or diesel cars.
From 6 April 2018, there will by law be no charge to Income Tax or National Insurance on the benefit provided to an employee whose employer allows them to charge an electric car at the workplace. In theory, a tax charge could otherwise arise on the cost of providing the benefit, so this puts the matter beyond doubt.
SAYE schemes
Employees with SAYE-related share option schemes are permitted to pause their contributions while on maternity or paternity leave. This has been limited to 6 months, but will increase to 12 months from 6 April 2018.
‘Off payroll’ and disguised remuneration
HMRC has been concerned about individuals working through personal service companies (PSCs) and similar arrangements for two decades: they regard this as a way of avoiding PAYE and Class 1 NIC where ‘in reality’ (in HMRC’s view) the individual is acting as an employee. From 6 April 2017, where the individual behind the PSC works in the public sector, the responsibility for paying this tax has been transferred to the person making the payment to the PSC. Public bodies such as NHS Trusts have had to account for PAYE on such payments, even if the PSC is registered for VAT. The Government intends to consult on the possibility of extending this to people working in the private sector as well.
Meanwhile, other anti-avoidance measures announced in 2016 have been confirmed as applying for the tax year 2017/18. These are aimed at ‘disguised remuneration’ schemes used by closely controlled companies to pay what are effectively earnings to employees without accounting for PAYE, where the employees have a material interest in the company.
Termination payments
As previously announced, from April 2018 termination payments paid in a year in which the recipient is UK resident will no longer be eligible for ‘foreign service relief’. Until now this has exempted from income tax a termination payment to a person leaving a job if a sufficient proportion of the employment was spent outside the UK.
Employee expenses
As a simplification measure, from April 2019 employers paying subsistence expenses will no longer be subject to a requirement that they check receipts if they are within benchmark subsistence scale rates. Existing concessionary overseas scale rates for subsistence and accommodation will be placed on a statutory basis in order to provide greater certainty for businesses.