In his Autumn Statement 2016, the Chancellor announced the following measures of interest to employers and employees.

Termination payments

  • From 2018 payments over £30k subject to Employers' National Insurance Contributions (ERS NICs) (as pre-announced).
  • NEW: Tax applied to the equivalent of an employee's basic pay if their notice is not worked.

Employee expenses

  • From April 2017 employees no longer pay tax on legal support from their employer.
  • The government will publish a call for evidence at Budget 2017 on the use of Income Tax relief for employee business expenses, including those not reimbursed by their employer.

Salary sacrifice

  • Tax and employer NIC advantages of salary sacrifice schemes will be removed from April 2017, except for pensions, childcare, Cycle to Work and ultralow emission cars.
  • Pre-April 2017 arrangements protected until April 2018. Arrangements for cars, accommodation and school fees protected until April 2020.
  • All subject to consultation.

Benefits In Kind (BIK)

  • There will be a consultation on the valuation of BIKs, in particular living accommodation.
  • Legislation will be introduced in Finance Bill 2017 on dates for making good BIKs. 
  • Assets made available without a transfer of ownership: Finance Bill 2017 will clarify that employees are only taxed for periods the asset is available for private use.

Company cars

  • Company Car Tax (CCT) bands and rates for 2020-21: new, lower bands for the lowest emitting cars.
  • The appropriate percentage for cars emitting greater than 90g CO2 /km will rise by 1%.
  • See Company Cars

Fuel benefit and van benefit charges

Rates are set for 2017/18, increasing over 2016/17 as follows:

  2016-17 2017-18
Car fuel benefit charge multiplier £22,200 £22,600
Van fuel benefit charge £598 £610
Van benefit charge £3,170 £3,230

Employee Shareholder Status

  • Income Tax and CGT reliefs are removed for individuals entering employee shareholder agreements on or after 1 December 2016.
  • Shares received under agreements made before that date are not affected.
  • Corporation Tax reliefs for the employer company are unaffected.

Simplifying PAYE Settlement Agreement (PSA) process

  • As previously announced Finance Bill 2017 will introduce measures to simplify the process for applying for and agreeing PSAs.
  • This will apply from 2018/19. 

Personal Service Companies (PSC) and IR35 changes

Changes to 'Off-Payroll Working rules' for the public sector were originally proposed in a HMRC consultation in May 2016. The government confirms that from April 2017, where a PSC provide services to the public sector: 

  • IR35 will no longer apply: the responsibility for paying the employment taxes will move from the PSC to the public sector body engager.
  • The paying body will have to assess the employment status of the individual and deduct PAYE and NICs.
  • The 5% flat rate deduction that applies to PSCs who are within IR35 will be removed.


 Back to Autumn Statement 2016: Headlines and Highlights