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 |
- See Van benefits
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.
