The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.
Keeping up to speed with changes in employment taxes is crucial – both for employers and employees.
Here are some of the latest changes in rules and regulations.
Employer provided cars
The scale of charges for working out the taxable benefit for an employee who has use of an employer provided car are now announced well in advance. Most cars are taxed by reference to bands of CO2 emissions. There is a 3% diesel supplement. The maximum charge is capped at 37% of the list price of the car.
From 6 April 2016 there is a 2% increase in the percentage applied by each band with similar increases in 2017/18 and 2018/19. For 2019/20 the rate will increase by a further 3%.
From 6 April 2017 the appropriate percentage for cars which have neither a CO2 emissions figure nor an engine cylinder capacity, and which cannot produce CO2 emissions in any circumstances by being driven, will be set at 9%.
From 6 April 2018 this will be increased to 13%, and from 6 April 2019 to 16%.
Van benefit charge for zero emissions vans
The van benefit charge for 2015/16 is £3,150 increasing to £3,170 in 2016/17.
The government will extend van benefit charge support for zero-emission vans so that from 6 April 2016 the charge will be 20% of the main rate in 2016/17 and 2017/18, and will then increase on a tapered basis to 5 April 2022. The government will review the impact of this incentive at Budget 2018 together with enhanced capital allowances for zero-emission vans.
Taxation of termination payments
From April 2018 the government will tighten the scope of the income tax exemption for termination payments to prevent manipulation.
Termination payments over £30,000 which are subject to income tax will also be subject to employer NIC. The government will undertake a technical consultation on tightening the scope of the exemption.
Travel and subsistence expenses rules
In September 2015 the government published a discussion document aimed at modernising the tax rules for travel and subsistence (T&S).
The government has analysed responses and concluded that, although complex in parts, the current T&S rules are generally well understood and work effectively for the majority of employees and has decided not to make further changes to the T&S rules at this time.
Employment intermediaries and relief for travel and subsistence As announced at March Budget 2015, the government will introduce legislation in Finance Bill 2016 to restrict tax relief for home to work travel and subsistence expenses for workers engaged through an employment intermediary.
This will bring the rules into line with those that apply to employees.
Simplifying the NIC rules
The government will commission the Office of Tax Simplification to review the impact of moving employee NIC to an annual, cumulative and aggregated basis and moving employer NIC to a payroll basis.
Disguised remuneration schemes
The government will introduce a package of measures to tackle the current and historic use of disguised remuneration schemes, which are used to avoid income tax and NIC.
Legislation will be included in Finance Bill 2016 which will prevent a relief in the existing legislation from applying where it is used as part of a tax avoidance scheme from Budget Day.
The government will hold a technical consultation on further changes to the legislation which will be included in a future Finance Bill.
This will include a new charge on loans paid through disguised remuneration schemes which have not been taxed and are still outstanding on 5 April 2019.
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