Budget, Brexit and British employees - what's the prognosis?

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By Justine Riccomini

5 May 2016

Justine Riccomini, Senior Employment Tax and HR Manager at Mazars and a speaker at the ICAS Tax Conference 2016, previews some of the big topics for debate at this year’s event in Glasgow on 24 May.

Employment law and tax always represent the fastest-changing measures in a business each year but 2016 is turning out to be one of the fastest of all and so many things seem to be happening at once.

Employers need to be ever more vigilant that they are complying with both employment law and employment taxes rules. Somewhere in the midst of all this new legislation, the Brexit argument is raging and this is affecting the labour market as well as the financial one. There may be more questions than answers.

The Budget did not seem to be too exciting on the employment tax front, but one very important change came about in the form of termination payments, as their on-off affair with National Insurance Contributions was set on a firmer footing.

I was expecting an announcement in the Budget about the OTS's report on Income Tax and NICs alignment, but none came!  Perhaps this was because the two taxes are so incredibly misaligned in so many ways (despite HMRC and DWP arguing to the contrary), that it was a bridge too far to take this mammoth project on board just now.  Having worked on the project myself, I can tell you it was something of an anti-climax (although I did receive a nice letter from George Osborne to thank me for my efforts).

It hasn't gone unnoticed that practically anyone can be an agent these days, too, and the legislation and reporting requirements are so complicated that the likelihood of wholesale compliance is greatly reduced...

The National Minimum Wage was re-branded as the National Living Wage, but this clashes with the voluntary Living Wage and to confuse matters further, there are different qualifying criteria. To add further mischief to the mix, the holiday pay question continues to cause controversy and is inextricably linked to pay, benefits, salary sacrifice, maternity pay... and until the current cases being heard in the courts are finalised, no-one really knows what they should be paying.

The Agency rules have been further "enhanced" to bring the travel and subsistence rules into line with other employees in terms of what constitutes qualifying and non-qualifying payments.  It hasn't gone unnoticed that practically anyone can be an agent these days, too, and the legislation and reporting requirements are so complicated that the likelihood of wholesale compliance is greatly reduced, simply because no-one understands it!

Employment costs for large business will of course rise further in the form of the Apprenticeship Levy, and we have yet to see whether this move to “incentivise” businesses to engage more apprentices will work in practice. And what of “off payroll” workers? Is the net closing in on them as further moves are made by HMRC to ring-fence them, starting with the public sector?

Finally, our old friend Salary Sacrifice may be for the chop as far as some of the ‘whackier’ schemes go - HMRC nevertheless seems content to forge ahead with bikes to work, childcare vouchers and pension (possibly because this is what it offers its own staff).  But to classify it as ‘salary diversion’ and therefore deem it non-qualifying? Now, that has to be worth discussing!

See you at the conference!

Taxing Times: The ICAS Tax Conference 2016

Has there ever been a greater time of change in the world of tax? Secure your place at this year’s conference as we look to bring insight and clarity to the changes in the fiscal landscape. Find out more and book now.


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  • Tax

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