News articles

Happy Christmas – Brexit is over (well hopefully soon)

Posted by David on December 17, 2018
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Brian and Dave at ET4B would like to wish you all the very best to you and yours for Christmas 2018 and the New Year.

We have also attached our annual Christmas Quiz, which has become surprisingly popular, perhaps even more so than our tax updates! As usual the quiz contains just a few harmless festive questions on general knowledge and popular culture, as well as recalling some of the events of the last 12 months!

All the quiz questions plus answers can be viewed (or printed as a PDF) from here.

The heading of this blog post borrows a phrase from John and Yoko’s 1972 Christmas hit ‘Happy Xmas (War is Over)’, and perhaps reflects the optimism for which the couple were famous. Even if our updated optimism proves misplaced in 2019, we hope you do have a pleasant break, and please accept our warmest wishes for the Christmas and New Year season.

Planned IR35 changes confirmed in 2018 Budget

Posted by David on October 30, 2018
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Earlier in 2018 the government consulted on whether to alter the so called ‘IR35 rules, in effect whether to transfer the IR35 obligations from the hired Personal Service Company (PSC) to the hirer of the service.

These extended rules were first introduced in April 2017, though at that time the changes applied only to hirers in the Public Sector. However the latest Budget 2018 documentation confirms that the new rules will be extended to the Private Sector, from April 2020.

Make no mistake this is a very significant switch in responsibility. Whilst the latest information suggests that the precise nature of the changes will themselves be subject to consultation (including perhaps exclusion of ‘small businesses’ from applying the new rules), at this stage it is fair to assume the new Private Sector obligations will mirror the Public Sector equivalent. This will mean:

  • The body hiring the PSC and worker has to make a decision whether the particular contract is ‘caught’ within IR35. In short, the hirer must decide would the worker be their employee if the PSC had not been used. Employment status is of course a very complex employment case law test, which requires a full understanding of how the contract will operate practically (simply agreeing robust written terms will not be enough in itself).
  • If the contract is caught, the body paying the PSC must deduct and account for PAYE and NIC before it pays the PSC. If the hirer pays though an intermediary agency or employment business etc., the hirer must inform the intermediary agency of the PAYE/NIC obligation.
  • Apart from the extra cost to the hirer (e.g. the employer’s NIC cost) the practicalities of deducting PAYE/NIC at the same time as paying a limited company, which may have other obligations e.g. VAT payment, may mean that specialist software is needed.

What can be done?

We admit there is unlikely to be a ‘one size fits all’ solution that we can dust off the shelf. However the announced timescale and promised HMRC guidance should ensure that, with very careful planning and a flexible approach, any increases in outgoings can be managed.

Please contact ET4B if you would like to discuss this further.

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Termination payments: new rules and obligations

Posted by David on April 30, 2018
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From April 2018 basic Pay in Lieu of Notice (PILON) is now subject to payroll tax and NIC in full. For many employers there was previously been little or no need to identify what is and isn’t PILON when making a severance payment.

The additional processes requires identification of the date notice was effectively served, the employee’s contractual or statutory notice period (whichever is higher), and any unworked notice (defined in statute as “post-employment notice period), in order to identify any PILON outstanding upon termination.
In addition Foreign Service Relief was also abolished from April 2018.

The proposed charging of Class 1A (employer’s) NIC on other sums over £30,000 has been delayed to April 2019  Overall we are told the changes are intended to bring some ‘fairness and clarity’ to a complex area! However the previous pretences of ‘simplification’ and tax neutrality have been dropped from the latest guidance; in practice each of the new measures will only increase the Treasury’s tax/NIC take, as well as the employer’s costs and responsibilities.

 

Childcare tax relief changes

Posted by David on April 14, 2018
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Childcare vouchers – phasing out of changes

In conjunction with the introduction of the new ‘Tax Free Childcare’ (which is an allowance paid directly to the parent etc by the government) some of the existing tax reliefs for employer sponsored childcare (e.g. paid via childcare vouchers) are expected to be phased out.

Up to recently it was intended that qualifying employees would have to apply before April 2018 in order to stay within the existing system. However at the last minute it was announced that this cut-off date for new applications was is to be extended by 6 months, to October 2018.

Whilst this change does prevent new entrants joining, existing agreements are expected to remain valid

ET4Bs Winter 2018 Newsletter

Posted by David on February 11, 2018
Flexible Benefits, HMRC, News articles, Payroll, Status, Termination Payments / Comments Off on ET4Bs Winter 2018 Newsletter

ET4B’s Winter Newsletter 2018 looks at some of the more pressing matters currently on our, and our clients’ agendas.

One aspect affecting nearly all employers is the changes planned on treatment of employment termination payments. Upon implementation the changes are now being justified on a robust agenda of ‘fairness and clarity’, with the previous pretences of extra ‘simplicity’ and tax-neutrality having been dropped.  This presents the prospect of more work for employers and more tax/NIC to pay (for almost every employer and employee).

A few specific points of interpretation in respect of the new termination payments rules have very recently (14 February 2018) been clarified by HMRC in its February 2018 Employer Bulletin.

Firstly, HMRC has confirmed that payments made on or after 6 April 2018, but relating to a termination before that date, would fall under the ‘old’ rather than ‘new’ rules.

Secondly HMRC confirms that genuine redundancy payments (whether statutory, or non-statutory i.e. at enhanced rates agreed between employer and employee) should not be looked at under the new Post Employment Notice Pay rules i.e. they will still qualify for the £30,000 exemption. This is consistent with existing treatment which in effect goes as far back as the ‘Inland Revenue’ Statement Of Practice 1 of 1994 – so it would been a major disappointment if HMRC had decided to take a more stringent view here.

Finally the Employer Bulletin does confirm that the proposed withdrawal of Foreign Service Relief on termination payments from 6 April 2018 is still intended, but remains subject to further Parliamentary Approval.

Other than termination payments, the Newsletter looks at other hot topics concerning the government’s ongoing concern on employed v self-employed status, the increase in HMRC minimum wage reviews, changes in tax treatment of flexible benefits (or Optional Remuneration Arrangements to use the current terminology), possible changes to the way employee expenses are treated, and the proposed further uplift in taxation for diesel company car drivers.

We trust you find the Newsletter of interest. If you think we can assist, on these or any other employment/worker related matters, please of course contact us contact us.

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Christmas 2017 Greetings from ET4B

Posted by David on December 18, 2017
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We hope you are well and looking forward to enjoying some rest and relaxation over the next couple of weeks. This is just a quick note from Brian and Dave at ET4B to wish all the best over the festive season.

If you have the opportunity for a gentle wind down for the festive break, we have enclosed ET4Bs Christmas Quiz 2017 (with answers) for your amusement.

 

All the very best to you and yours for Christmas 2017 and the New Year