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ET4B’s Autumn 2020 Newsletter

Posted by David on November 17, 2020
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In the latest of our series of occasional Newsletters we consider the forthcoming IR35 changes, recent updates to the Job Retention Scheme, and other topical matters.

Are you confused by the employer reclaim rules for businesses affected by coronavirus? If so, our guess is that you are in good company with about 60m others!

You may have also read that the proposed ‘Job Support Scheme’ (JSS) effectively bit the dust within days of its premature launch (as a consequence of which the ‘JSS Closed’ scheme has failed to open, and the ‘JSS Open’ scheme was also closed before it had chance to open!). 

We can all too easily become bamboozled by jargon; however the important redeeming factor is of course that the ‘Job Retention Scheme’ (JRS) has now been extended until 31 March 2021.

In our attached Newsletter we have provided a brief summary of the time limits applicable to JRS claims in 2020/21. Although these were correct at the time of ‘going to print’, we would always suggest that you visit the site to check the latest rules and time limits. Indeed, if and when you do complete a JRS claim, we would suggest you take a screen print of the relevant guidance. The speed of these guidance changes has been bewildering throughout 2020; however this point might be conveniently overlooked by HMRC, if you happen to be facing an Employer Compliance Review in a couple of years time.

The changes to IR35 obligations for large and medium sized employers were of course postponed last April as a result of the pandemic, however there is nothing so far to suggest the new rules will be delayed beyond April 2021.

We find it interesting to note that case law on key aspects of employment status continues to develop in the midst of these significant IR35 changes. For those seeking to ensure contractors are ‘outside IR35’ it is important to ensure each of these developing factors are considered.

If you would like to discuss any aspects of this update and Newsletter, please contact Dave Cooper on 0783 3218569.

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Happy Christmas 2019 from ET4B

Posted by David on December 20, 2019
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ET4B hopes you are looking forward to spending some time off with friends and family, following the time-honoured tradition of abstinence and moderation over the festive break. Well maybe not, but Brian and Dave at ET4B would still like to wish you all the very best to you and yours for Christmas 2019 and the New Year.

In the meantime, we have attached our annual Christmas Quiz, which may help you decide whether you are feeling sharp as a carving knife, or more like a Christmas pudding?

You can view and print off ET4Bs Christmas Quiz 2019_WITH ANSWERS here, or if you prefer to see just the QUESTIONS ONLY click here..

Either way, hopefully this makes a change from our more typical updates on IR35 or National Minimum Wage.

As usual the quiz contains just a few harmless festive questions on general knowledge & popular culture, as well as recalling some of the events of 2019.

If we don’t speak to you beforehand, please accept our very best  wishes for the Christmas season.

Brian and Dave

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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