Many of the articles link back to the website of ACAS - the Advisory Conciliation and Arbitration Service - and we are grateful for their contribution to improved employment relations. We also acknowledge Farringdon and Cº for providing regular updates on such issues.
Spring Statement 2018
The Chancellor Philip Hammond presented his first Spring Statement on Tuesday 13 March 2018.
In his speech he provided an update on the economy and responded to the Office for Budget Responsibility forecasts. In addition he launched consultations on various aspects of the tax system.
Changes to the timing of tax legislation
Chancellor Philip Hammond has implemented some fundamental changes to the UK fiscal timetable.
In the 2016 Autumn Statement, the Chancellor announced that he would be introducing a new Budget timetable, which would see the main annual Budget moving from its traditional spring setting to the autumn and the Autumn Statement being replaced by a Spring Statement. The first Autumn Budget was presented in November 2017.
The new process
While the general process of developing tax policy will remain the same, the timescales for policy making and consultation have changed significantly. The government hopes that the new system will allow more time to scrutinise and consult on draft tax legislation before it is introduced.
The new timing of the Autumn Budget will allow the announcement of most new measures well in advance of the tax year in which they are due to take effect. The Spring Statement also offers the opportunity for the government to consult during the early stages of policy making, and publish calls for evidence on long-term tax policy issues.
Under the new system, measures announced in the Autumn Budget will generally be consulted on during the winter and spring, with draft legislation being published in the summer, ahead of the introduction of the Finance Bill in the winter. This will then receive Royal Assent the following spring.
Our Spring Statement 2018 summary focuses on the issues likely to affect you, your family and your business. To help you decipher what was announced we have included our own comments. If you have any questions please do not hesitate to contact us for advice.
Tribunal rules BBC journalist is caught by 'IR35' legislation
A First Tier Tribunal has ruled that Christa Ackroyd who presented BBC news programme Look North and was paid via a personal service company was caught by the IR35 rules resulting in additional tax and national insurance contributions being payable.
The IR35 rules in broad terms mean that those working via a personal service company have to consider whether, if the services were provided by the individual contractor directly to the client, there would be a contract of employment.
The tribunal looked at lots of factors pertinent to Ms Ackroyd's engagement and considered it significant that the BBC could control what work she did. She was engaged for seven years on effectively a full time basis.
Subject to any appeal and determination of final figures, the tax and NIC that Ms Ackroyd will be liable for amounts to around £420,000 before offset of corporation tax.
The IR35 rules were amended for Public Bodies (including the BBC) from April 2017 and the government has announced that it may make changes to the rules for the private sector as well in the future.
Internet link: ICAEW News
Advisory fuel rates for company cars
New company car advisory fuel rates have been published which take effect from 1 March 2018. The guidance states: 'You can use the previous rates for up to one month from the date the new rates apply'. The rates only apply to employees using a company car.
The advisory fuel rates for journeys undertaken on or after 1 March 2018 are:
Engine size Petrol 1400cc or less 11p 1401cc - 2000cc 14p Over 2000cc 22p
Engine size LPG 1400cc or less 7p 1401cc - 2000cc 8p Over 2000cc 13p
Engine size Diesel 1600cc or less 9p 1601cc - 2000cc 11p Over 2000cc 13p
HMRC guidance states that the rates only apply when you either:
- reimburse employees for business travel in their company cars or
- require employees to repay the cost of fuel used for private travel.
You must not use these rates in any other circumstances.
If you would like to discuss your car policy, please contact us.
Internet link: GOV.UK AFR
Scotland's five income tax bands and tax relief for pensions
Following the announcement of new income tax rates for Scottish taxpayers for 2018/19, the government is looking at ways of addressing the issue of the tax relief due on Scottish taxpayers' pension contributions.
Tax relief on pension contributions is a complex matter and depends on the marginal tax rate of the individual concerned and whether or not the contributions are being paid with relief at source or under net pay arrangements. The following link details how relief will be given for 2018/19. If you would like help in this complex area please contact us.
The income tax rates for Scottish taxpayers on income other than savings and dividend income are now expected to be as follows:
Scottish Bands (£) Band name Scottish Rate (%) 0 - 2,000 Starter 19 2,001 - 12,150 Basic 20 12,151 - 31,580 Intermediate 21 31,581 - 150,000 Higher 41 Over 150,000 Top 46
Scottish taxpayers are entitled to the same personal allowance as individuals in the rest of the UK which for 2018/19 is £11,850. The allowance is reduced by £1 for every £2 of adjusted net income in excess of £100,000. The bands and allowances are detailed in the P9X.
Minimum Wage increases
The National Minimum Wage (NMW) and National Living Wage (NLW) are the legal minimum wage rates that must be paid to employees. Employers are liable to be penalised for not complying with the NMW and NLW rules.
There are different levels of NMW and NLW, depending on age and whether the employee is an apprentice. The rates are due to increase from 1 April 2018 as shown in the following table:
Rate from 1 April 2017 (£) Rate from 1 April 2018 (£) NLW for workers aged 25 and over 7.50 7.83 NMW main rate for workers aged 21-24 7.05 7.38 NMW 18-20 rate 5.60 5.90 NMW 16-17 rate for workers above school leaving age but under 18 4.05 4.20 NMW apprentice rate * 3.50 3.70
*for apprentices under 19 or 19 or over and in the first year of their apprenticeship
There are no exemptions from paying the NMW on the grounds of the size of the business.
If you would like help with payroll matters please get in touch.
Internet link: ACAS article
Pensions Auto Enrolment reaches a million employers
The Pensions Regulator has announced that the number of employers meeting their workplace pension duties has reached one million and that statistics show that approximately 9.3 million people are saving into a pension.
TPR's Director of Automatic Enrolment, Darren Ryder, said:
'I am delighted we have reached this important landmark, which shows how far we have come since the start of automatic enrolment.
By successfully meeting their responsibilities, employers have helped reverse the downward trend in workplace saving so that putting earnings into a pension has now become the norm.
The continued support of the pensions industry, including pension and payroll providers and business advisers has been crucial to the success of automatic enrolment. The industry has helped us ensure employers have the tools, information and services they need to comply with the law.
We are now focused on the challenges ahead so that employers continue to understand what they need to do so that staff receive the pensions they are entitled to.'
Minimum pension contributions are set to increase from 6 April 2018 and again in 2019.
Period Duration Employer minimum (%) Total minimum contribution (%) 1 Employer's staging date to 5 April 2018 1 2 2 6 April 2018 to 5 April 2019 2 5 6 April 2019 onwards 3 8
Contact us if you would like help with auto enrolment.
Year end tax planning
With the end of the tax year looming there is still time to save tax for 2017/18. We have set out some points you may want to consider.
Make full use of your ISA allowance
ISAs can offer a useful tax free way to save, whether this is for your children's future, a first home or another purpose. Individuals may invest up to a limit of £20,000 for the 2017/18 tax year. A saver may only pay into a maximum of one Cash ISA, one Stocks and Shares ISA and one Innovative Finance ISA per year. Savers have until 5 April 2018 to make their 2017/18 ISA investment.
Take advantage of capital allowances
By making the most of capital allowances, businesses may be able to write off the costs of capital assets against taxable profits. The Annual Investment Allowance allows businesses to claim a deduction of up to £200,000 of the year's investment in plant and machinery (excluding cars). Businesses of any size and most business structures can make use of the AIA. However, there are provisions to prevent multiple claims.
Build a tax efficient retirement plan
Pension contributions must be paid on or before 5 April 2018 for them to be relieved against 2017/18 income. Annual contributions are limited to the greater of £3,600 (gross) or the amount of your UK relevant earnings may be eligible for tax relief. However, these will be subject to the annual allowance, which is generally £40,000. This is reduced for those whose income is above certain technical thresholds and has to be considered when both adjusted annual income is (their income plus both their own and their employer's pension contributions) over £150,000 and 'net' income is at least £110,000. Net income broadly means an individual's income less own gross pension contributions made. For every £2 of adjusted income over £150,000, a person's annual allowance is reduced by £1 (down to a minimum of £10,000).