Budget 2015 – Employment Taxes

National Minimum Wage

In the budget, the Chancellor confirmed that the National Minimum Wage will rise in October 2015 to the following levels

Wages

 

Employees under age of 21

Employers’ National Insurance Contributions are changing for employees under the age of 21 from April 2015.  The rate of employer Class 1 secondary NICs for employees under the age of 21 will be 0% up to the Upper Earnings Limit (UEL).

Class 1 secondary NICs will however continue to be payable on all earnings above this threshold.  For employees who are at, or over the age of 16 and under the age of 21 there will be a range of new NI category letters to use when assessing secondary NICs in respect of the earnings paid to these employees and these will need to be used when submitting PAYE information.

In addition to this, the Chancellor also announced that from April 2016 employers will not have to pay NIC for all but the highest earning apprentices aged under 25.

 

Van benefit charge for zero emission vans

Legislation will be introduced to increase the current van benefit charge for zero emissions vans from nil to 20% of the value of the “normal” van benefit charge in 2015/16; to 40% in 2016/17; to 60% in 2017/18, to 80% in 2018/19 and to 90% in 2019/20. From 2012 the full van benefit charge will apply so that there is a single charge for all vans.

The van benefit charge will also increase in line with inflation from 6 April 2016.

 

Statutory exemption for trivial benefits in kind

Legislation will be introduced to provide a statutory exemption from tax for qualifying trivial benefits in kind which cost £50 or less.  An exemption will also be introduced for NIC purposes.  The exemption will be capped at £300 for office holders of close companies (effectively those run by their directors or controlled by a small number of shareholders).

 

End to dispensations

From 6 April 2016, legislation will be introduced to provide an exemption for certain expenses payments and benefits in kind provided to employees.  It will apply where the employees would have been able to claim tax relief on the items in question.  The exemption replaces the agreement between HMRC and an employer – know as a dispensation – which allows them to provide such benefits tax and NIC free.  But the exemption will not apply where expenses are paid as part of a salary sacrifice arrangement or where there are other arrangements to replace salary with expenses.

 

Company Car Benefits

The appropriate percentage of the list price of company cars used for calculating the Benefit in Kind charge will be increased in a future Finance Bill.  The percentage will increase by 3% for cars emitting more than 75g Co2/km to a maximum of 37%. The 0-50g and 51-75g categories will also increase by 3%.  These changes will have affect from 2019/2020.

The car fuel benefit charge will also increase in line with inflation from 6 April 2016.

 

Employment intermediaries: further crackdown

A consultation will be held into detailed proposals to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary such as an umbrella company or a personal service company, where there is supervision, direction or control of the worker. The aim is to put such workers on an even footing with others who are not engaged through such entities and cannot claim tax and NIC exemptions for travel and subsistence payments.  Any changes will be brought in from 6 April 2016.

 

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