Summer Budget 2015- Employment Tax Issues
The Chancellor’s Budget on 8th July 2015 included the following measures/announcements in respect of Employment Taxation, which will be of relevance to local authority employers and employees:
Councillors’ Travel Expenses
The date for the statutory exemption from Tax and National Insurance for councillors’ home to work travel mileage expenses paid by their local authority has now been set at 6th April 2016. This was originally planned to take effect from April 2015, but has been deferred to the later date. This will apply to journeys from a councillor’s home to their permanent workplace unless the councillor lives more than 20 miles outside the local authority area. However, we understand that, until the legislation is introduced, payments made to councillors in respect of home to work travel will continue to be governed by existing guidance/interpretation for Tax/NI purposes. Therefore, as we have previously recommended, local authorities are strongly advised to review their current procedures to determine the correct position, whether or not this matter has been raised by HMRC as part of an Employer Compliance Review.
Salary Sacrifice Arrangements
Whilst no specific changes were announced in respect of salary sacrifice schemes used by local authorities, the Government has said it will actively monitor these arrangements to assess the effect on the levels of Tax and National Insurance saved as result of their use. Therefore, it is possible that changes may be made in future Budgets.
Further consultation will take place in respect of the voluntary payrolling of all benefits in kind from 2016/17, with the exception of accommodation, loans and vouchers/credit tokens. The proposed changes will mean that, if the employer wishes, Tax and National Insurance may be accounted for via the payroll for most benefits rather than being reported on forms P11D.
Trivial Benefits in Kind – Statutory Exemption
It was originally intended that a statutory exemption for trivial benefits in kind costing less than £50 would be introduced in April 2015, but this was delayed. The exemption has now been confirmed as being applicable from April 2016.
If you would like further information regarding these announcements – or on Employment Taxes generally – please contact our Employment Taxes Director, John Harling, on 07768 446381 or via firstname.lastname@example.org.