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Employment Tax Briefing Spring 2018

5th April 2018

It is pleasing to see that we have some certainty following changes to the legislation in respect of PAYE Settlement Agreements and termination payments. The changes came into effect from 6 April 2018.

Recent changes
The changes to PAYE Settlement Agreements will help to make the process that much easier for employers to adopt and are clearly a step closer to a digitalised approach being introduced. However, it is the introduction of a charge to tax on “post-employment notice pay” in relation to termination payments which employers will need to consider especially where they are looking at reducing employee numbers. The charge will apply whether or not there is a contractual obligation to make a payment.

Employment status
Employment status and ‘off-payroll’ working arrangements remain very topical issues. Last year we saw the publication of the Matthew Taylor Report which looked at how to bring greater fairness to the workplace. The Government published a consultation earlier this year to help consider the options available to help provide certainty regarding workers’ rights and working arrangements. 

As well as the Taylor Report it is the BBC’s involvement in the use of personal service companies, recently considered by the First Tier Tribunal decision in the Christa Ackroyd case, which has enhanced the debate surrounding worker engagement. The position has been further ‘mudded’ following the taxpayer’s success in another First Tier Tribunal decision in MDCM Ltd v Commissioners for Revenue and Customs. Further developments are awaited with interest, especially the much anticipated consultation paper dealing with changes to the ‘IR35’ rules which will affect the private sector. 

National minimum wage 
The National Minimum Wage legislation is celebrating its 20th anniversary this year. The intention of the legislation is to help protect employees by ensuring that they receive a minimum hourly rate of pay.  However, we continue to see employers being ‘named and shamed’. 

Whilst it may be surprising that a number of employers are not paying employees the minimum hourly rate, many employers are simply ignorant as to how the rules work.  We can only expect the enforcement of the legislation will increase.

We hope there is something of interest for everyone in this edition. We are expecting further developments, especially towards the end of the year when the Chancellor delivers his Autumn Budget. Should you have any questions, please do not hesitate to contact a member of the Employment Taxes team or your usual haysmacintyre contact.

Nick Bustin, Director of Employment Taxes 
T 020 7969 5578 M 07515 795186 

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