Were there any big surprises in today's Budget in the UK? Well, a few snuck in:
Rises in the personal allowance and the higher rate threshold
The Personal Allowance will increase from £10,600 in 2015-16, to £11,000 on 6th April 2016 and then again to £11,500 in April 2017. The higher rate of Income Tax will increase from £42,385 in 2015-16 to £43,000 on 6th April 2016 and then to £45,000 in April 2017.
The National Insurance contributions (NICs) Upper Earnings and Class 4 Profit Limits are aligned to the higher rate threshold and so will increase accordingly.
Termination payments
From April 2018 employers will now need to pay National Insurance contributions on payoffs (for example, termination payments) above £30,000 where Income Tax is also due. For people who lose their job, payments up to £30,000 will remain tax-free and they will not need to pay National Insurance on any of the payment.
The government will also undertake a technical consultation on tightening the scope of the exemption, which might include the removal of foreign service relief from April 2018.
Voluntary payrolling of benefits - extending the real time collection of tax on benefits in kind
The voluntary payrolling of benefits has been extended to enable the payrolling of non-cash vouchers and credit tokens and will help to reduce both the employers’ reporting obligations and the risk of incorrect tax being deducted.
Company Car Tax (CCT) rates
The Benefit in Kind value of company cars will continue to be based on CO2 emissions, however a consultation will be launched on reforming the lower CO2 bands for ultra-low emission vehicles to target incentives on the cleanest cars beyond 2020-21.
The 3 percentage point differential between diesel cars and petrol cars will be retained until April 2021.
The Finance Bill 2016 will legislate changes in the appropriate percentage for all cars for 2019-2020 and for cars with no registered CO2 emissions, which cannot produce emissions in 2017-2018 and 2018- 2019.
The appropriate percentage, which is applied to the list price of company cars subject to tax will increase by 3 percentage points to a maximum of 37% in 2019-20. There will be a 3 percentage point differential between the 0-50 and 51-75g CO2/km bands and between the 51-75 and 76-94g CO2/km bands.
The measure also sets the level of the appropriate percentage for the years 2017- 18 and 2018-19 for cars which do not have a registered CO2 emissions figure and which cannot produce CO2.
Van benefit charge for zero emissions vans
The measure amends existing legislation to apply the level of the van benefit charge for zero-emissions vans at 20% of the charge for conventionally fuelled vans for the tax years 2016-17 and 2017-18 and so defers the planned increase to 40% benefit charge for conventionally fuelled vans to 2018 -19.
The van benefit charge for zero emission vans will be 60% of the van benefit charge for conventionally fuelled vans in 2019-20, 80% in 2020-21 and 90% in 2021-22. From 2022- 23 the van benefit charge for zero emission vans is 100% of the van benefit charge for conventionally fuelled vans.
Employee share schemes: simplification
Individuals who exercise an Enterprise Management Incentive (EMI) option to acquire shares and where those shares are then subject to a rights issue on or after 6 April 2016, will now be treated in the same way as other rights issues.
The measure simplifies the law so that a rights issue, which takes place on or after 6 April 2016 in respect of shares received on exercise of an EMI option will be treated in the same way for share identification purposes as other rights issues.
Sporting testimonials
All income from sporting testimonials and benefit matches for an employed sports person, which is non-contractual or noncustomary will be chargeable to tax, and National Insurance subject to a ‘one-off’ exemption of £100,000 of the income received
Helen Harvey, director, Zinnia Payroll Consultancy.
Were there any big surprises in today's Budget in the UK? Well, a few snuck in:
Rises in the personal allowance and the higher rate threshold
The Personal Allowance will increase from £10,600 in 2015-16, to £11,000 on 6th April 2016 and then again to £11,500 in April 2017. The higher rate of Income Tax will increase from £42,385 in 2015-16 to £43,000 on 6th April 2016 and then to £45,000 in April 2017.
The National Insurance contributions (NICs) Upper Earnings and Class 4 Profit Limits are aligned to the higher rate threshold and so will increase accordingly.
Termination payments
From April 2018 employers will now need to pay National Insurance contributions on payoffs (for example, termination payments) above £30,000 where Income Tax is also due. For people who lose their job, payments up to £30,000 will remain tax-free and they will not need to pay National Insurance on any of the payment.
The government will also undertake a technical consultation on tightening the scope of the exemption, which might include the removal of foreign service relief from April 2018.
Voluntary payrolling of benefits - extending the real time collection of tax on benefits in kind
The voluntary payrolling of benefits has been extended to enable the payrolling of non-cash vouchers and credit tokens and will help to reduce both the employers’ reporting obligations and the risk of incorrect tax being deducted.
Company Car Tax (CCT) rates
The Benefit in Kind value of company cars will continue to be based on CO2 emissions, however a consultation will be launched on reforming the lower CO2 bands for ultra-low emission vehicles to target incentives on the cleanest cars beyond 2020-21.
The 3 percentage point differential between diesel cars and petrol cars will be retained until April 2021.
The Finance Bill 2016 will legislate changes in the appropriate percentage for all cars for 2019-2020 and for cars with no registered CO2 emissions, which cannot produce emissions in 2017-2018 and 2018- 2019.
The appropriate percentage, which is applied to the list price of company cars subject to tax will increase by 3 percentage points to a maximum of 37% in 2019-20. There will be a 3 percentage point differential between the 0-50 and 51-75g CO2/km bands and between the 51-75 and 76-94g CO2/km bands.
The measure also sets the level of the appropriate percentage for the years 2017- 18 and 2018-19 for cars which do not have a registered CO2 emissions figure and which cannot produce CO2.
Van benefit charge for zero emissions vans
The measure amends existing legislation to apply the level of the van benefit charge for zero-emissions vans at 20% of the charge for conventionally fuelled vans for the tax years 2016-17 and 2017-18 and so defers the planned increase to 40% benefit charge for conventionally fuelled vans to 2018 -19.
The van benefit charge for zero emission vans will be 60% of the van benefit charge for conventionally fuelled vans in 2019-20, 80% in 2020-21 and 90% in 2021-22. From 2022- 23 the van benefit charge for zero emission vans is 100% of the van benefit charge for conventionally fuelled vans.
Employee share schemes: simplification
Individuals who exercise an Enterprise Management Incentive (EMI) option to acquire shares and where those shares are then subject to a rights issue on or after 6 April 2016, will now be treated in the same way as other rights issues.
The measure simplifies the law so that a rights issue, which takes place on or after 6 April 2016 in respect of shares received on exercise of an EMI option will be treated in the same way for share identification purposes as other rights issues.
Sporting testimonials
All income from sporting testimonials and benefit matches for an employed sports person, which is non-contractual or noncustomary will be chargeable to tax, and National Insurance subject to a ‘one-off’ exemption of £100,000 of the income received
Helen Harvey, director, Zinnia Payroll Consultancy.
