The primary and secondary national insurance (NI) thresholds are to be aligned from 2017/18 at £157 per week, meaning that the point at which employers and employees pay NI will be the same. This will not affect employees and will cost employers £7.18 per employee a year.
The Chancellor attacked salary sacrifice schemes as ‘unfair’. The arrangements allow employees to sacrifice part of their salary in exchange for benefits. This creates a NI (and in some cases income tax) saving. The scheme is to be tightened up so that individuals will pay the same amount of tax as if they were buying the benefits from their post-tax income. This will not apply to employer pension contributions, pension advice, employer-supported childcare, workplace nurseries, low emission cars and the cycle to work scheme.
Company car tax in relation to Ultra Low Emission Vehicles (ULEVs) used as company cars has been announced for 2020/21 as 2% for zero emission cars and up to 14% for cars with emissions of up to 50g/km, depending on the number of zero-emission miles the vehicle can travel. This is a reduction on the rates that have been published for these cars up to 2020.
Continuing the theme of anti-avoidance provisions in recent Budgets and Autumn Statements, an extension to the disguised remuneration rules was announced. There is to be a new tax charge on historic loans drawn from disguised remuneration schemes that have not been repaid by April 2019.
The biggest change announced from an employment tax perspective, was the abolishment of the Employee Shareholder Status (ESS). This was one of George Osborne’s pet proposals but Mr Hammond stated that the scheme had been misused by high earners. Any schemes that were not fully in place by 1 December 2016 (or 2 December 2016 in certain cases) will not be eligible for the previously generous tax reliefs.