Employer provided cars
From 6 April 2014, the bands used to work out the taxable benefit of a company car remain the same but the percentage applied by each band increases by 1%. There is an overriding maximum charge of 35% of the list price of the car. From 6 April 2015, the percentage applied by each band goes up by a further 2% and the maximum charge is increased to 37%.
Exemption threshold for employment-related loans
Where an employer provides an employee with a cheap or interest free loan they have to report notional interest on the loan at 4% per annum on the form P11D. Currently, where the balance of the loan is no more than £5,000 throughout the tax year no benefit is reportable. From 6 April 2014 the exemption is amended to where the total outstanding balances on all such loans do not exceed £10,000 at any time in the tax year.
National Insurance – £2,000 employment allowance
Subject to some exceptions an allowance of up to £2,000 to be offset against employer Class 1 National Insurance Contributions will be introduced from 6 April 2014
The allowance will be claimed as part of the normal payroll process. The employer’s payment of PAYE and NIC will be reduced each month to the extent it includes an employer Class 1 NIC liability until the £2,000 limit has been reached.
Employer NIC for the under 21s
From April 2015 the Government will abolish employer NIC for those under the age of 21. This exemption will not apply to those earning more than the Upper Earnings Limit, which is £42,285 per annum for 2015/16. Employer NIC will be liable as normal beyond this limit.
Employee ownership
Following a consultation the Government will introduce three new tax reliefs to encourage and promote indirect employee ownership. The reliefs are as follows:
From 6 April 2014 disposals of shares that result in a controlling interest in a company being held by an employee ownership trust will be relieved from CGT.
Transfers of shares and other assets to employee ownership trusts will also be exempt from inheritance tax providing certain conditions are met.
From 1 October 2014 bonus payments made to employees of indirectly employee owned companies which are controlled by an employee ownership trust will be exempt from income tax up to a cap of £3,600 per annum.
Real Time Information (RTI) late filing penalties
RTI requires employers operating PAYE to report information on employees’ pay and deductions in ‘real time’ to HMRC. Under RTI employers are obliged to tell HMRC about payments they make to their employees, on or before the date payments are made. Employers continue to pay over to HMRC the sums deducted from their employees under the PAYE system either monthly, quarterly or annually.
From October 2014 HMRC are introducing automatic in-year penalties for RTI to encourage compliance with the information and payment obligations. Llate filing penalties will apply to each PAYE scheme, with the size of the penalty based on the number of employees in the scheme. It is proposed that monthly penalties of between £100 and £400 will apply to micro, small, medium and large employers.
From April 2014 HMRC will charge daily interest on all unpaid amounts from the due and payable date to the date of payment, and will raise the charge when payment in full has been made.