UK Budget 2017 for Payroll Professionals
The latest Autumn UK budget was released by UK chancellor, Phillip Hammond November 22nd 2017. Our partner Paycheck Plus has reviewed the Autumn UK Budget and have highlighted the key impacts for payroll professionals.
UK NATIONAL LIVING WAGE AND NATIONAL MINIMUM WAGEThe UK National Living Wage is set to increase by 4.4% (from £7.50 to £7.83). The UK National Minimum Wage is also set to increase, the hourly rate increase by age groups are as follows:
- 16-17 year olds: 3.7% increase (from £4.05 to £4.20 per hour)
- 18-20 year olds: 5.4% increase (from £5.60 to £5.90 per hour)
- 21-24 year olds: 4.7% increase (from £7.05 to £7.38 per hour)
PERSONAL ALLOWANCE AND HIGHER RATE THRESHOLDThe personal allowance and higher rate threshold in the UK will increase to £11,850 and £46,350 respectively.
OFF-PAYROLL WORKING (IR35)Off-payroll working rules (known as IR35) is expected to be extended to the private sector however no specific date was provided. The budget notes that a government publication is scheduled for release in 2018.
NATIONAL INSURANCE CONTRIBUTIONS (NICS)There will be a one year delay in implementing a series of NICs policies, incl. the abolition of Class 2 NICs and reforms to how termination payments and sporting testimonials are treated.
MILEAGE RATESThe option to use mileage rates will be extended to individuals operating property businesses, on a voluntary basis, to reduce their admin burden. ELECTRIC VEHICLES There will be no BIK charge on UK employer provided electricity that is used to charge employees’ electric vehicles.
UK EMPLOYEE BUSINESS EXPENSES
- The scope for self-funded training tax relief will be reviewed by the UK government in 2018
- Subsistence benchmark scale rates: from April 2019 it will no longer be necessary for employers, when reimbursing employees, to check receipts. The current concessionary accommodation & subsistence overseas scale rates will be placed on a statutory basis, to provide greater certainty for businesses
- Guidance and claims process for employee expenses: efforts will be made to improve employee expenses guidance.
UK TRANSPORTATION TAX
FUEL DUTYOnce again the fuel duty will be frozen
COMPANY CARSFrom 6th April 2018, both the Fuel Benefit Charge and the Van Benefit Charge will increase by RPI (Retail Price Index)
COMPANY CAR TAX DIESEL SUPPLEMENTThe Company Car Tax diesel supplement will rise to 4% (from 3%)
VEHICLE EXCISE DUTY / CAR TAXAccording to GOV.UK, the UK government will: 1. increase, in line with RPI from 1 April 2018, VED rates for cars, vans and motorcycles registered before April 2017 and the First-Year Rates for cars registered after April 2017 2. freeze the Heavy Goods Vehicle (HGV) VED and Road User Levy rates from 1 April 2018. A call for evidence on updating the existing HGV Road User Levy will be launched this autumn. The government will work with industry to update the Levy so that it rewards hauliers that plan their routes efficiently, to encourage the efficient use of roads and improve air quality 3. from April 2019, exempt zero-emission capable taxis from the VED supplement that applies to expensive cars, consulting in advance on how to define such taxis
LIFETIME ALLOWANCE FOR PENSIONSThe lifetime allowance for pension savings is set to increase to £1,030,000 for 2018-19.
LIFE ASSURANCE AND OVERSEAS PENSION SCHEMESAs noted on GOV.UK:
From April 2019, tax relief for employer premiums paid into life assurance products or certain overseas pension schemes will be modernised to cover policies when an employee nominates an individual or registered charity to be their beneficiary.While the above are key points of note from the UK Budget 2017 affecting the payroll profession, we do encourage you to read the full Autumn Budget 2017 here. Payroll compliance requirements change regularly and it’s imperative that HR, payroll teams, accountant’s etc. keep up with these changes otherwise significant penalties can be incurred. Payroll mistakes, or calculations based on outdated information, can be costly for companies and ensuring payroll compliance can be difficult for businesses and staff that don’t have payroll as a core focus. For more information on UK payroll contact our team today