This is considered an out of date browser. This website has been developed with modern browsers in mind to allow it to display at its best in a wide variety of viewing situations - including mobile viewing. But we haven't supported older browsers like IE8. Please upgrade to the latest version of Internet Explorer - or try Mozilla Firefox or Google Chrome. Both are excellent browsers.
As previously announced, from 6 April 2017, new tax rules potentially affect individuals who provide their personal services via their own companies (PSCs) to an organisation which has been classified as a ‘public authority’.
The effect of these rules, if they apply, will mean:
Public sector organisations include government departments and their executive agencies, many companies owned or controlled by the public sector, universities, local authorities, parish councils and the National Health Service.
The new rules operate in respect of payments made on or after 6 April 2017. This means that they are relevant to contracts entered into before 6 April 2017 but where the payment for the work is made after 6 April 2017.
Larger employers (or connected employers treated as large) will be liable to pay the apprenticeship levy from April 2017. The levy is set at a rate of 0.5% of an employer’s pay bill, which is broadly total employee earnings excluding benefits in kind, and will be paid along with other PAYE deductions. Each employer receives an annual allowance of £15,000 to offset against their levy payment. This means that the levy will only be paid on any pay bill in excess of £3 million in a year.
Employers only need to report on the levy where they have a pay bill of £3 million in the current tax year or consider that the pay bill will be over £3 million during the 2017/18 tax year.
The levy will be used to provide funding for apprenticeships and there will be changes to the funding for apprenticeship training for all employers as a consequence. Each country in the UK has its own apprenticeship authority and each is making changes to its scheme.
The government is consulting on the following:
The government will publish a call for evidence on exemptions and valuation methodology for the income tax and employer NICs treatment of benefits in kind, in order to better understand whether their use in the tax system can be made fairer and more consistent.
The government will publish a consultation with proposals to bring the tax treatment of employer-provided accommodation and board and lodgings up to date. This will include proposals for when accommodation should be exempt from tax and to support taxpayers during any transition.
The government will publish a call for evidence to better understand the use of the income tax relief for employees’ expenses, including those that are not reimbursed by their employer.
Legislation will limit the income tax and employer NICs advantages where:
The taxable value of benefits in kind where cash has been forgone will be fixed at the higher of the current taxable value or the value of the cash forgone.
The new rules will not affect employer-provided pension saving, employer-provided pensions advice, childcare vouchers, workplace nurseries, or Cycle to Work. Following consultation, the government has also decided to exempt Ultra-Low Emission Vehicles, with emissions under 75 grams of CO2 per kilometre.
This change will take effect from 6 April 2017. Those already in salary sacrifice contracts at that date will become subject to the new rules in respect of those contracts at the earlier of:
Changes from 6 April 2018 will align the rules for tax and employer NICs by making an employer liable to pay NICs on any part of a termination payment that exceeds the £30,000 threshold. It is anticipated that this will be collected in ‘real-time’.
In addition, all payments in lieu of notice (PILONs) will be both taxable and subject to Class 1 NICs. This will be done by requiring the employer to identify the amount of basic pay that the employee would have received if they had worked their notice period, even if the employee leaves the employment part way through their notice period. This amount will be treated as earnings and will not be subject to the £30,000 exemption.
Finally, the exemption known as foreign service relief will be removed and a clarification made to ensure that the exemption for injury does not apply in cases of injured feelings.
The Chancellor confirmed that the National Living Wage (NLW) rate will be increased from 1 April 2017. Increases are also being made to the National Minimum Wage (NMW) rates. The NLW applies to workers aged 25 and over. The NMW applies to other workers provided they are at least school leaving age.
1 October 2016
1 April 2017
NLW for workers aged 25 and over
NMW main rate for workers aged 21-24
NMW 18-20 rate
NMW 16-17 rate
NMW apprentice rate**
* introduced and applies from 1 April 2016
**the apprentice rate applies to apprentices under 19 or 19 and over and in the first year of their apprenticeship.
Please contact us for further details if this is an area of interest to you.
Disclaimer | The Budget 2017
New HMRC Phishing Scam
We have received communication from HMRC that a new phishing scam is doing therounds via email and business owners need ...
Directors Pay Structure 2017/2018 - What you need to know...
The tax free personal allowance for 2017/2018 is set at£11,500. The National Insurance earnings threshold is...
Paying Your PAYE Electronically
If you pay your PAYE electronically, you need to ensureyou follow this guide fully to make sure your payment reaches...
Fuel Rates Increase – April 2017
HMRC has updated its advisory fuel rates (AFRs) with effect from 1 April 2017. These are the rates for reimbursement of ...
Vehicle Excise Duty 2017
Vehicle Excise Duty (VED) for all new cars registered from the 1st April onwards is being reformed. VED for the first...
Government clamps down on VAT Flat Rate Scheme
The Autumn Statement included a proposal to remove the VAT saving which can be achieved by businesses which use the flat...
Tax Free Childcare has arrived (almost)
In 2013 the government announced a new tax breakfor working parents to help them pay for childcare. Itwill, at last, be ...
Have you seen your Personal Tax Account Yet?
As part of the government’s initiative to bring tax into the digital age they have created an individual and persona...
Some of you may not have met me yet, I joined Sence Accounting at the end of 2016 having joined theaccounts and technica...
Government U-Turn on National Insurance Increase for Self-Employed
We recently sent you our Budget Summary detailing the announcements made on Budget Day 8March2017. One of the sig...
Statutory Rates Will Change - 2017
In April 2017 the National Living Wage (NLW), National Minimum Wage (NMW), Statutory Sick Pay (SSP), Statutory maternity...
Salary Sacrifice – Existing Schemes Safe for Now!
From the 6th April 2017, HMRC reported that the tax and NI advantages would stop for most salary sacrifice schemes. This...
Class 2 NIC Confusion – Check your figures!
If you are Self-Employed you need to ensure you have paid the right amount of Class 2 National Insurance Contribution fo...
Survey Results are in...
In November we launched a client satisfaction questionnaire to allow us to monitor what our clients thought of our servi...
HMRC Investigations - Are you insured?
Every year, HMRC conducts investigations into thousands of businesses and individuals and so far, its speciali...
What does 2017 hold...
Back in the summer of 2016 a client of minerecommended a book to me, this was one of the best things that happened dur...
Advisory Fuel Rates 2016
Advisory Fuel Rates from 1 December 2016 These rates apply from 1 December 2016. You can use the previous rates for u...
Exciting Times at Sence Accounting
We hope you have had a great summer. Sence Accounting have certainly been busy - so much so we thought we would share ou...
How to tell if communication from HMRC is genuine
At Sence, we are regularly asked how business owners can tell if they have received a genuine communication from HMRC. T...
Sence Support ITCC - Ladies Team
Sence Accounting are delighted to sponsor Ibstock Town Cricket Club Ladies Team for the 2015/2016 season and look forwar...
The team at Sence have been so helpful and understanding from the moment I started to use their services.
Red Door Studios