Gone – but not forgotten?
The Finance Act 2017 underwent major surgery in order for it to receive Royal Assent prior to the dissolution of Parliament in advance of the General Election. The original Bill ran to a record 762 pages. However, following discussions between Government and Opposition, the revised bill weighed in at a svelte 148 pages.
Most of the proposed changed to employment taxes survived the axe but there were still a number of items which did not make the final cut in the amended bill:
Time Limit For “Making Good” The Value Of Benefits-In-Kind
The introduction of 6 July as a standard deadline for an employee to make good the value of a benefit-in-kind provided to by an employer was removed from the Bill. This had been intended to apply to benefits provided for 2017-18 et seq.
Ultra Low Emissions Vehicles
The clause reducing the appropriate percentage for company cars with emissions levels of less than 75g/km was removed from the Bill. This had been intended to apply for 2020-21 onwards.
The provision to exempt the first £500 worth of employer-provided pensions advice, and to widen the scope of that advice to include pension-related taxation and general financial advice were removed from the Bill. The current provisions, which allow for £150 worth of advice per tax year relating to pension advice only, will continue for the time being.
The widening of the exemption for employer-funded legal expenses was removed from the Bill. The current exemption applies only where the employee is the subject of allegations made against individuals in their capacity as an employee. The amendment had been intended to widen the scope of the exemption to cover employees who, for example, had been required to give evidence with no allegations made against them.
The major changes to the treatment of termination payments due to come in from 6 April 2018 have been removed from the Bill. The proposed changes would have brought all payments made in lieu of notice within the scope of taxable earnings whether or not they were contractual. Corresponding Social Security legislation which would have brought any payments made in excess of the £30,000 limit within the scope of secondary (employers) National Insurance has also been shelved.
PAYE Settlement Agreements
The proposal to remove the need to set up PAYE Settlement Agreements in advance of the tax year to which they apply was also removed from the Bill. The change had been intended to apply from 6 April 2018.
The big question is whether or not we will see these clauses reintroduced after the election. This will, of course, depend to a great degree on the election result. Although they have yet to comment, should the current Government be re-elected one would expect that most, if not all of the above proposals would make a reappearance, either in a new Finance Bill to be introduced after the election or as part of the next budget which, following the introduction of the new finance timetable, is due to take place this Autumn.
However, should the current Government fail to be re-elected, any new Government would have its own ideas for the content of its first Finance Bill. Although the omitted clauses relating to employment taxes are far from contentious it remains to be seen which, if any, of them would be a priority for any new incumbent of 11 Downing Street.
If you would like to discuss this issue in more detail contact Gordon Thrower, Senior Tax Manager at MHA MacIntyre Hudson