• Employment law saw no headline grabbing changes in the budget.
    There were some subtle changes to note:

    Employee Shareholder Status

    This scheme, where you give some employment rights in return for shares has been of very limited use in our experience. Until now all share value gains were entirely exempt from capital gains tax. From 17 March 2016, an individual lifetime limit of £100,000 on gains eligible for CGT is to be introduced. This is likely to make an already low take up even lower.

    Limited reform of IR35 – Contractors

    The current IR35 position is be changed at first for public sector engagements. The liability to pay the correct employment taxes will be moved from the worker’s own company to the public sector body or agency / third party paying the company. This is likely to be the first step in then extending this to all businesses going forward shifting the tax risk from the intermediary company to the end user.

    Termination payments and National Insurance

    From April 2018 employers will need to pay National Insurance (NI) contributions on pay-offs (for example, termination payments) above £30,000. Currently, payments falling with the £30,000 tax exemption are also national insurance exempt entirely.

    Employer provided pensions advice

    There will be legislation to increase the tax and NICs relief available for employer arranged pension’s advice. This will increase from £150 to £500. The first £500 of any advice will be eligible for the relief from April 2017.

    Further Illegal Worker Penalties

    The Government will remove a year’s employment allowance (currently up to £3,000) from any employer receiving a civil penalty for employing an illegal worker starting in 2018. When the civil penalties are now up to £20,000 per worker this is of limited additional threat.

    This content is correct at time of publication

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