Autumn Statement 2016 - Employer issues
The end of Employee Shareholder Status
The Treasury is now to scrap tax relief on employee shareholder status for any arrangements entered into on or after 1 December 2016.
This follows on from a restriction in the favourable tax treatment introduced at the last Budget on 16 March 2016.
As announced at the Budget 2016, from April 2018 termination payments over £30,000 which are subject to income tax, will also be subject to employer’s National Insurance. There is also a suggestion that there will be a review of what payments exactly fall within the exemption.
Service companies and the public sector
Reforms will apply to the off-payroll working rules in the public sector from April 2017. Responsibility for operating them including paying the tax will move to the body paying the worker’s company. Where a public sector body engages through an agency, or other third party, the party closest to the worker’s limited company in the supply chain will be required to comply with the rules. The employer, agency or third party will have to decide if the rules apply to a contract and if so, account for and pay the liabilities through the Real Time Information system and deduct the relevant tax and National Insurance Contributions. These reforms are to ensure employees in the public sector operating through service companies will pay the same taxes as direct employees.
If you would like further information, please contact Tax Director Jacqui Gudgion or your usual Mercer & Hole contact.
Date: 25th November, 2016
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