Whilst the Chancellor George Osbourne, covered a wide range of changes that he plans to introduce between now and April 2020, there were a few changes due to come in on 6th April 2015, potentially affecting millions of taxpayers, that didn’t get a mention. These are:
Benefits In Kind
As a result of the sterling work of the Office of Tax Simplification HMRC, various changes in the benefits in kind rules kick in on 6th April.
This will exempt from tax (and Class 1 NIC) any benefit in kind given to an employee that has a cash equivalent value of £50 or less including VAT. Such items would typically include small gifts at Christmas and birthdays or flowers given for welfare or celebratory reasons.
This puts on a statutory footing an exemption from P11D reporting that previously only existed if the employer had agreed such items were exempt with HMRC (known as a ‘trivial benefits agreement’). The good news is that these gifts can include gift vouchers and each gift is assessed against the £50 limit, it is not an annual exemption of £50 in total and in theory you can have as many £50’s as your employer cares to give you.
Fast forward to April 5th 2016 and P9Ds will be abolished (they are used to report end-of-year expenses and benefits for employees who earned less than £8,500pa) so any employees will be taxable on them regardless of their level of earnings.
At the same time though employers are being encouraged to opt to tax certain benefits through the payroll. This was last looked at in 2007 but is now firmly back on the agenda not least because DWP want to collect benefits in kind data so that this can also feed in to reduce Universal Credit awards as at the moment, any benefits in kind have to be ignored as they are not reported until post year end rather than in real time.
Class 2 National Insurance contributions (NICs), instead of being paid monthly will become an annual charge for the majority of those who are self-employed for the 2015-16 tax year onwards. As a result Class 2 liability will not be determined until the Self-Assessment return is filed.
Small Earnings Exception Certificates will no longer apply from 12 April 2015, with the liability for Class 2 NIC now being determined by the level of profits declared on your SA Tax Return. If the level of profits doesn’t reach a Small Profits Threshold no Class 2 NICs will be due.
Company car benefit
From 6th April 2015 a car benefit charge for zero emission company cars and vans is to be introduced, if there is any private use, however small.
The benefit charge for zero emission vehicles is one of two new emissions bands being introduced – the first from 0 to 50g of CO2 with a percentage charge of 5% and second from 51 to 75 g of CO2 with a charge of 9%.
All the remaining bands are unchanged and the charge for each in 2015-16 will increase by 2% up to a new top rate of 37%.
The diesel vehicle surcharge of 3% remains until April 2016, when it is set to be abolished, but will still be subject to a maximum overall 37% rate for the top CO2 band.
And finally on this subject, the good news for those of you with an electric car is that there is still no fuel scale charge for the provision of electricity. If I were a betting man however, I suspect it would be worth a flutter that it won’t be long in coming.