2012 AUTUMN STATEMENT INTRODUCTION »

EMPLOYMENT TAX

Employer-provided cars

From 6 April 2013 the CO₂ emissions bands used to work out the taxable benefit for an employee who has use of an employer-provided car will be shifted downwards by 5gm/km. This will have the effect of increasing the charge for each vehicle by 1% of the list price of the car unless the percentage is already 35% of list price.

Real Time Information

Most employers and pension providers will move to reporting PAYE information in real time from April 2013. Employers should by now have received a letter from HMRC which told them what they need to do to get ready to make the first real time submission in April 2013.

This is probably the most significant change in the PAYE system since its introduction in 1944. Employers will need to send HMRC information about pay, tax, NICs, student loans and other deductions each time they pay their employees. This will enable HMRC to keep more accurate records and, over time, more people will pay the correct tax.

Supported by information about income made available in real time from HMRC’s systems, Universal Credit will be introduced by the Department for Work and Pensions from October 2013.

Employee-owner contracts

The Government announced in October 2012 that it intended to introduce a new type of employment contract called an employee-owner contract. Under this contract an employee would be given shares in a company in exchange for giving up their rights in respect of unfair dismissal, redundancy, and the right to request flexible working and time off for training, and would be required to provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight.

Each employee who agrees to this status will receive a minimum of £2,000 and a maximum of £50,000 of shares in the company. The Chancellor has announced that gains on up to £50,000 of shares acquired by employee-shareholders will be exempt from capital gains tax (CGT) from 6 April 2013.

The Government has now announced that it is looking at options to reduce the potential income tax and National Insurance (NIC) liabilities which would arise when the shares are issued in the first place. This includes a possible exemption from income tax and NIC for the first £2,000 of shares received.

Review of taxation of benefits in kind

The Government is to ask the Office of Tax Simplification to carry out a review of ways to simplify the tax regime for employee benefits in kind, expenses and termination payments.

2012 AUTUMN STATEMENT INTRODUCTION »