Employment Taxes


Work and Pensions Committee continues to call witnesses to discuss  self-employment and the gig economy. The Committee took evidence from, among other people, Victoria Todd of the Low Incomes Tax Reform Group (LITRG).

Following criticism, including by some Conservative MPs, of his decision to raise Class 4 National Insurance (paid by the self-employed), Chancellor Philip Hammond announced in a parliamentary statement that he would be dropping the proposal. The u-turn was welcomed by MPs across the political spectrum.

The four day Budget debate continued in the early part of this week, ahead of the Chancellor’s announcement of a u-turn on national insurance. A summary of days three and four are below. A summary of the debates on day one and two can be found here.

The draft Finance Bill 2017 legislation aims to limit the range of benefits-in-kind (BIKs) that receive income tax and National Insurance Contributions (NICs) advantages when they are provided as part of salary sacrifice and flexible benefit arrangements. Some amendments to the draft legislation have been included in the Finance Bill and the CIOT will be responding separately in this respect (and to HMRC’s draft guidance).

We attach a note from HMRC clarifying the position in relation to Scottish income tax thresholds and employer provided childcare vouchers.

The CIOT comments sent to HMRC on The Social Security (Miscellaneous Amendments) Regulations 2017.

New IR35 rules take effect from 6 April 2017 under which where the engagement is with a public sector body the responsibility for deciding whether or not IR35 applies moves to the public sector body. If an engagement falls with the new IR35 rules then the person paying the PSC (ie the public sector body or third party agency) is responsible for deducting tax and NICs under PAYE. A new online tool from HMRC (the ‘employment status service’) will be made available to assist in deciding whether or not IR35 applies to an engagement.

From 6 April 2017, 100% of foreign pension income is to be subject to UK income tax, the period of an individual’s non-UK residence during which UK tax charges can apply to payments out of pension savings in overseas pension schemes that have had UK tax relief is extended from 5 to 10 years, the UK tax treatment of non-UK registered pension schemes will be aligned with UK registered schemes and lump sums paid under foreign pension schemes to or in respect of UK residents will be brought into charge for UK tax purposes.

The CIOT has made a proactive submission to HMRC on the business and administrative burdens of operating the Construction Industry Scheme on landlord contributions to tenant’s works. 

Finance Secretary Derek Mackay outlined the Scottish Government’s draft budget for 2017/18 to Parliament on Thursday.  A copy of the full budget document can be found here.