The 2016 Budget delivered by the Chancellor on 16 March includes the following:
- From April 2018, the Government will tighten the scope of the income tax exemption for payments on termination of employment "to prevent manipulation" and will also align the rules so employer National Insurance contributions are due on those payments above £30,000 that are already subject to income tax. The first £30,000 of a termination payment will remain exempt from income tax and the full payment will be outside the scope of employee NICs. The Government will undertake a technical consultation on tightening the scope of the exemption.
- The Government wants to encourage employers to offer certain benefits but is concerned about the growth of salary sacrifice schemes and is therefore considering limiting the range of benefits that attract income tax and NICs advantages when they are provided as part of salary sacrifice schemes. However, the intention is that pension saving, childcare and health-related benefits such as Cycle to Work should continue to benefit from income tax and NICs relief when provided through salary sacrifice arrangements.
- The Government will launch a consultation in May 2016 on how to implement its commitment to extend Shared Parental Leave and Pay to working grandparents. The consultation will also cover options for streamlining the system, including simplifying the eligibility requirements and notification system, and will explore the potential to make better use of digital technology.
Meanwhile, BIS has published a departmental plan for 2015 to 2020 confirming the government's intention to allow employees of public employers and large private employers to take three days volunteering leave each year. The plan does not confirm a timescale for introducing this right nor whether the leave will be paid.
Our HSF tax team will be producing a detailed briefing on the Budget shortly.