The Finance Bill 2020 published on 11 July 2019 includes draft legislation to extend the public sector off-payroll working rules to large and medium-sized private sector companies with effect from 6 April 2020; consultation on the draft legislation closes on 5 September 2019. A summary of responses to the earlier consultation on the proposals, a policy paper and fact sheet have also been published, and the government has promised to publish further guidance this summer.
Employers will welcome the reassurance in the factsheet that “HMRC will focus on ensuring businesses comply with the reform for new engagements, rather than focusing on historic cases. HMRC will not carry out targeted campaigns into previous years when individuals start paying employment taxes under IR35 for the first time. Organisations’ decisions about whether workers are within the rules will not automatically trigger an enquiry into earlier years.”
Our blog post discussing the reforms in more detail is available here.
Under PRC law, employers are required to pay social insurance premiums for employees. The social insurance premiums cover basic endowment, medical, employment–related injury, unemployment and maternity insurance. Non-compliance with these requirements can result in administrative penalties, claims by employees and other measures taken by government authorities, and cause significant reputational damage. It was originally contemplated that from January 2019, responsibility for social insurance will be transferred to the tax bureau which is expected to bring more stringent collection and enforcement in this area. Although the plan has not been fully implemented according to the original timetable, employers still need to be increasingly cautious when dealing with social insurance payments and ensure full compliance. Continue reading
HMRC is consulting on the extension of IR35 reforms to the private sector from April 2020.
As previously announced, the rules introduced in April 2017 in relation to off-payroll workers in the public sector will be rolled out to off-payroll workers of large and medium-sized private sector businesses from next year.
But HMRC’s most recent consultation document proposes significant additional compliance obligations for businesses that engage these services (the clients or “end users”). Continue reading
Several important employment law reforms have come into force recently or will come into force shortly, both at the EU and French level. Below are some of the changes to expect for 2019:
Our colleagues at Greenwoods & Herbert Smith Freehills have published their latest Employment Taxes Update for August to December 2018.
Key points are: Continue reading
The off-payroll working rules (commonly known as IR35) seek to ensure that individuals who are engaged through personal service companies (PSCs) by service users (End Users), but who perform roles equivalent to employees, are taxed through payroll in the same way as employees.
Historically, the obligations to operate payroll and to pay associated employer NIC costs have lain with PSCs rather than End Users; however, in 2017, reforms to IR35 were introduced that transferred these obligations to public sector End Users. It has now been announced that these reforms will be extended to the private sector. Continue reading
An important announcement in the Budget for employers to note was the decision to delay by a further year the introduction of employer Class 1A NICs on termination payments over £30,000, until April 2020.
There will also be changes to the availability of employment allowance in respect of NIC liability from April 2020 and to the apprenticeship levy from April 2019.
The new national minimum wage rates applicable from April 2019 have also been confirmed, with the rate for those aged 25 or over set at £8.21 an hour. (The Real Living Wage has also increased, to £9 an hour outside London and £10.55 an hour in London.)
Our tax team’s briefing on the Autumn Budget is available here. Our blog post on the proposed changes to off-payroll working rules from April 2020 is here.
Our colleagues at Greenwoods & Herbert Smith Freehills have released their Employment Taxes Update (April to July 2018 edition). Continue reading
Despite clear rules requiring both employers and employees to contribute to state social insurance schemes, many companies still remain in breach. In a crackdown intended to increase compliance, the tax authority will now be overseeing social insurance contributions.
On 18 May 2018, HMRC published a consultation document entitled “Off-payroll working in the private sector” with the aim of tackling what it perceives as high levels of non-compliance in the private sector with the existing off-payroll working regime (HMRC predicts the costs of such non-compliance will reach £1.2 billion in 2022/23 if this issue is not dealt with).