Playing by the same rules

The Chancellor made a further commitment in his Autumn Statement to promote fairness in the tax system, ensuring that everyone ‘plays by the same rules’. He may well have had the recent Uber court ruling [see recent article] in mind which highlighted the differences between the self-employed, employee’s and the use of private service companies by individuals.

The government will therefore consider how the system could be made fairer between workers carrying out the same work under different arrangements and will look specifically at how the taxation of benefits in kind and expenses could be made fairer and more coherent.

In order to tackle tax avoidance, the chancellor announced that it will strengthen sanctions and deterrents and will take action on disguised remuneration tax avoidance schemes. In particular he announced that the government would:

1. Remove the tax and employer National Insurance advantages of salary sacrifice schemes, call for evidence on the valuation of all other benefits in kind and examine the use of the income tax relief for employees’ business expenses; and
2. Reform the off-payroll working rules in the public sector from April 2017 by moving responsibility for operating them, and paying the correct tax, to the body paying the worker’s company. This reform will help to tackle the high levels of non-compliance with the current rules and means that those working in a similar way to employees in the public sector will pay the same taxes as employees.

Earlier this month, the government announced the Taylor Review, an independent review into UK employment practices, headed by RSA chief executive Matthew Taylor. This will look into employment practice in the UK, particularly the prevalence of self-employed contracts, and general employment terms and conditions.

For further information regarding employment of staff speak to Grazyna Baldwin who heads our Payroll and employment team.