Partner Article

Employers offered stale curate’s egg

With all the Budget good news around pensions, will employers be feeling a little let-down?

We knew about the Employment Allowance – up to £2,000 off employer NI bills starting next month – because it has already been legislated. But it’s good news for everyone.

We knew about the 0% NI rate for under-21s from April 2015. Youth unemployment is a problem now, so why wait until next year? The answer is probably IT-related – now that all wages are reported in real-time, HMRC’s and employers’ computers would have had to be re-programmed in a big way, which can’t be done on short timescales. It will be good news, eventually.

We knew about the big tax hike for green company cars, because these things are now trailed several years in advance. Gas guzzlers will see their scale benefits rise from 35% of list price to 37% in April 2016, but the really odd thing is the very un-green blitz on low-emissions cars.

Those who have taken the plunge and bought plug-in electric and range-extended hybrids, currently taxed at 0% or 5% of list price, will be taxed on 13% by April 2018. And then there’s the tinkering – why mess with the 0% taxable benefit on the tiny population of zero-emission vans, phasing it up to the level of conventional vans over five years? It’s only £3,090 (plus inflation), so since most van drivers pay basic rate tax, how much will this raise?

And finally, we already knew about the new tax-free childcare scheme, due to replace the current employer-supported childcare arrangements from autumn 2015. What we didn’t know, until it was announced – days before the Budget – was that it would be worth up to £2,000 per child, and cover all children up to age 12.

It is hugely better than the current ‘£11 per week’ scheme, so parents will desert their current arrangements in droves. So the administration of old schemes will probably become uneconomic, and employers will probably close them fairly quickly. Which is exactly what HMRC wants: the old scheme costs a fortune in tax and NI lost through salary sacrifice plans, but that won’t work for the new scheme.

A very clever change, but it will cost employers serious money (but not until after the general election …).

This was posted in Bdaily's Members' News section by Baker Tilly .