Private sector ‘IR 35’ reform was centre stage in Phil Hammond’s last Budget before Brexit. This is of course a significant measure for many businesses in the private sector. In many other respects, the Budget was a relatively subdued affair from an employment tax perspective, with the Government’s response to the Taylor Review employment status consultation conspicuous by its absence.
From an employer’s perspective, the main developments were as follows:
- Off-payroll working in the private sector – As expected, the Chancellor announced that the 2017 public sector reforms will be extended to the private sector. These changes will take effect from April 2020 and be limited to large and medium sized enterprises – this is later than originally anticipated and the deferral will please business, although the scale of the changes means that an 18 month lead in time may still be a challenge for some;
- Short Term Business Visitors (STBVs) – From April 2020 the administrative treatment of individuals who come to work in the UK from an overseas branch of a UK company will be eased. Key features are an extension of the special annual pay as you earn (PAYE) scheme to cover individuals who spend up to 60 days in the UK, and moving the annual reporting and payment deadlines from 19 April to 31 May, aligning them with the main STBV reporting deadline;
- Employment status and the Taylor Review – There was no announcement on the Government’s consultation on employment status that followed the Taylor Review; and
- National Insurance Contributions (NIC) – Employer’s NIC will apply to termination payments to the extent they exceed the £30,000 threshold from April 2020, rather than from April 2019 as was originally announced, and the Employment Allowance (£3,000 per year offset for employer’s NIC) will be targeted at smaller employers from April 2020.