Employees

A critical look at government plans to simplify employee taxation

The abolition of employer National Insurance contributions (NICs) on young trainees is a “great idea” made at the “right time”, according to commentators inside and outside the tax sector.

Chancellor George Osborne this afternoon announced that firms will no longer have to pay NICs on earnings up to the upper earnings limit for apprentices under 25 years old.

N S Philpott, D W Scott Law, D J McKillop, J B Law & V A Law (TC3969)

HMRC have announced new fuel rates for company cars, to apply to all journeys on or after 1 December 2014 until further notice. Employers may use either the previous or new rates for one month from the date of change, and therefore make or require supplementary payments, but are under no obligation to do either. Petrol hybrid cars are treated as petrol cars for this purpose. The amounts can be used for VAT, but employers will need to retain receipts.

Yau Wing Liu (TC4118)

So-called pay-day-by-pay-day (PDPD) provisions continue to be used by low-paid agency workers to obtain tax relief for travel costs, despite HMRC deeming such schemes non-compliant, according to the Low Income Tax Reform Group (LITRG).

The inaugural meeting of the taxman’s new employment and payroll group is set to be held on 4 December.

Trade bodies will be joined by software developers, small and large employers, and payroll bureaux to provide primary route through which the Revenue and other government departments will discuss PAYE operational issues with the employment and payroll sectors.

How to challenge fines for late submission of PAYE and CIS returns

The Office of Tax Simplification (OTS) has published a series of questions as part of its review of employment status.

The body says it is keen to receive comments on the complexities of employment status from businesses and individuals, as well as from representative groups and professional tax advisers.

Views are sought on changes to working patterns over recent decades, dealings with HMRC, and the tax system’s compatibility with employment law and current working practices.

Issue 18 in summary

Tax-debt recovery based on graduated scale

HMRC have announced the end of IR35 compliance checks, only two years after they were introduced.

The abolition of risk-based business entity tests (BETs) will take effect on 6 April 2015, following a review by tax professionals. The IR35 Forum, the Revenue’s external group of advisers on intermediaries legislation, found the voluntary checks – launched in 2012 – were not widely used and were not fulfilling their purpose of assessing whether or not IR35 applied to taxpayer firms.