Matters of interest included the announcement that a consultation will begin on the extension of shared parental leave (SPL) to working grandparents in May 2016. The consultation will also include options for streamlining the current SPL system, including options for simplification of the eligibility requirements and the notification system. SPL was introduced in April 2015 but the uptake has been low with just 2% of companies reporting a significant number of employees making use of the entitlement. It will be interesting to see whether the uptake will be higher in the older generation, and if so, whether it will be grandmothers or grandfathers who make use of it. Statistics suggest that more than 50% of all grandparents help with childcare arrangements and, as such, this extension of the right to take SPL may well have an impact.
Despite a variety of options having been proposed in relation to the tax treatment of termination payments, all that was confirmed was that from April 2018 termination payments that are subject to income tax on amounts in excess of £30,000 will now be subject to employer NICs. However, the payments will remain outside the scope of employee NICs. Although not announced as part of the Budget, it has been reported that HMRC has confirmed that the UK Government also intends to introduce legislation to ensure that all payments in lieu of notice and certain damages payments will be taxed as earning, that the foreign service exemption is also to be removed and that a technical consultation setting out the detail of the changes is to be published over the summer.
Employee shareholder status allows tax benefits on shares given to employees who agree to give up certain fundamental employment protection. The take up of this has been extremely limited. However, in response to concerns that employee shareholders were receiving more than was fair, a lifetime limit of £100,000 has been put on the gains which are eligible for Capital Gains Tax relief.
One aspect that did not go with pre budget predictions was salary sacrifice arrangements, which many had anticipated would be a target. The Budget papers confirm that "the government is considering limiting the range of benefits that attract income tax and NIC advantages when they are provided as part of salary sacrifice schemes". However, it was also clear that pension savings, childcare and health related benefits such as cycle to work would continue to benefit from income tax and NIC relief when provided through salary sacrifice arrangements.
Other tax related announcements of interest to employers included:-
From April 2017 the tax free personal allowance will be increased to £11,500 and the higher rate tax band will be increased to £45,000. However, the Scottish Government has since indicated that it will not adopt the higher rate band increase in Scotland.
The use of personal service companies to reduce tax liabilities is likely to be clamped down upon;
Class 2 NICs are being abolished for the self-employed from 2018. While this could be seen as an attempt to encourage more self-employment, in reality it will only reduce taxes by approximately £2.80 per person per week.