Employees
Company cars and fuel (Table C)
The basis for taxing company cars and fuel provided for private use is set out in the Table. The rates and thresholds continue to change each year as the Government acts to encourage people to make ‘greener choices’.
‘Off payroll’ working
HMRC has been concerned about individuals working through personal service companies (PSCs) and similar arrangements for two decades: they regard this as a way of avoiding PAYE and Class 1 NIC where ‘in reality’ (in HMRC’s view) the individual is acting as an employee. HMRC estimates that the cost to the Exchequer could reach £1.3 billion a year by 2023/24.
The ‘IR35’ rules required PSCs to pay PAYE and NIC on income from engagements that were effectively employments. From 6 April 2017, where the individual behind the PSC works in the public sector, the responsibility for paying this tax was transferred to the person making the payment to the PSC, and the responsibility for deciding ‘what is effectively employment’ was imposed on the public sector engager. HMRC is convinced that this has reduced non-compliance, and has been consulting about extending the same rules to the private sector. Representative and professional bodies have protested that the rules are unclear and complicated, and increase cost and uncertainty for all parts of the professional flexible labour market.
The Chancellor announced that the rules will be extended to the private sector, but he has taken account of representations made. The change will not apply until April 2020, and only ‘large and medium-sized’ engagers will be affected, excluding the smallest 1.5 million businesses. A further consultation will be carried out during 2019 to clarify how the rules should be introduced in detail.
This is the largest single revenue-raising measure in the Budget, expected to bring in well over £1 billion in 2020/21 when the public sector rules are extended to contracts undertaken in the private sector.