Spring Budget 2017—Employment Taxes

Spring Budget 2017—Employment Taxes

This analysis is part of the Lexis®PSL Tax team's summary of the Spring Budget 2017.   Some of the links require a LexisPSL subscription. If you are not a subscriber, you can take a free trial here.

Off-payroll working in the public sector

As announced at Budget 2016 and confirmed at Autumn Statement 2016, FB 2017 will reform the way IR35 applies to public sector bodies. As a result of feedback received during the technical consultation on FB 2017, it will be optional for the public sector body (or agency, if used) to take account of the worker’s expenses when calculating the tax due. This change puts the affected workers in the same position as employees, whose employers can choose whether or not to reimburse incurred expenses. This will not affect the individual’s right to claim tax relief on legitimate employment expenses from HMRC as part of their own tax returns. In addition, the application of the rules to parliament and statutory auditors will be clarified.

The reform to IR35 will come into effect from 6 April 2017.

See: OOTLAR (para 1.9) and Updated TIIN: Off-payroll working in the public sector: changes to the intermediaries legislation.

Employment Allowance—illegal workers restriction

The government consulted from November 2016 to January 2017 on excluding certain employers from claiming the employment allowance for one year where that employer received a civil penalty from the Home Office for employing illegal workers. The government has decided not to proceed with the proposal as a result of consultation responses which raised concerns around complexity.

See: OOTLAR (para 2.36).

Removing NICs from the effects of the Limitation Act and aligning recovery of debts

As announced at AS 2016, the government will remove NICs from the effects of the Limitation Act 1980

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