Tag archives: taxation

Changes to off payroll working rules from April 2020

HMRC has published its latest consultation on off payroll working rules. As we have previously discussed (Global Workplace insider post – June 2018), the reformed off payroll rules which have applied in the public sector since April 2017 will be extended to the private sector from 6 April 2020.  The consultation has raised significant issues for private sector employers who employ contractors.

The off payroll working rules, known as IR35, are intended to ensure that individuals who personally provide their work to a client via their own personal service company or other intermediary, pay broadly the same employment … Continue Reading

Appointing Contractors through a personal service company – employment and tax implications

Following on from the recent cases on employment status there has been much discussion regarding how individuals should be appointed. Whilst some commentary has suggested that companies should consider appointing their contractors through Personal Service Companies (PSC’s), is this an ideal solution?

Currently, where a private sector employer appoints a contractor who operates through a PSC, the client company does not have to deduct income tax or NICs under PAYE from payments made to the PSC or pay employer’s NICS. The individual typically receives a small salary and dividends from the PSC and it is up to the individual to … Continue Reading

Changes to taxation of termination payments – April 2018

Changes to taxation of termination payments came into force in the United Kingdom on 6 April 2018. The new rules will mean that income tax and national insurance contributions (NICs) will be payable on all payments which relate to an employee’s notice period.

The position prior to 6 April was that a “termination payment” (being any payment that is not already chargeable to income tax) could be paid tax free up to £30,000. However, any payments made pursuant to the contract of employment including a contractual payment in lieu of notice (PILON) would be subject to tax in the usual … Continue Reading

Termination payments – proposed changes to tax and national insurance.

The UK Government has published its response to a consultation on the taxation of termination payments. In 2015, the Government issued a consultation paper containing various different proposals for simplifying the regime. The paper published on 10 August is the Government response and also includes draft legislation for further consultation.

Currently under UK legislation payments and other benefits “received directly or indirectly in consideration or in consequence of, or otherwise in connection with” a termination of employment are taxable under sections 401 to 416 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). However, the first £30,000 of … Continue Reading

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