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annual statement 2013


2014, amendment will be made to the Social Security (Contributions) Regulations 2001 to ensure that any payment of earnings exempted from a charge to income tax under these new provisions will also be disregarded for NICs purposes. It is expected that this measure will have effect in autumn 2014.


Indirectly employee-owned companies Finance Bill 2014 will include provisions that amend the ITEPA to exempt from income tax any relevant bonus payment made in a tax year to an employee by a qualifying indirectly employee-owned company that meets the relevant conditions. A ‘relevant bonus’ will be a cash award other than regular salary or wages that is paid to all employees on equal terms, although bonuses can be set by an employer by reference to a percentage of salary or length of service or hours worked. The exemption will be subject to an annual cap of £3,600 per employee for each qualifying company. To ensure that employers are not prevented from claiming a corporation tax deduction to which they would otherwise be entitled because a bonus paid is exempt from income tax under these new provisions, a consequential amendment will be made to the Corporation Tax Act 2009 to ensure such payments are treated as qualifying benefits.


Shares l Save as you earn (SAYE) share schemes – with effect 6 April 2014 the amount that employees can save and apply towards the purchase of shares will be increased from £250 to £500 per month. l Share incentive plans (SIPs) – the individual limits on: m the ‘free’ shares companies can award to employees from 6 April 2014 will be increased from £3,000 to £3,600 per year, and m the ‘partnership’ shares employees can purchase will be increased from £1,500 to £1,800 per year (or 10% of an employee’s annual salary). The maximum amount that can be deducted from an employee’s salary annually for SIP partnership shares increases to £1,800.


l Unapproved share schemes – a package of simplifications proposed by the Office of Tax Simplification on non-tax


advantaged (‘unapproved’) employee share schemes will take effect during 2014, with measures included in the Finance Bill 2014. l SAYE, SIP and CSOP – new purpose tests will be introduced for SIPs, SAYE and company share option plans (CSOPs), and to clarify or simplify certain requirements of these schemes including: provision of information to scheme participants; variations of share capital; company events that are subject to overseas legislation; and the exchange of options. With effect 6 April 2014, the requirement that a SIP, SAYE or CSOP scheme must be approved by HMRC before it can be operated will be replaced with new requirements in relation to the self-certification of schemes by businesses. The changes take effect on 6 April 2014. l Digital filing – Finance Bill 2014 will provide, with effect 6 April 2014, for digital filing of employment-related securities information to HMRC, including annual return forms and notifications of options granted under enterprise management incentives. These changes will be accompanied by new HMRC compliance, penalty and assessment powers, information requirements, and appeal rights for businesses. l Chargeable gains – provisions in Finance Bill 2014 will amend the Taxation of Chargeable Gains Act 1992 so that disposals of shares to a new kind of trust which benefits all employees of a company (or a group) may be wholly relieved from tax if certain criteria are met. The new relief will be available on disposals which take place in a single tax year. The disposals may be made by more than one person, and can be of any number of shares. There will be provisions to prevent claimants of the new relief receiving disproportionate share-related benefits from the trust.


Intermediaries Existing legislation will be strengthened to ensure that the correct tax and NICs are paid when UK and UK continental shelf (UKCS) workers are employed by offshore companies or engaged by or through offshore employment intermediaries. The measure, which is to be included in Finance Bill 2014 and will apply to workers employed from April 2014, affects: l offshore employers and agencies, whose workers are engaged in the UK or


on the UK continental shelf (UKCS) l UK and UKCS workers, who are engaged by or through an offshore agency or employed by an offshore company l UK agencies who place workers with end clients. The measure introduces a record keeping and return requirement for intermediaries placing workers with end clients but not deducting income tax and NICs at source. It sets out who is the secondary contributor and responsible for operating PAYE for workers on the UKCS. It also introduces a certification system for employers when someone other than the deemed employer (for tax and NICs purposes) is administering and paying NICs, income tax and NICs through PAYE on the deemed employer’s behalf.


Apprenticeships The government will reform apprenticeship funding and put business at the centre of the apprenticeship system by enabling employers to receive funding for the training costs of apprentices directly through an HMRC-led system and ensuring that employers contribute.


Anti-avoidance


Provisions in Finance Bill 2014 will require payment of the tax in dispute in a tax avoidance enquiry when an ‘avoidance follower penalty notice’ is issued. This will take effect from Royal Assent which is expected mid-July 2014.


A new obligation is to be introduced for users of an avoidance scheme that HMRC have defeated in a tribunal or court hearing in another party’s litigation, to concede their position to reflect that decision. When there has been a relevant decision HMRC will issue a notice to all users of the scheme in question requiring them to amend their return or advise why they believe they should not. A tax- geared penalty would be charged if they failed to amend their return and it was subsequently found that the avoidance scheme they used failed on the same point of law. Legislation will be introduced in Finance


Bill 2014 to prevent a small number of high earning non-domiciled individuals from avoiding tax by creating an artificial division of the duties of one employment between contracts in both the UK and overseas – commonly known as ‘dual contracts’.


PP PayrollProfessional 21


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