The Chancellor of the Exchequer pulled out a few surprises in his Autumn Statement however we thought that it would be useful to outline what some of this means for employers…..
This newsletter is based on the documents released on 3 December 2014. It is possible that a different position will be shown by the draft legislation which will be published on 10 December 2014. We will keep you informed of any significant developments.
The employment allowance was introduced from 6 April 2014. It is worth £2,000 per year per employer to set against the employer’s national insurance liability. For 2014/15 individuals who employed people in their own home, such as nannies, housekeepers or gardeners could not claim the employment allowance. This blanket ban for domestic workers also applied to carers, but from April 2015 the employment allowance will be available to households who employ care and support workers.
From 6 April 2015 employers will not have to pay employers’ NI on the wages of workers aged under 21, for wages up to £815 per week. From 6 April 2016 that exemption from employers NI will be extended to wages paid to apprentices aged under 25, with the same weekly cap on the amount paid.
Employee Benefits – Company Cars
Drivers of very low-emission cars may be in for a shock from 6 April 2015. Those vehicles with CO2 emissions from zero (i.e. electric) to 50g/km will be subject to tax as a benefit in kind for the first time. Tax will be payable on 5% of the vehicle’s list price, or 8% for diesel cars. The benefit in kind chargeable amount for all other cars will increase by 2% of the list price, including those cars which are currently taxed on 35% of the list price, as the maximum benefit rises to 37% of the list price.
Where a company car driver receives free fuel (petrol, diesel or LPG) for private journeys, the taxable benefit is calculated as the percentage of the list price for the car applied to the fuel charge multiplier set at £22,100 for 2015/16 (£21,700 for 2014/15) . The maximum taxable benefit of receiving free road fuel for private use will increase to £8,177 for 2015/16 from £7,595 for 2014/15.
Where the employer pays for the electricity to charge an electric company car there is no tax on the benefit of using that electricity on private journeys. Equally there is no standard rate to reimburse employees when they use their own domestic electricity supply to charge an electric company car.
Employee Benefits – Company Vans
Driving from home to work in a company van is not considered to be a private journey, but it is when the vehicle is a company car.
When a company van is used for private journeys the driver is taxed on £3,090 for 2014/15. This increases to £3,150 for 2015/16. When road fuel is provided for private journeys in a company van the taxable benefit is £581 for 2014/15, rising to £594 for 2015/16.
An electric van is currently tax-free for the driver, even when it is used for private journeys. However, from 6 April 2015 the private use of an electric commercial vehicle will be a taxable benefit, calculated as £630 for 2015/16. The taxable benefit for electric vans will increase each year until it is equal to other vans from April 2020.