Tax

Employee Incentives Update | Winter 2020

Written on 5 Feb 2020

Welcome to our Employee Incentives Update for February 2020.

In this edition, we look ahead to the UK Budget on 11 March 2020 and make our predictions. We also look at a number of developments in incentives and employee tax, including employer's National Insurance Contributions (NICs) on termination payments above the £30,000 limit which are due to come in on 6 April 2020.

We hope that you find this update interesting. If you would like to discuss any of the issues raised, please let us know. Our contact details are set out below.

Budget 2020 | our predictions

We have published our Insight on some of the key business tax issues we expect to be announced in the UK Budget on 11 March 2020.

In particular we focus on possible changes to entrepreneurs' relief. In the context of employee share schemes, this is a highly valued relief, particularly for tax-advantaged enterprise management incentive (EMI) options, where special rules apply. Incentivising employees is an important consideration for businesses. In the event that significant changes to entrepreneurs' relief are made, selling shareholders may in the future look more closely at employee ownership trusts (which are increasing in popularity) as a way of achieving a tax efficient exit.

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Termination payments | HMRC update and further NICs changes coming soon

In recent months, HMRC has published some helpful updates and amended guidance on post-employment notice pay (PENP) for employees who are paid by equal monthly instalments.

More widely, the introduction of employer’s class 1A NICs on termination payments above the £30,000 threshold are due to take effect from 6 April 2020.

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Disguised remuneration loan charge | Independent review outcome and changes to the charge

The government published its response to the independent review of the disguised remuneration loan charge on 20 December 2019. It has accepted the majority of the recommendations and announced a significant reduction in the scope of the loan charge. On 21 January 2020, HMRC published draft legislation to implement the changes.

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Employment-related securities | HMRC update on registration process

As companies operating employee share plans will be aware, all new schemes and arrangements (whether tax-advantaged or not) must be registered and annual returns filed with HMRC by 6 July following the tax year in which they are established.

HMRC has recently made a minor update to its guidance on the procedure for receiving a scheme reference number as part of the registration process. This serves as a reminder to register any new schemes in good time to enable the scheme reference number to be generated so that annual returns can be submitted by the deadline.

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IR35 update | HMRC powers to pursue – is the industry prepared?

On 22 January 2020, HMRC published draft secondary legislation and a technical note dealing with how end users, managed-service providers and others may be liable for IR35. Our specialist Workforce Solutions team look at what powers the proposed legislation offers HMRC, and consider whether IR35 checking services and insurance are a solution.

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Belgium | Recent employee tax developments

In Belgium, the benefit in kind charge for the private use of a company car has decreased for the income year 2020.

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Hong Kong | Recent employee tax developments

A new Bill intended to enhance maternity leave protection and benefits was published in the Hong Kong Government Gazette recently. A number of important changes would be effected by the Bill, although questions remain on whether it can make it through the current impasse in the Legislative Council.

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The UK exits | 20 quick things you should know

We have gathered together 20 quick points you should know for this special edition of Brexit Business Brief as the UK enters the transition phase to negotiate its future relationship and end its 46-year marriage with the EU.

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