Employee Benefits and The Autumn Statement

On 23 November 2016, Chancellor Philip Hammond delivered his Autumn Statement 2016 speech.
 
Below is a round-up of the key announcements that impact employee benefits:
 
Tax-free personal allowance will increase to £11,500 in April 2017 and £12,500 by the end of the current Parliament’s term in 2020. The higher-rate threshold will increase to £45,000 in 2017 and to £50,000 by 2020. From 2020, the tax-free personal allowance will rise in line with the Consumer Price Index rather than the national minimum wage.
 
The national living wage will increase by 4.2%, rising from £7.20 an hour for those aged 25 or over to £7.50 an hour in April 2017.
 
From April 2017, the government will limit the range of benefits that attract tax and employer national insurance (NI) advantages when offered through a salary sacrifice arrangement. Benefits that are exempt from these changes include pensions and pension advice, childcare, bikes-for-work schemes and ultra-low emission vehicles (ULEVs). Arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation, and school fees will be protected until 2021.
 
The government will consider how benefits in kind (BIK) are valued for tax purposes, with a call for evidence to be announced at the Budget 2017. The government will also consult on employer-provided living accommodation.
 
The government will set new bands and rates for company car tax for the lowest-emitting cars, which are set be announced in the Finance Bill in December 2016, ready to come into effect for 2020-21. Tax rates for cars emitting more than 90g of carbon dioxide per kilometre will rise by one percentage point.
 
From December 2016, the government will abolish the tax advantages awarded under employer shareholder status (ESS), with the status itself to be closed to new arrangements at the next legislative opportunity.
 
The standard rate of insurance premium tax (IPT) will increase from 10% to 12% from June 2017.
 
The government is to consult on options to tackle pension scams, including a ban on cold calling.
 
From April 2017, employer and employee national insurance (NI) thresholds will be aligned to pay NI on weekly earnings above £157.
 
The government will reduce the money purchase annual allowance from £10,000 to £4,000 from April 2017. A consultation on the change will run until 15 February 2017.

Kai Tang

The EB Partnership, Apsley House, 176 Upper Richmond Road, London, SW15 2SH