Autumn Statement 2015 – Personal Taxation and Welfare

November 26th, 2015

Personal taxation

Salary sacrifice

The government remains concerned about the growth of salary sacrifice arrangements and is considering what action, if any, is necessary. Further evidence will be gathered, including from employers, on salary sacrifice arrangements to inform its approach.

Company car tax diesel supplement

The three percentage point differential for company car taxation between diesel and petrol cars will be retained until April 2021. The original intention was to abolish it from April 2016.

Taxation of sporting testimonials

The tax treatment of income from sporting testimonials will be simplified. From 6 April 2017, all income from sporting testimonials and benefit matches for employed sports men and women will be liable to income tax. However, an exemption of up to £50,000 will be available for employed sports men and women with income from sporting testimonials that are not contractual or customary.

This will apply where the sporting testimonial is granted or awarded on or after 25 November 2015, and only to events that take place after 5 April 2017. There will be separate legislation before 6 April 2017 for the national insurance treatment of this income, which will follow the income tax treatment.

Employment intermediaries: travel and subsistence

There will be a restriction to the tax relief for travel and subsistence expenses for workers who are engaged through an employment intermediary, such as an umbrella company or a personal service company. This was previously announced in the Summer Budget 2015. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016.

Welfare

Tax credits

The changes to tax credits proposed in the July 2015 Budget have been withdrawn. The rate at which a claimant’s award is reduced as each pound of their income exceeds the income threshold (known as the taper rate) will remain at 41% of gross income. The level of income at which a claimant’s tax credit award begins to be tapered away (known as the income threshold), will also stay unchanged at £6,420 a year.

As announced in the Summer Budget 2015, the income rise disregard in tax credits will reduce from £5,000 to £2,500 from April 2016. This is the amount by which a claimant’s income can increase in-year compared with their previous year’s income before their award is adjusted.

Tax-free childcare

The upper income limit per parent for tax-free childcare will be reduced from £150,000 to £100,000. The minimum income level per parent will be increased from the equivalent of eight hours to 16 hours at the National Living Wage.