Important tax changes are coming in the New Year, including the Finance Bill 2023-24, which is currently making its way through Parliament following the Chancellor’s Autumn Statement.
Paul Robbins, Associate Director of Tax at Croner-I, looks at the main changes for employers and what they can do now to prepare ahead of time.
“The first is a welcome change in reporting for Enterprise Management Incentives (EMI) options. Previously, employers were required to report the issue of new EMI options within 92 days of granting the option, otherwise the EMI tax advantages were lost. For options granted on or after 6 April 2024, the time limit is changed to 6 July following the tax year end – putting it in line with P11D reporting procedures, giving employers at least three months and potentially as much as 15 months to submit the notification.
“Another welcome change is the provision of a set-off for tax already paid in cases where HMRC decide that the off-payroll working (IR35) provisions apply. The deemed employer’s liability (the end-client or ‘fee-payer’) will consider the corporation tax or personal income tax already paid by the worker or their intermediary in respect of the deemed direct payment.
“This removes an obvious anomaly which allowed the worker or their intermediary to make a full reclaim and thus effectively receive the income tax-free. This measure is backdated to 6 April 2017, although that will not help those who have already settled cases with HMRC.
“Less welcome is the inclusion of powers for HMRC to require additional information in PAYE returns. Exactly what information HMRC intends to require is not yet specified, but the power is limited to that related to the collection and management of income tax, corporation tax and capital gains tax.
“Additionally, the National Living Wage rate will increase for pay reference periods beginning on or after 1 April 2024. Importantly, the age threshold for qualifying is also lowered from 23 to 21 years old, which means employees aged 21 and up will see their pay rise by approximately £1,800 per year for those working full-time.
“As of 1 April, the new hourly rates will be:
- 21 years old and over – £11.44 per hour
- 18–20-year-olds – £8.60 per hour
- Apprentices and workers 16–17-year-old – £6.40 per hour
- The weekly ‘accommodation offset’ will be £9.99
“Employers should make sure to stay ahead of all current and pending tax laws as we move into the new calendar year and last quarter of the financial year. Get processes in place now to update your finance team’s reporting records and processes – or check that your external accountants have done so – and ensure you’re fully prepared for the upcoming changes.”
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