October 2019

tax tips & finance e-newsletter

In this issue

Off-payroll working rules extended

Proposed increases in probate fees have been scrapped

Capital Gains Tax

Time for an electric company car?

Exam success

Off-payroll working rules extended

From 6 April 2020, the off-payroll working rules that apply where the end client is a public sector organisation are being extended to the private sector.

The amended rules will apply where services are provided via an intermediary, such as a personal service company, to an end client which is a medium or large private sector organisation. The rules apply if, ignoring the personal service company, the worker would be classed as an employee of the end client. Prior to 6 April 2020, the personal service company had to operate the IR35 rules and work out the deemed payment. However, from 6 April 2020, responsibility for working out whether the rules apply will shift to the end client and, where they do, the fee payer must deduct tax and National Insurance from payments made to the worker’s personal service company.

Where the end client is a small private sector organisation, the existing IR35 rules apply. A private sector organisation is not small if at least two of the following apply:

  • turnover of more than £10.2 million;
  • balance sheet total of more than £5.1 million;
  • more than 50 employees.

To prepare for the changes, HMRC recommend that medium and large private sector companies should:

  • look at their current workforce (including those engaged through agencies and intermediaries) to identify those individuals who are supplying their services through personal service companies;
  • determine whether the off-payroll rules will apply for any contracts that extend beyond 6 April 2020 (HMRC’s Check Employment Status for Tax (CEST) tool can be used to determine a worker’s status);
  • start talking to contractors about whether the off-payroll rules apply to their role; and
  • put processes in place to determine if the off-payroll working rules will apply to future engagements. These may include assigning responsibility for making a determination and determining how payments will be made to contractors who fall within the off-payroll working rules.

Workers affected by the changes should also consider whether it is worth remaining ‘off-payroll’.

If you are a medium or large private sector organisation engaging workers who provide their services through an intermediary, such as a personal service company, or if you are a worker providing services via an intermediary, do please contact the Partner that acts on your behalf to understand what the changes to the off-payroll working rules mean for you.

Proposed increases in probate fees have been scrapped

The controversial plans to overhaul probate fees, which would have resulted in a substantial increase in the costs of applying for probate (up to £6,000 for large estates), have been scrapped. The welcome announcement was made this week.

Instead the Government will consider probate fees as part of an overall review of court charges at some point in the future.

Our Trust & Estate Support Services Team can assist you with any Probate queries.

Changes to taxation of capital gains on property

There is increasing attention being given in the financial press about changes in taxation on the sale of residential properties, whether it be your own home or a let property, that will take effect from 6 April 2020.

You will still be entitled to full exemption from capital gains if you have lived in your home throughout the period of ownership but if you have not occupied the home during the entire period, or have more than one home, the capital gains tax burden is likely to be increased as a result of these changes.

Our articles in our July and August e-news provide information on these changes.  

The timing of such sales could impact on the capital gains tax payable as a result of these changes, as well as the due date of payment of the tax. So do please contact us for advice if you are looking to sell such residential property.  

Time for an electric company car?

The government has announced that there will be a zero P11d benefit for the drivers of electric cars from 2020/21. This is instead of the 2% scale charge that was originally included in Finance Act 2017 to apply for 2020/21. The legislation for the change will be included in Finance Bill 2020 and it is proposed that the benefit will be 1% of list price in 2021/2 and then 2% in 2022/3.

The zero taxable benefit will also apply to hybrid cars emitting no more than 50 grams of CO2 per kilometre with a range using its electric motor of at least 130 miles, but only for cars first registered on or after 6 April 2020. For those registered before 6 April 2020 the scale charge will be 2%.

Rather confusingly there will be two different sets of scale charges from 2020/21, one set relating to those registered before 6 April 2020 and a new lower set of rates for those registered on or after 6 April 2020.

However businesses are advised to wait until 6 April 2020 as the P11d scale charge for electric cars is currently 16% of original list price for 2019/20.

Exam Success

We are pleased to announce that Gemma McDowell has passed her final paper to complete the STEP Diploma in Trusts and Estates. Gemma is now a fully qualified Trust and Estate Practitioner (TEP).

Gemma joined the firm in 2017 and works for Partner Sue Pocklington in the Trust & Estate Support Services Team. We are delighted to have yet more exam successes within the firm and congratulate Gemma on all her hard work in achieving this qualification.