As we listened to the Chancellor deliver his first Spring Budget, I began to think that there would be little to write about from an employment tax perspective. However, as my first boss said with regards to tax….the devil is in the detail and as we read through the Spring Budget 2023 online document a few specific details began to emerge.
The Government had previously indicated that it was consulting on ways to simplify tax advantageous equity reward plans. Last Autumn, the Chancellor announced that from April 2023, the value of shares that could be awarded under a Company Share Option Plan (‘CSOP’) will increase from £30,000 to £60,000.
In today’s Budget, it was announced that some of the requirements for option awards to qualify under an Enterprise Management Incentive Plan will now be relaxed. Employees will no longer have to sign a working time declaration; however, it is unclear if this means the working time requirements will be removed. Option awards will no longer have to be notified within 92 days and instead the deadline will be by 6 July. This is welcomed and aligns with the deadline for Employer Annual Employment Related Securities return.
As the world moves towards a more flexible way of working, the tax and legal implications for employers present many challenges. It is encouraging to see the document mention an expansion to the rules around Business Visitors to the UK from Autumn 2023. The strict requirement to operate PAYE with respect to business visitors can be relaxed subject to having a Short Term Business Visitors Agreement in place. While this is beneficial in some circumstances, there are limitations. Consultations will also begin to make the legal migration system quicker and more responsive to help immediate labour supply pressures.
Pension Contribution Changes
The increase in the pension Annual Allowance form £40,000 to £60,000 will provide some welcome relief for employers and employees trying to manage pension obligations under auto-enrolment and the resulting pension tax charges that arise when the mandatory contributions exceed the limit. The minimum Tapered Annual Allowance will increase from £4,000 to £10,000 and the income threshold will increase from £240,000 to £260,000.
Benefits & Tax Administration
A consultation will also begin to consider what impact regulations requiring employers to provide occupational health services for employees, will have.
The Government is also looking at improving IT systems to allow full pay-rolling of benefits, reducing administration around end of year P11D reporting. Further announcements will be made around tax administration in a Spring Tax Administration and Maintenance day.