Transcript
00:00:06:20 - 00:00:09:23
Hello and welcome to the sixth episode of our First 100 Days
00:00:09:23 - 00:00:13:19
in Office podcast series, where we delve into the Labour Party's policies
00:00:13:19 - 00:00:17:01
and how they could impact sectors, businesses and individuals.
00:00:18:02 - 00:00:20:22
We began this podcast series way back at the beginning of summer
00:00:20:22 - 00:00:23:13
in early July, just after the general election,
00:00:23:13 - 00:00:26:14
and now we're just a few days out from Labour's first autumn Budget,
00:00:26:14 - 00:00:30:21
described by the Prime Minister himself as a painful one, with Labour needing
00:00:30:22 - 00:00:35:16
to make difficult decisions if they are to close the 222 billion debt gap.
00:00:36:16 - 00:00:39:00
Today we're going to discuss the changes Labour could make
00:00:39:00 - 00:00:42:05
to personal business taxation, some of which has been touted
00:00:42:05 - 00:00:46:03
for quite some time, including Capital Gains Tax, Inheritance Tax,
00:00:46:11 - 00:00:50:03
pensions and other bits that have come as a surprise along the way,
00:00:50:03 - 00:00:53:20
including National Insurance charges on employer pension contributions.
00:00:54:17 - 00:00:57:04
There's a lot to unpick, so let's get started.
00:00:57:04 - 00:00:59:19
I’m Paul Barham, Private Client Tax Partner.
00:00:59:19 - 00:01:03:15
Today I'm joined by Zoe Davies, Private Client Tax Partner,
00:01:03:20 - 00:01:08:12
Ian Goodwin, Employment Tax Partner, and James Robinson, a Financial Planning Director.
00:01:09:08 - 00:01:12:14
So if I come to you first and we discuss the impact
00:01:12:14 - 00:01:15:18
of Capital Gains Tax changes on business owners in the last episode,
00:01:16:04 - 00:01:20:05
but how could changes to Capital Gains Tax impact and individuals wider estate?
00:01:21:12 - 00:01:22:01
Thanks, Paul.
00:01:22:01 - 00:01:25:11
So Capital Gains Tax is applied on the sale of a chargeable asset
00:01:25:11 - 00:01:28:02
that has increased in value since it was purchased.
00:01:28:02 - 00:01:29:23
The amount that you pay depends on what you're selling
00:01:29:23 - 00:01:32:06
and the income tax band that you fall into.
00:01:32:06 - 00:01:33:04
There have been rumours
00:01:33:04 - 00:01:36:08
that the government could raise CGT in line with Income Tax.
00:01:36:08 - 00:01:41:15
However, the Prime Minister has said that raising CGT to 39% is wide of the mark.
00:01:42:18 - 00:01:46:04
My interpretation of that is that any rate increases will be far more modest.
00:01:46:19 - 00:01:49:13
It's worth noting that Capital Gains Tax applied to
00:01:49:13 - 00:01:52:22
the sale of a property is slightly higher, and capital gains tax on other assets.
00:01:53:06 - 00:01:56:06
So the government could choose to bring this in, along with other rates
00:01:56:21 - 00:01:58:12
in terms of an individual's estate.
00:01:58:12 - 00:02:00:14
Currently, there's a Capital Gains Tax uplift
00:02:00:14 - 00:02:03:03
that's applied to assets passed down following death.
00:02:03:03 - 00:02:06:16
This means that the current market value is applied to the asset when it's passed
00:02:06:16 - 00:02:10:16
on, with only Capital Gains Tax applied to any increase in value from the date
00:02:10:16 - 00:02:12:16
that the assets are later disposed of.
00:02:12:16 - 00:02:15:09
Effectively, assets that have substantially increased in value
00:02:15:09 - 00:02:19:04
since acquisition that passed on on debt can reset their Capital Gains
00:02:19:04 - 00:02:20:10
Tax exposure.
00:02:20:10 - 00:02:23:18
This can save substantial amounts of Capital Gains Tax, and is often
00:02:23:18 - 00:02:27:09
the reason why it may not be tax efficient to pass on assets during lifetime,
00:02:27:19 - 00:02:30:19
especially where they qualify for relief from Inheritance Tax.
00:02:31:05 - 00:02:34:07
There has been speculation that Labour could remove the Capital Gains
00:02:34:07 - 00:02:36:11
Tax uplift that's available on death for assets
00:02:36:11 - 00:02:39:18
that also qualify for relief from Inheritance Tax, including business
00:02:39:18 - 00:02:43:21
property, agricultural property or assets that are transferred to a spouse.
00:02:45:02 - 00:02:47:00
As the base cost uplift is intended
00:02:47:00 - 00:02:50:20
to avoid a double tax charge to Inheritance Tax and Capital Gains Tax.
00:02:51:01 - 00:02:54:02
At the same time, there's no obvious reason to provide an uplift,
00:02:54:09 - 00:02:57:19
and any such change would affect numerous estate plans seeking to rely on them.
00:02:58:20 - 00:03:02:04
With most tax changes taking effect from the start of the tax year.
00:03:02:04 - 00:03:03:22
Announcing a change in Capital Gains
00:03:03:22 - 00:03:06:22
Tax rates in advance will impact the market, with investors
00:03:06:22 - 00:03:10:14
keen to crystallise gains ahead of the 5th of April 25.
00:03:10:23 - 00:03:12:17
It therefore seems likely that an increase
00:03:12:17 - 00:03:16:12
would take immediate effect to avoid any panic selling. Zoe.
00:03:16:12 - 00:03:17:11
Thank you.
00:03:17:11 - 00:03:20:21
It is certainly a lot of speculation around changes to Capital Gains Tax.
00:03:20:21 - 00:03:21:21
And I think you're right,
00:03:21:21 - 00:03:25:15
it does feel more like a question of how much and when, rather than if.
00:03:26:22 - 00:03:27:17
Another point that
00:03:27:17 - 00:03:31:16
we've seen lots of attention in the media over the last few months
00:03:31:16 - 00:03:36:03
have been the conversation about residency and people moving overseas to mitigate
00:03:36:03 - 00:03:39:05
the impact of those Capital Gains Tax changes.
00:03:41:03 - 00:03:43:00
It's not a new concept, and Capital Gains
00:03:43:00 - 00:03:46:00
Tax has a residency based test to it.
00:03:47:06 - 00:03:49:06
And we advise on it quite regularly.
00:03:49:06 - 00:03:52:12
I often find that clients explore the possibility of relocating
00:03:52:19 - 00:03:55:18
as particularly when they're looking to sell a business.
00:03:56:08 - 00:03:59:00
But that usually decide against it.
00:03:59:00 - 00:04:03:21
The lifestyle impact usually means that it's not worth pursuing.
00:04:04:16 - 00:04:07:07
That said, there are certainly lots of clients
00:04:07:07 - 00:04:09:13
who are considering moving overseas.
00:04:09:13 - 00:04:14:02
As a consequence of that, the potential for CGT rates to increase
00:04:14:20 - 00:04:18:05
and those that seem to be able to make that transition
00:04:18:05 - 00:04:21:18
and manage that balance of that, how they spend their,
00:04:22:06 - 00:04:26:02
life, manage their personal obligations and their business obligations
00:04:26:12 - 00:04:29:12
seem to be able to do so with more ease
00:04:29:12 - 00:04:32:20
if they are used to living their, life
00:04:33:03 - 00:04:35:14
and spending their time across several countries already.
00:04:36:16 - 00:04:39:19
It's also worth noting that the UK has some very clear rules
00:04:39:19 - 00:04:42:21
in its domestic legislation about how to become non-resident.
00:04:43:17 - 00:04:47:05
They often require spending a lot of time outside of the UK,
00:04:47:12 - 00:04:50:12
and that differs depending on personal circumstances.
00:04:50:15 - 00:04:54:12
So being able to manage that plan in a realistic way
00:04:54:17 - 00:04:58:11
is really important, particularly if you look at the anti-avoidance rules
00:04:58:11 - 00:05:01:11
that come alongside these conditions.
00:05:02:11 - 00:05:06:06
There's also been discussion recently about the idea of an exit tax,
00:05:06:06 - 00:05:07:04
which is something that which
00:05:07:04 - 00:05:11:00
a number of other countries have within their tax legislation.
00:05:11:23 - 00:05:13:23
It's not clear if that would be implemented.
00:05:13:23 - 00:05:14:22
And recently
00:05:14:22 - 00:05:18:19
headlines have suggested that Rate Tories is distancing herself from the idea.
00:05:20:10 - 00:05:23:14
Zoe, if I keep with, you for a moment,
00:05:23:23 - 00:05:28:03
another area of concern for many is the potential changes to Inheritance Tax.
00:05:28:16 - 00:05:30:16
The number of estates now paying in her successors
00:05:30:16 - 00:05:34:00
increased considerably due to inflation and frozen thresholds.
00:05:34:10 - 00:05:38:04
What changes do you think we could see in inheritance tax in the upcoming budget?
00:05:39:10 - 00:05:39:23
Thanks, Paul.
00:05:39:23 - 00:05:44:04
And it's no surprise that changes to Inheritance Tax might worry people.
00:05:45:01 - 00:05:49:15
We don't expect that the 40% headline rate of inheritance tax will change,
00:05:49:15 - 00:05:51:02
and we don't expect the limits,
00:05:51:02 - 00:05:54:01
which are known as no rate bands, to decrease either.
00:05:54:10 - 00:05:58:03
However, we do think that the government may look to tighten rules on gifting money
00:05:58:03 - 00:06:01:05
away, perhaps by taxing gifts over a certain size
00:06:01:10 - 00:06:04:07
or by introducing a lifetime limit of gifts.
00:06:04:07 - 00:06:06:23
Some other areas that the government could look at are
00:06:06:23 - 00:06:11:14
removing business relief on, ehm assets, limiting agricultural property
00:06:11:14 - 00:06:14:03
relief and tightening the criteria for business relief.
00:06:14:03 - 00:06:15:21
To apply.
00:06:15:21 - 00:06:18:19
Given the uncertainty over how the government might look to change
00:06:18:19 - 00:06:21:12
Inheritance Tax legislation, and given that the planning
00:06:21:12 - 00:06:25:15
typically involves significant decisions that impact an individual's long term
00:06:25:15 - 00:06:30:01
financial position, we are being cautious about undertaking planning in this area
00:06:30:01 - 00:06:33:06
currently, where individuals have planned to make certain gifts
00:06:33:06 - 00:06:34:23
we're discussing with them whether such gifts
00:06:34:23 - 00:06:37:04
should be made over the coming months.
00:06:37:04 - 00:06:40:08
But from a business perspective, Inheritance Tax business relief
00:06:40:12 - 00:06:43:12
shares in an unlisted company, such as those in
00:06:43:12 - 00:06:46:13
Enterprise Investment schemes, aim and package products
00:06:46:19 - 00:06:50:10
are designed to mitigate IHT and we may well see the government tighten these up.
00:06:51:12 - 00:06:52:02
In any event,
00:06:52:02 - 00:06:55:06
I often find a review of succession plans doesn't happen as often
00:06:55:06 - 00:06:59:08
as it ideally should, which is really on any life event within the family.
00:06:59:08 - 00:07:02:14
Births, marriages, divorce and every five years is failsafe.
00:07:02:14 - 00:07:03:19
Really.
00:07:03:19 - 00:07:06:14
So with whatever's announced, this should be a good prompt
00:07:06:14 - 00:07:09:14
to ensure affairs are in order and tax efficient.
00:07:10:20 - 00:07:12:11
Zoe. Thank you.
00:07:12:11 - 00:07:16:06
If I go to my list of popular topics that have been discussed
00:07:16:06 - 00:07:20:02
in the run up to the budget, then, pensions is next on it.
00:07:20:10 - 00:07:24:22
James, if we come to you next, I feel like we'll see some further changes.
00:07:25:10 - 00:07:28:18
Given that Labour has reneged on their plans to reintroduce lifetime
00:07:28:18 - 00:07:29:15
allowance.
00:07:29:15 - 00:07:32:15
Perhaps you could explain a little bit more about what they might be.
00:07:33:03 - 00:07:33:11
Yeah, you’re
00:07:33:11 - 00:07:34:17
right, Paul, that,
00:07:34:17 - 00:07:37:08
working the starting point for a lot of clients over the last year
00:07:37:08 - 00:07:40:02
or so has been to worry about the readjust the lifetime announced,
00:07:40:02 - 00:07:42:14
because the starting point when it was announced by the
00:07:43:17 - 00:07:45:23
conservative government was the Labour said they would introduce it.
00:07:45:23 - 00:07:49:03
However, since getting into power, Labour have said that they're not really
00:07:49:03 - 00:07:52:03
looking forward looking to to reintroduce that.
00:07:52:15 - 00:07:55:15
However, there are four particular rumoured areas of change,
00:07:55:15 - 00:07:58:15
so I'll just run through those as quickly as I can.
00:07:58:16 - 00:08:01:23
The first is whether a flat rate of tax
00:08:01:23 - 00:08:04:03
relief is applied on on pension contributions,
00:08:04:03 - 00:08:06:13
as opposed to the current regime where you get tax relief
00:08:06:13 - 00:08:10:09
for your marginal rate so you can get anywhere between 20 and up
00:08:10:09 - 00:08:14:04
to 60% tax relief on some contributions, and whether they replace that
00:08:14:04 - 00:08:17:09
with a rate of, say, 20% or 30%, something like that.
00:08:18:14 - 00:08:19:18
That's one that's been discussed
00:08:19:18 - 00:08:22:18
for a number of years, and it feels quite unlikely,
00:08:23:12 - 00:08:25:18
really, just because of how difficult it would be to implement.
00:08:25:18 - 00:08:28:10
So Steve Webb, the previous,
00:08:28:10 - 00:08:32:01
a previous pensions minister, said he even looked at it in the past,
00:08:32:16 - 00:08:36:21
when he was in his role and that it was just too complicated to implement
00:08:36:21 - 00:08:40:09
between all the different contribution methods and pension structures.
00:08:40:09 - 00:08:43:09
So all of the for that feels very unlikely.
00:08:43:18 - 00:08:44:16
The three
00:08:45:18 - 00:08:46:06
possibly more
00:08:46:06 - 00:08:49:21
likely areas are, reconsidering the likes of,
00:08:50:05 - 00:08:53:15
the annual allowance for for pension contributions, the lump sum allowance,
00:08:53:15 - 00:08:56:15
which is how much tax free cash you can take from, pensions
00:08:56:17 - 00:09:00:06
and then taxation of pension benefits on death.
00:09:00:06 - 00:09:01:10
So I'll run through each of those.
00:09:01:10 - 00:09:05:09
So the annual allowance is the is the annual limit
00:09:05:09 - 00:09:09:01
on, pension benefits that can be built up while receiving tax relief?
00:09:09:18 - 00:09:12:15
It's changed quite a lot over the few years, the last few years.
00:09:12:15 - 00:09:16:14
And the, the current standard annual allowance is 60,000,
00:09:16:22 - 00:09:18:20
but this can be reduced for high earners
00:09:18:20 - 00:09:20:13
and it's changed quite a few times of said.
00:09:20:13 - 00:09:24:03
So we've seen anything from £4000 to
00:09:24:03 - 00:09:27:03
£60,000 is an annual allowance over the last few years.
00:09:27:12 - 00:09:31:02
And if the government is looking to reduce the limit, it's
00:09:31:03 - 00:09:35:13
admittedly fairly generous in relation to previous years £60,000.
00:09:36:13 - 00:09:38:22
So they could be looking at reducing that somewhat.
00:09:38:22 - 00:09:39:12
And maybe do they
00:09:39:12 - 00:09:42:23
reduce that back to a say 40,000 limit they had a couple of years ago?
00:09:43:07 - 00:09:46:01
The challenge they've got is when they reduce the standing allowance,
00:09:46:01 - 00:09:50:03
they bring a lot of senior doctors back into scope of paying this tax charge,
00:09:50:09 - 00:09:53:05
which does sometimes mean that they then decide to retire
00:09:53:05 - 00:09:54:16
rather than keep working in the NHS.
00:09:54:16 - 00:09:58:05
So whatever decisions they've got to make on the taxation perspective,
00:09:58:05 - 00:10:02:07
they've also got to balance politically with how they look after the NHS as well.
00:10:02:12 - 00:10:05:12
With whatever mandate they set out.
00:10:06:06 - 00:10:09:16
Secondly, I said the lump sum allowance could potentially be looked at.
00:10:09:21 - 00:10:13:12
So the lump sum allowance is the lifetime limit on how much tax free cash can be
00:10:13:12 - 00:10:19:09
paid from a pension currently set to £268,275.
00:10:19:20 - 00:10:22:21
The reason that such an odd figure is it used to be set
00:10:22:21 - 00:10:25:21
to 25% of the previous lifetime allowance.
00:10:25:23 - 00:10:30:00
It's no longer linked to anything, and so the government could reduce that figure.
00:10:30:11 - 00:10:34:06
And we've even seen the likes of the the IFS, the Institute for Fiscal Studies
00:10:34:11 - 00:10:37:12
recommend the government should consider reducing this allowance,
00:10:37:22 - 00:10:41:11
but it is seen as quite an unpopular move in the pensions markets.
00:10:42:05 - 00:10:45:22
As a result of these rumours, we've seen, we've had a surge in conversations
00:10:45:22 - 00:10:47:10
with clients where they're asking about
00:10:47:10 - 00:10:49:21
whether they should take their tax free cash ahead of the budget's
00:10:51:02 - 00:10:51:13
focus.
00:10:51:13 - 00:10:55:08
When you look at how previous reductions, the long term allowance came through,
00:10:55:08 - 00:10:58:17
and therefore how previous reductions in tax free cash amounts came through.
00:10:58:17 - 00:11:02:02
At the same time, remember that 25% linked to the lifetime allowance?
00:11:03:01 - 00:11:06:05
They also brought in, transitional protections
00:11:06:05 - 00:11:10:07
for anyone with pensions and tax free cash above those, newly
00:11:10:07 - 00:11:13:23
set limits, including Labour government, when when they did it previously.
00:11:13:23 - 00:11:17:09
So we'd hope that if they did reduce the amount
00:11:17:09 - 00:11:20:09
of tax free cash that that's possible take over someone's lifetime.
00:11:20:14 - 00:11:24:02
If someone already has a pension in excess of that new limits,
00:11:24:11 - 00:11:28:02
then there should be hopefully some form of transitional protection
00:11:28:02 - 00:11:29:10
to protect their old amount.
00:11:29:10 - 00:11:32:02
They could have had before legislation change.
00:11:32:02 - 00:11:32:21
Just as ever.
00:11:32:21 - 00:11:35:23
Note that our crystal ball is is just as accurate as anyone else's on a
00:11:35:23 - 00:11:36:21
topic like this.
00:11:38:16 - 00:11:41:13
Finally, what does feel a little bit
00:11:41:13 - 00:11:45:05
too good to be true at the moment is the taxation of pension death benefits.
00:11:45:22 - 00:11:49:04
Currently, it's possible for a beneficiary to receive a pension fund of pretty
00:11:49:04 - 00:11:52:23
much any level without any immediate death taxes being levied.
00:11:52:23 - 00:11:55:23
And when they removed the lifetime allowance, it was with,
00:11:56:15 - 00:11:59:04
a trade off of saying, well, we won't tax you during your lifetime
00:11:59:04 - 00:12:02:02
if you've got a large pension, but we will tax it on death.
00:12:02:02 - 00:12:05:05
With how the changes have come through, it's now possible for beneficiaries
00:12:05:05 - 00:12:09:08
to effectively, indefinitely defer when they do pay
00:12:09:08 - 00:12:13:17
that that tax charge by choosing when they when they take income from that pension.
00:12:15:08 - 00:12:17:22
You of course need to have the right options
00:12:17:22 - 00:12:21:04
within the original pension to allow this sort of flexibility.
00:12:21:14 - 00:12:25:18
But given the growing level of pension wealth being stored away
00:12:25:18 - 00:12:29:10
and the rhetoric and the landscape of the current government
00:12:29:10 - 00:12:32:22
of needing to raise funds, it wouldn't be surprising to me if this is
00:12:33:06 - 00:12:36:11
if a different view is taken, they look to apply a tax charge on death
00:12:36:11 - 00:12:39:23
rather than when someone comes to come to draw from the pensions.
00:12:40:20 - 00:12:42:21
Obviously, anyone that thinks that could be affected
00:12:42:21 - 00:12:45:13
by any of this should to check what their pension schemes allow.
00:12:45:13 - 00:12:48:03
Firstly, and take appropriate advice.
00:12:48:03 - 00:12:50:10
If you are considering tax free cash ahead of the budget
00:12:50:10 - 00:12:53:22
by the time this podcast comes out, I fear it may be too late, but
00:12:54:07 - 00:12:57:05
it's worthwhile making sure that whenever you do anything
00:12:57:05 - 00:13:00:06
around this, consider the other taxes involved as well.
00:13:00:06 - 00:13:04:02
And just as Zoe's been talking about inheritance tax earlier, by taking tax
00:13:04:02 - 00:13:07:00
free cash, you could just be increasing your inheritance tax liability.
00:13:07:00 - 00:13:08:14
So really do think carefully about it,
00:13:10:03 - 00:13:10:13
James.
00:13:10:13 - 00:13:13:13
Thank you. And I'm up bringing you in here.
00:13:13:17 - 00:13:16:10
One rumour that's been gaining some traction is the possibility
00:13:16:10 - 00:13:18:18
of National Insurance being charged to an employer.
00:13:18:18 - 00:13:20:16
Pension contributions.
00:13:20:16 - 00:13:23:08
I know you've been looking at this quite closely, so could you
00:13:23:08 - 00:13:26:07
perhaps explain a little bit more about how these proposed changes
00:13:26:10 - 00:13:29:10
might come in and the impact he would have on employers?
00:13:30:15 - 00:13:31:03
Of course.
00:13:31:03 - 00:13:33:07
Thank you, Paul, and thank you, James, for earlier.
00:13:33:07 - 00:13:36:04
I think it's quite out that this budget is at Halloween
00:13:36:04 - 00:13:39:04
because some of the changes that are,
00:13:39:08 - 00:13:42:12
kind of speculated and rumoured are quite scary, actually.
00:13:42:12 - 00:13:45:07
And this definitely is the case for employers.
00:13:45:07 - 00:13:48:07
Now, the things we're seeing mooted at the moment relate
00:13:48:07 - 00:13:51:09
to employer national insurance, on employer
00:13:52:00 - 00:13:56:15
pension contributions, potential rises of employer National Insurance
00:13:56:15 - 00:13:59:10
and potential rises of apprenticeship levy,
00:13:59:10 - 00:14:02:10
which is now known as a growth and skills levy.
00:14:02:19 - 00:14:06:02
Let me start with employer National Insurance on employer
00:14:06:02 - 00:14:07:05
pension contributions.
00:14:07:05 - 00:14:09:21
Quite a mouthful to say, you'll admit.
00:14:09:21 - 00:14:12:05
But what we are seeing there is at the moment
00:14:12:05 - 00:14:14:11
when an employer makes a pension contribution,
00:14:14:11 - 00:14:17:04
there's no national insurance that the employer has to pay on that.
00:14:17:04 - 00:14:20:04
And the government seems to be thinking about this
00:14:20:04 - 00:14:23:10
based on all the speculation rumour front pages we are seeing.
00:14:24:03 - 00:14:27:03
This comes with lots of potential issues.
00:14:27:06 - 00:14:29:10
And we've looked into it to quite a degree.
00:14:29:10 - 00:14:31:07
Rarely here as well.
00:14:31:07 - 00:14:34:01
So at the moment, if you're if you're paying an employer
00:14:34:01 - 00:14:37:20
pension contribution, no national insurance is paid by the employer on that.
00:14:38:09 - 00:14:41:04
Say we're going to put employer National Insurance on employer
00:14:41:04 - 00:14:42:14
pension contributions.
00:14:42:14 - 00:14:45:14
That would be a significant cost to the public sector,
00:14:45:14 - 00:14:48:14
given that their pensions schemes are typically defined benefit
00:14:48:14 - 00:14:52:07
career average schemes in upwards of 2030 40%.
00:14:52:07 - 00:14:54:12
Employer contributions are going in.
00:14:54:12 - 00:14:58:04
So that could potentially widen this black hole that is being talked about,
00:14:58:16 - 00:15:01:05
where they look to carve out the public sector
00:15:01:05 - 00:15:02:19
that could cause some issues as well.
00:15:02:19 - 00:15:06:11
From a finance and equality perspective with private sector schemes
00:15:06:15 - 00:15:10:16
where employers will have a lot more cost to support, particularly given
00:15:10:16 - 00:15:14:18
that national minimum wage is likely to increase the national minimum wage, i.e.
00:15:14:18 - 00:15:17:23
the National Living wage, which is, potentially going to go
00:15:17:23 - 00:15:21:20
from the £11.44 to something in the region of £12 will apply
00:15:21:20 - 00:15:25:21
not just from those 21 and over, but those that are 18 and over.
00:15:26:08 - 00:15:28:01
From the new tax year as well.
00:15:28:01 - 00:15:30:11
So there's those costs to think about.
00:15:30:11 - 00:15:33:21
One thing that I've been really looking at here has been salary sacrifice.
00:15:34:16 - 00:15:37:09
Now at the moment that helps a lot of individuals
00:15:37:09 - 00:15:40:18
and organisations reduce cost, increase net pay.
00:15:41:03 - 00:15:45:00
Where that happens will see net pay reduce, which will potentially
00:15:45:02 - 00:15:48:02
go against one of the manifestos from the election.
00:15:48:10 - 00:15:52:01
So there's a few things to think about that separately.
00:15:52:01 - 00:15:55:00
There's also some more complex areas to think about.
00:15:55:00 - 00:15:58:03
What happens when you're putting in, contributions
00:15:58:03 - 00:16:02:05
from earlier periods, that, that weren't recognised at the time.
00:16:02:11 - 00:16:05:02
Will they need to have employer National Insurance?
00:16:05:02 - 00:16:06:22
What happens if there's other discrepancies
00:16:06:22 - 00:16:09:14
or pension scheme expenses that needs to be reported?
00:16:09:14 - 00:16:12:04
Will they have employer national insurance on say,
00:16:12:04 - 00:16:14:13
and when I get into the payroll technicalities
00:16:14:13 - 00:16:16:17
and what they are we actually playing paying
00:16:16:17 - 00:16:20:02
employer national insurance on these employer pension contributions.
00:16:20:18 - 00:16:23:11
These are the date they're paid across the the pension scheme is that date
00:16:23:11 - 00:16:25:00
they recognise on the payslip.
00:16:25:00 - 00:16:28:12
There'll be lots of unanswered questions there and certainly a need
00:16:29:04 - 00:16:32:16
to consult on it with wide audience to make sure
00:16:32:16 - 00:16:35:01
that if they were going to introduce something like this,
00:16:35:01 - 00:16:37:20
it was done as effectively as it can be,
00:16:37:20 - 00:16:42:05
I would say, pausing there, that in increasing employer
00:16:42:05 - 00:16:46:09
national Insurance generally, or increasing the apprenticeship levy i.e.
00:16:46:09 - 00:16:47:18
the growth and skills levy
00:16:47:18 - 00:16:50:11
would potentially be an easier move for the government to do given
00:16:50:11 - 00:16:55:06
it would take less consultation and it's already built into payrolls, etc.
00:16:55:08 - 00:16:59:00
so increasing the percentage wouldn't make a huge difference there.
00:16:59:05 - 00:17:02:06
But looking at employer National Insurance, on employer pension
00:17:02:06 - 00:17:05:14
contributions would certainly need a lot of information
00:17:05:14 - 00:17:09:00
to be reviewed and a lot of devil to be looked at in the detail.
00:17:10:00 - 00:17:11:01
And thank you.
00:17:11:01 - 00:17:12:17
It does seem that if they were to introduce
00:17:12:17 - 00:17:14:15
National Insurance on employer contributions,
00:17:14:15 - 00:17:18:10
it would have a significant impact on a number of employer related areas.
00:17:19:09 - 00:17:21:05
We've recorded nearly all of these podcasts
00:17:21:05 - 00:17:24:22
and still yet to talk through a number of points that have been talked
00:17:24:22 - 00:17:27:22
about quite a lot over the last 2 or 3 months.
00:17:28:04 - 00:17:31:13
There were a few items that Labour have confirmed are going
00:17:31:13 - 00:17:35:04
to take place in terms of changes or new proposals,
00:17:35:16 - 00:17:40:12
and some of those were previously announced by the conservatives
00:17:40:12 - 00:17:43:12
and they've just confirmed they are to go ahead with them,
00:17:44:01 - 00:17:46:12
just to sort of pull together a few of the other points
00:17:46:12 - 00:17:49:09
we've not had a chance to discuss in any detail today.
00:17:49:09 - 00:17:53:08
We know that several changes around Non-Doms and the way in which
00:17:53:08 - 00:17:58:03
they are tax some proposals for the new SIC regime remain probable.
00:17:58:04 - 00:18:01:10
Labour are likely to alter some of the proposals
00:18:01:15 - 00:18:04:07
announced by the conservatives earlier in the year.
00:18:05:17 - 00:18:08:23
VAT and private school fees is coming and will be applied from the 1st
00:18:08:23 - 00:18:12:15
of January 2025, and any payments made in advance of this date
00:18:12:15 - 00:18:16:13
in respect of the January terms are expected to attract VAT.
00:18:17:16 - 00:18:20:00
Labour has confirmed that it will go ahead with the plans
00:18:20:00 - 00:18:23:00
to abolish the furnished holiday lets regime,
00:18:23:00 - 00:18:26:00
with effect from April 25th,
00:18:26:02 - 00:18:28:01
and of course they are intending
00:18:28:01 - 00:18:31:05
to close down on tax loopholes so the government will increase
00:18:31:05 - 00:18:35:09
HMRC resources in a bid to identify and increase tax revenue.
00:18:35:17 - 00:18:38:12
Having an additional 5000 staff to bolster
00:18:38:12 - 00:18:41:12
the management and scrutiny of tax compliance.
00:18:41:15 - 00:18:44:11
What's not yet evident is which sectors
00:18:44:11 - 00:18:47:11
and which areas of risk they won't know.
00:18:47:11 - 00:18:48:12
From experience.
00:18:48:12 - 00:18:51:16
We think HMRC will seek to undertake a greater number of audits
00:18:51:16 - 00:18:55:11
concerning employer compliance, National Minimum Wage, B8
00:18:55:20 - 00:19:00:04
and focus scrutiny on Ir35 and research and development.
00:19:00:18 - 00:19:04:03
In short, if an organisation has not had a review for the past five years,
00:19:04:03 - 00:19:05:02
then it's pretty safe
00:19:05:02 - 00:19:08:02
to assume there should be expecting one in the not too distant future.
00:19:10:07 - 00:19:13:04
Just to wrap up, thank you all for joining me today.
00:19:13:04 - 00:19:15:03
Thank you to the panel for spending some time
00:19:15:03 - 00:19:18:20
to share their thoughts on where we think things might change in the Budget
00:19:19:10 - 00:19:21:22
if the rumour mill is to be believed, and we could certainly see
00:19:21:22 - 00:19:24:22
some significant changes.
00:19:25:08 - 00:19:28:00
Thank you very much for listening to today's podcast.
00:19:28:00 - 00:19:31:23
As always, if you have any concerns about how you could be impacted by the changes
00:19:31:23 - 00:19:35:18
announced in the budget, then by all means get in touch via our website.
00:19:37:04 - 00:19:40:22
All that remains for me to say is that we hope you enjoyed the podcast today.
00:19:40:22 - 00:19:45:06
Please, of course, remember to like, subscribe and leave a review after listening.
