Three words can neatly sum up 2015 for the payroll industry in the U.K.: Busy, Busy, Busy, with a capital “B” for emphasis.

For an industry well-versed with the concept of change, it is fair to say that 2015 promised significant upheaval, if for no other reason than we would see a change of government following the General Election on 7 May.

However, back at the coal face for those of us working in the day-to-day operations of payroll, 6 April 2015 brought about several tax changes in the U.K., including:

That’s not much and, indeed, looking at these subjects in isolation these changes appear to be minor in comparison with previous tax years. But set them against a backdrop of a government transition to “digital by default,” which has caused us all to rethink where we look for essential guidance, along with a transition to increased use of “automated” penalties for late payment and late filing of pay-as-you-earn returns, and the water begins to look a little less pristine.

We listened to the spring budget with interest—in the full expectation that there would be another one to come after the installation of a new government, and indeed we weren’t disappointed. You will recall from my previous article in the October Global Payroll issue, “Pomp and Circumstance: 25 Bills and the Promise of More to Come,” and that was the point where I possibly should have reconsidered my chosen career path.

Summer of Surveys

On 8 July, the date of the Summer Budget 2015, Chancellor George Osbourne delivered his first budget speech in representation of a Conservative Government. Given that it had only been a couple of months since his previous budget speech, you would be forgiven for thinking he might not have much to say. How wrong you would be. This was a budget to “reward work and back aspiration,” one that “sets out bold reforms on tax and welfare, and introduces a National Living Wage so we move Britain from a low-wage, high-tax, high-welfare economy to a higher wage, lower tax, lower welfare economy.”

If you are wondering where the National Living Wage was mentioned in the 25-plus Bills of the Queen’s Speech, please wonder no more, because it wasn’t. But it went on to be one of the subjects consulted upon during the summer by the Low Pay Commission. Employees age 25 and up will be paid at least £7.20 per hour beginning in April 2016.

But drawing out the comment of “bold reforms on tax” brings me nicely to the publication of consultations that followed the Summer Budget, and they simply kept on coming. Even now, as we head toward Christmas, still they keep coming.

The type of consultation documents that come across our desk can range from a Green paper that considers a problem that as yet there are no real proposals for, through to draft technical guidance and every possible option in between. I will pick from a selection of these as we look forward to 2016.

What Simplification Might Look Like

During 2013, the Office of Tax Simplification (OTS) carried out a review of Expenses and Benefits in Kind, an area that provides the most complex challenge when considering the income tax and NICs (National Insurance Contributions) implications on the payments of expenses, and the provision of non-cash benefits generated as a result of employment.

The OTS issued its final report in July 2014 looking to make recommendations that would impact:

The ability for an employer to continue to have bespoke scales rates approved will continue, although HMRC had favoured a removal of the pre-approval process, employers and their agents were unnerved by how vulnerable this removal left them to a later claim that the bespoke rates were unacceptable. 

This has been a long time in the making and will introduce, for the first time, a regulatory framework for employers who chose to voluntarily payroll. At the moment, and whilst the principle is allowed, an employer who chooses to tax the cash equivalent of its benefits in Kind through its payroll processes still faces the administrative burden of having to complete forms P11D. During the summer, draft regulations were published as part of a technical consultation. The regulations will be enacted for 6 April 2016, and we will see these long-awaited simplification measures come in to force. A few include: Tightening up on tax losses—A document published this summer detailed the removal of proposals to remove home-to-work travel and subsistence tax relief where a worker is employed through an employment intermediary and under the supervision, direction, or control of any person. This consultation sought views on the detail of how these proposals could be implemented and how they would work. The current timeline will see them implemented from 6 April 2016. Further utilisation of zero rate employer NICs—On a final note (simply because I am running out of word count and not because I am running out of subject matter), 6 April 2016 will see the extension of the zero rate of employer NICs being extended to employers of apprentices who are on a Government-approved apprenticeship and under age 25 on earnings up to a new Apprentice Upper Secondary Threshold (AUST). I will finish with a quote from a very popular U.K. comedian of the 1970s—“and there’s more”— but space prevents me from including the detail here. Be assured if your chosen career path gives you reason to come into contact with U.K. payroll, you can be guaranteed a Busy, Busy, Busy future.