As part of its drive to encourage green motoring, the government has introduced a new emissions test, as well as new car benefit percentages. The scale of charges for working out the taxable benefit for an employee who has use of an employer provided car is computed by reference to bands of CO₂ emissions multiplied by the original list price of the vehicle. The maximum charge is capped at 37% of the list price of the car.

In 2017, the government announced that cars registered from April 2020 will be taxed based on the Worldwide harmonised Light vehicles Test Procedure (WLTP). Legislation has now been passed to amend the previously planned benefit percentages for 2020/21 through to 2022/23.

• All zero emission cars will attract a reduced percentage of 0% in 2020/21 and 1% in 2021/22, before returning to the planned 2% rate in 2022/23.
• For cars registered before 6 April 2020, the current test procedure will continue to apply and there are no further changes to percentages previously set for 2020/21. These rates will be frozen at the 2020/21 level for 2021/22 and 2022/23.
• For cars first registered from 6 April 2020, most rates will reduce by 2% in 2020/21 before returning to planned rates over the following two years, increasing by 1% in 2021/22 and 1% in 2022/23.

The WLTP aims to be more representative of real-world driving conditions, compared to the current test known as the New European Driving Cycle. The government estimates that reported CO₂ values may be, on average, about 2 – 25% higher under the WLTP when compared to the current test.

Contact us for advice on car benefits.

Internet link: GOV.UK publications

HMRC has delayed the introduction of off-payroll rules to the private sector as part of its measures to support businesses through the COVID-19 pandemic.

The reforms will shift the responsibility for assessing employment status to the organisations employing individuals. The rules would have applied to contractors working for medium and large organisations in the private sector, and were due to come into effect on 6 April. Steve Barclay, Chief Secretary to the Treasury, stressed that the introduction of the rules has simply been delayed, rather than cancelled. The rules will now take effect on 6 April 2021.

In a statement, HMRC said:

‘This is part of additional support for businesses and individuals to deal with the economic impacts of COVID-19.

‘This means that the different rules that exist for inside and outside the public sector will continue to apply until 6 April 2021.’

The introduction of the off-payroll rules to the private sector, which are known as IR35 and have applied to the public sector since 2017, was reviewed earlier this year. The changes were due to go ahead alongside the implementation of measures to support affected businesses and individuals.

Commenting on the delay, Andy Chamberlain, Director of Policy at the Association of Independent Professionals and the Self-Employed (IPSE), said:

‘The government has done the sensible thing by delaying the changes to IR35 in the private sector.

‘This is a sensible step to limit the damage to self-employed businesses in this grave and unprecedented situation, but we also urge the government to do more. It must create an emergency Income Protection Fund to keep the UK’s crucial self-employed businesses afloat.’

Internet link: GOV.UK publications

From 1 April the spending limit for contactless card payments rose from £30 to £45.

The decision to increase the payment limit was reached following consultation between the retail sector and the finance and payments industry, and echoes similar increases in other European countries.

UK Finance stated that the change had been under consideration before the outbreak of COVID-19, but has been brought forward in order to support consumers during the pandemic.

Commenting on the increase, Stephen Jones, CEO of UK Finance, said:

‘The payments industry has been working closely with retailers to be able to increase the contactless payment limit to help customers with their shopping at this critical time for the country.

‘This will give more people the choice to opt for the speed and convenience of purchasing goods using their contactless card, helping to cut queues at the checkout.’

UK Finance said that, given the pace at which the change is being rolled out, the new payment limit will take ‘some time’ to be introduced across all retailers.

Consumers spending more than £45 will be able to make use of many other ways to pay, including Chip and PIN, cash and mobile payments.

Internet link: UK Finance press release

On 26 March, Chancellor Rishi Sunak announced a scheme to help self-employed workers who have been hit by the COVID-19 crisis.

Under the scheme, the government will pay self-employed people a taxable grant based on an average of their earnings over the past three years. The grant will cover up to 80% of earnings, up to a limit of £2,500 a month.

To be eligible, self-employed workers must have filed a tax return for the 2018/19 tax year and have average trading profits under £50,000 for the past three years. Directors of their own companies who are paid through Pay as You Earn (PAYE) are able to get support using the Coronavirus Job Retention Scheme.

The self-employed scheme will be available from June this year and will run for three months, but may be extended if necessary. In the meantime, the Chancellor said people can access Universal Credit, business loans or keep on working. HMRC will contact self-employed workers if eligible for the scheme and invite them to apply online.

Internet link: GOV.UK publications

On 17 March, Chancellor Rishi Sunak unveiled a £330 billion package of support for the UK economy as it combats the COVID-19 pandemic. The measures dwarf the £12 billion made available in the 2020 Budget. The package includes an increase in government-backed loans, higher cash grants, widened business rates relief for some sectors and mortgage holidays for struggling homeowners. The government has extended the Coronavirus Business Interruption Loan Scheme announced in the Budget from £1.2 million to £5 million, with no interest due for the first 12 months. On 3 April, the Chancellor announced changes to the loan scheme in order to make it easier for small businesses to access loans. The current Business Interruption Loan Scheme has been extended so more small businesses benefit. Lenders will be banned from requesting personal guarantees on loans under £250,000. Additionally, a new scheme has been announced to bolster support for larger firms not currently eligible for loans.

Changes to business rates as a result of the COVID-19 pandemic have been put into place as well as some grants. The latest information for businesses located in England can be found here. Information for businesses in the devolved nations can be found here: Wales, Scotland, Northern Ireland.

Commenting on the measures, Dame Carolyn Fairbairn, Director General of the Confederation of British Industry (CBI), said:

‘This is a landmark package of measures for business, people and jobs. The Chancellor’s offer of substantial payroll support, fast access to cash and tax deferral will support the livelihoods of millions.’

Internet link: GOV.UK publications