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UK Tax Changes Shift Worker Classification Burden to Clients

The UK Government has confirmed that it will extend to the private sector tax rules designed to target tax avoidance by contractors who operate through an intermediary personal service company (PSC). The UK Government has announced that new “off-payroll working” tax rules (commonly known as IR35) will apply to the private sector from April 2020. The move will shift responsibility for determining the tax status of individuals who personally provide services through an intermediary personal service company from that PSC to the end user client. The IR35 rules apply if An individual personally performs services for a client, or is obliged to do so Those services are provided under arrangements involving an “intermediary”, i.e., the arrangement for the provision of the services is made between the client (or an agent on its behalf) and the PSC, rather than between the client and the individual; and The individual would be regarded as an employee or office-holder,...

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UK Employment Alert: Changes To The Taxation Of Termination Payments

The government has published its response to feedback received on its proposals to simplify the taxation of termination payments, expected to come into force in April 2018. The following table sets out the main proposals and the effect these will have on employers. Importantly, there is no change to the current £30,000 tax free allowance.   Proposal Change Effect 1. Termination payments above £30,000 to be subject to employer National Insurance contributions (NICs). Currently, termination payments above £30,000 only attract income tax, not NICs. While employer NICs will be payable under the proposal, employee NICs won’t. At 13.8%, the addition of employer NICs could add a not inconsiderable cost to paying a termination payment exceeding £30,000. 2. All payments in lieu of notice (PILONs) (contractual and non-contractual) to be taxed as income. Currently, contractual and non-contractual PILONs are taxed differently. Contractual PILONs (that are provided...

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