Employer Bulletin: Budget Special

17 March 2020

HMRC has published an Employer Bulletin Budget Special that provides a high-level overview of some of the main headlines that may be of interest to employers.

The Budget 2020 Edition is also available in the Welsh language and covers subjects that include:

Employment Allowance increase as from 6 April to eligible employers. The increase will take the current maximum annual amount from £3,000 to £4,000. The legislation applicable to the increase can be found here.

Eligible businesses and charities will be able to claim a greater reduction on their Secondary Class 1 National Insurance contributions liability. The £4,000 will count towards de minimis State aid limits which, for the following trade sectors are:

Primary production of agriculture products     €20,000

Fisheries and aquaculture sector                   €30,000

Road Freight Transport sector                       €100,000

Industrial / Other                                            €200,000

From 6 April 2020, the Employment Allowance will be available to employers who have a secondary (employers) Class 1 NIC bill in the preceding tax year that is less than £100,000.

Off-payroll working rules from April 2020 in the private and third sectors will continue to roll out as initially proposed but will see the recommendations brought in, in a bid to improve the delivery of these latest reforms, which are:

  • In the first year, customers will not be required to pay penalties for errors that relate to off-payroll, with the exception of cases where there has been deliberate non-compliance
  • HMRC has confirmed that information resulting from changes to the rules will not be used in order to open new investigations into Personal Service Companies for tax years prior to 6 April 2020, unless there is sufficient reason to suspect criminal behaviour or fraud
  • HMRC has also reiterated its previous announcement that the rules will become applicable to services carried out from 6 April 2020, and not as previously planned, to payments made on or after 6 April 2020 but that related to service delivered before 6 April e.g. if services were provided on 30 March 2020 but not paid until 8 April 2020, the new rules would not now apply. If the services were provided on 8 April 2020, then the new rules will apply
  • There will be a legal obligation for clients to respond to a request for information regarding their size from the agency or worker and legislation will be updated to address concerns raised overrules as they apply to off-shore companies. 

Pensions ‘net pay’ and ‘relief at source

The government has announced a ‘call for evidence’ on how to address the different outcomes for lower earners, depending on whether their pension schemes use the relief at source (RAS) or net pay (NPA) method of tax relief. The call for evidence will be published in the spring and will seek views from a wide range of stakeholders on how the two systems could be aligned.

There are an estimated 1.3 million workers earning below or just above the personal income tax allowance not receiving tax relief on some or all their contributions because their employer’s pension scheme uses NPA; this makes pension saving up to 25% more expensive for them as compared to a worker contributing to a RAS arrangement.

The CIPP is a member of a group campaigning to ensure that there is a level playing field for all pension contributors and strongly believes that the government should address these issues.  The CIPP is therefore very pleased with the announcement of a call for evidence on how best to address this anomaly.

For full details, the Employer Bulletin Budget Special is available on GOV.UK.

Coronavirus (COVID-19) Government Response is also available on GOV.UK.


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