Tax and legislation changes taking effect in April

A number of tax and legislation changes affecting employee benefits will come into force on 6 April 2014:

• The statutory sick pay percentage threshold scheme will be abolished. This will help to fund the launch of the government’s Health and Work Service. 
• The extension of the right to request flexible working, which was due to come into force on 6 April, has been postponed (see Nicola Kerr: Delay to extension of flexible-working arrangements).
• The relaxation of real-time information reporting arrangements for small and medium-sized enterprises with fewer than 50 employees will be withdrawn. But HM Revenue and Customs (HMRC) has extended the deadline for micro-employers to April 2016.
• The savings limits for sharesave schemes will double from £250 to £500 a month, and the maximum value of shares that an employee can acquire with tax advantages through share incentive plans will rise to £1,800 a year for partnership shares and £3,600 a year for free shares.
• HMRC is to change the way both new and existing employee share schemes are administered. In its Finance Bill 2014 new guidance notes, published on 7 February, it detailed its new self-certification and online filing process. From 6 April, employers must register online any new share plans, both tax advantaged and non-tax advantaged, and self-certify that any tax-advantaged plans are compliant with the legislation. The changes will affect sharesave schemes, share incentive plans, company share option plans, enterprise management incentives and any non tax-advantaged arrangements.
• The lifetime limit on any employee’s tax-exempt pension savings, currently set at £1.5 million for 2013/14, will reduce to £1.25 million from 6 April.
• The annual allowance limit on tax-efficient pension savings, currently capped at £50,000, will reduce to £40,000.
• The basic state pension will rise by £2.95 a week.
• The personal tax allowance of £9,440 will rise to £10,000, which means the first £10,000 of an employee’s salary will be exempt from income tax.
• The threshold for tax exemption on employment-related loans, such as travel season ticket loans, currently set at £5,000, will rise to £10,000 as long as the outstanding balances on loans do not exceed the threshold at any time in a tax year.