Spring Statement 2022

April 19, 2022

Plus recent HMRC publications in the employee share scheme/employment-related securities arena.

Spring Statement 2022

  • From 6 July 2022, the starting thresholds for national insurance contributions (NICs) will rise to £12,570; this is currently £9,880 (April to June 2022), a rise from £9,568 per annum last tax year
  • Employees earning between £242 (£190 from 6 April to 5 July 2022) and £967 per week pay NICs at 13.25%; earnings over £967 are subject to 3.25% NICs
  • Entitlement to basic state retirement benefits is preserved for employees with earnings between £123 and £242 per week (with no NICs liabilities)
  • No reform to enterprise management incentives (EMI) options
  • Review of the company share option plan (CSOP) to be undertaken to support companies as they grow beyond EMI
  • Employers will pay 15.05% on their employees’ earnings over £175 per week
  • Self-employed individuals with profits between the Small Profits Threshold and the Lower Profits Limit do not pay Class 4 NIC but will retain their entitlement to basic state retirement benefits
  • Self-employed individuals with profits between £11,908 and £50,270 per annum pay NICs at 10.25% and thereafter at 3.25%
  • £1,000 increase to the Employment Allowance will benefit SMEs
  • Basic rate of income tax will be cut from 20% to 19% from April 2024
  • 50% business rates relief for eligible retail, hospitality and leisure properties
  • Business tax rates exemption to green technology used to de-carbonise buildings
  • Fuel duty reduced by 5p per litre from 6pm on 23 March 2022 (for one year).
  • Time-limited zero rating for VAT will apply to the installation of some energy saving materials
  • Businesses will be able to claim relief on the storage of data, cloud computing and pure mathematics research.

Employment Related Securities Bulletin 41 (March 2022)

  • On 21 March 2022, HMRC published ERS Bulletin 41
  • Save As You Earn Scheme (SAYE) – HMRC has terminated the COVID-19 easement in relation to new saving contacts from 6 April 2022. The COVID-19 easement (introduced on 10 June 2020 by ERS Bulletin 35) allowed employees who were furloughed or on unpaid leave due to COVID-19, to pause saving for an unlimited period. However, the easement is still available for savings contracts in place before 6 April 2022. The termination of such easement is being made through a change in the new SAYE prospectus
  • Enterprise Management Incentives (EMI) – HMRC has also terminated the COVID-19 easement for EMI Options. From 6 April 2022, employees with EMI Options would need to continuously meet the working time requirement (i.e. 25 hours a week or, if less, 75% of their working time for the company, or a company in the same group as the company, that awarded the EMI Option) for the EMI Option to not be disqualified. The COVID-19 easement, (introduced from 19 March 2020) provided that if an employee would otherwise have met the scheme requirements but did not do so because of COVID-19, the time which they would have spent on the business of the company, but for COVID, counted towards their working time requirement.

Employment Related Securities Bulletin 42 (March 2022)

  • On 21 March 2022, HMRC published ERS Bulletin 42
  • This ERS Bulletin is essentially a reminder to employers to meet their employment related securities reporting requirements by the 6th July 2022 deadline with regard to registration of schemes and filing returns
  • For more information click here.

Spotlight 59 – Employee Bonus Schemes: Growth Securities Ownership Plan (GSOP) tax avoidance and similar scheme update

  • On 24th March 2022, HMRC published Spotlight 59, as an update to Spotlight 28
  • Following the decision of the First-Tier tribunal in Jones Bros Ruthin (Civil Engineering) C Ltd and Britannia Hotels Ltd V HMRC [2022 IKFTT 00026(TC) earlier this year, HMRC has stated that tax avoidance schemes based on contracts for differences and GSOP do not work
  • HMRC is encouraging those who have adopted GSOP to settle their tax affairs as soon as possible
  • MM&K is not aware of any of its clients adopting a GSOP or schemes based on contracts for differences and therefore Spotlight 59 is for information only.

For more information, please contact Nigel Mills, Paul Norris, Stuart James or JD Ghosh.

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