TaxPersonal TaxPKF warns companies to start budgeting

PKF warns companies to start budgeting

Pannell Kerr Forster has urged company bosses to tighten their purse strings now in preparation for the increased national insurance contributions payable on employee benefits.

The UK’s eighth largest accountancy firm warned bosses that due to the Budget changes on national insurance treatment of employee benefits, they must expect bigger liabilities.

Tax partner Sheena Sullivan said: ‘Until now the only staff benefit which most companies have had to pay national insurance on has been company cars and fuel. But from April of this year the charge has been extended to a number of benefits which were previously free from national insurance.’

Some of the benefits that the NIC changes will reap include private medical insurance, cheap or interest-free loans provided by the employer, company vans, and employer-provided accommodation. All of these were previously NIC-free, Sullivan added.

PKF has advised employers to find alternative benefit packages, such as offering more holiday time instead of company cars, in order to counter the increase. NIC will not be payable until after April 2001.

Sullivan said:’Although the NIC wil not be payable until after the end of the current tax year, companies need to budget now for these changes and also examine their staff benefit packages very closely to see where they will be hardest hit.’

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