The Chancellor has delivered his Autumn budget which contains a number of items of interest for UK Employers.
Income tax and NICs
The tax-free personal allowance will rise to £11,850 and the higher-rate tax threshold will increase to £46,350 in April 2018.
The lifetime allowance for pension savings will increase in line with CPI, rising to £1,030,000 for 2018-19.
As announced earlier this month, plans to introduce an employer NICs charge on termination payments which exceed £30,000 (payable on the excess over £30,000) have been postponed until April 2019. (Note that other changes to the tax and NICs treatment of termination payments are still expected to come into force in April 2018).
Wages
The National Living Wage payable to those aged 25 and over will increase from £7.50 per hour to £7.83 per hour from April 2018, a £600 annual increase for a full time worker. The National Minimum Wage will also increase as follows:
- 21 to 24 year olds – £7.38 per hour (from £7.05)
- 18 to 20 year olds – £5.90 per hour (from £5.60)
- 16 and 17 year olds – £4.20 per hour (from £4.05)
- Apprentices – £3.70 per hour (from £3.50)
Off-payroll working in the private sector
Following the reform of the off-payroll working rules (IR35) for engagements in the public sector in April 2017, the Government is considering extending the reforms to the private sector, so that individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company. It will consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms.
Employment status
The Government will publish a discussion paper as part its response to Matthew Taylor’s review of employment practices, exploring the case and options for longer-term reform to make the employment status tests for both employment rights and tax clearer. The government recognises that this is an important and complex issue, and says it will work with stakeholders to ensure that any potential changes are considered carefully.
Skills
The Government will enter into a formal skills partnership with the Trades Union Congress and the Confederation of British Industry to develop the National Retraining Scheme to give people the skills they need to get a well-paid job, and equip young people with the science, technology, engineering, and maths (STEM) skills to become innovators of the future.
Written by:
Louise Donaldson
Doyle Clayton
