Philip Hammond described his first Autumn Statement as Chancellor, as a plan to ensure the UK economy is ‘match-fit’.   But what do these changes mean for employers? This guide reviews the key changes that employers will need to plan/prepare for over the coming months.

1. National minimum wage

The national living wage (for employees age 25 and over) will increase from £7.20 per hour to £7.50 per hour from April 2017. The minimum wage for 21 to 24-year-olds will also increase from £6.95 to £7.05 per hour and the rate for apprentices will increase to £3.50 per hour. The government announced it will invest £4.3m a year into national minimum wage enforcement, enabling HMRC to review employers that are considered at risk of non-compliance.

2.  National insurance threshold aligned for employers and employees

Both employees and employers will start paying national insurance on weekly earnings of more than £157 from April 2017. This change will simplify national insurance payments for employers but will lead to a small increase in employer costs.

3. Salary sacrifice schemes abolished

Those who access employee benefits will pay same tax as everyone else from April 2017, although some salary-sacrifice schemes, such as pensions, childcare and cycle-to-work schemes, will be excluded.

4. Personal allowance changes

The tax-free personal allowance will increase from £11,000 to £11,500 in April 2017 and the higher-rate threshold will rise to £45,000.

5. Tax advantages of employee-shareholder status abolished

Hammond suggested that the tax advantages of employee-shareholder status (ESS) was being misused by high earning individuals for tax-planning purposes. ESS was introduced in 2013 and affected employees who gave up certain employment rights in return for workplace shares worth at least £2,000.

Other key announcements included new penalties being introduced for those who enable the use of tax avoidance schemes and a reduction in the rate at which benefits are withdrawn from people when they start work. Hammond also described the jobs markets as ‘robust’, referring to predictions (from the Office for Budget Responsibility) that the number of jobs would increase by 500,000 each year over the course of its five-year forecast.

For more information, contact Ramshaw HR @https://ramshawhr.com/contact-us/

By Bruce Ramshaw

Principal Consultant