The Budget July 2015
The Chancellor’s Budget was not primarily focused on employment issues but there are a number of headlines that employers should be aware of. Namely, the Government has committed to:-
- introduce a National Living Wage (NLW) of £7.20 per hour from April 2016 for all workers aged 25 and older. This will increase to £9 per hour by 2020. The National Minimum Wage is currently £6.50, rising to £6.70 in October 2015. The Low Pay Commission is due to recommend further increases to the NLW so that the lowest workers will earn 60% of the median earnings by 2020;
- reduce corporation tax to 19% in 2017and 18% in 2018;
- reduce National Insurance Contributions (NIC) for small employers. From April 2016, the employment allowance will increase from £2,000 to £3,000 allowing small businesses to employ up to four people on the NLW without paying any national insurance;
- increase the tax-free personal allowance to £11,000 for 2016/17 and the higher rate tax threshold to; £43,000 in 2016/17;
- create three million more apprenticeships financed by a new apprenticeship levy on large firms
- devolve Sunday trading laws to local councils and elected mayors. A consultation is to be launched to discuss extending Sunday trading hours. NB. Special rules apply to employees in relation to Sunday working therefore care will need to be taken in dealing with any objections and/or changing terms and conditions to facilitate this;
- freeze working age benefits for the next four years although benefits such as maternity pay, paternity pay and statutory sick pay will be unaffected;
- consult on the tax and NIC treatment of termination payments to make the system simpler and fairer;
- crack down on disguised employment and personal service companies;
- consult on “radical” changes to the pension saving system.
The above is only a summary of some of the key changes introduced. Employers need to consider carefully how the new provisions will affect their businesses and to put in place strategies to mitigate any negatives and to benefit from any positives. We would be happy to work with you to implement any changes to working practices brought about by the Chancellor’s announcements on 8 July 2015.
Published on 09/07/2015