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Autumn Budget – The Impact on Your Business

by Published on

First time buyers were the focus of the headline grabbing removal of stamp duty for property sales up to £300k but apart from also setting aside billions for Brexit and referring to investment in regional transport initiatives what of the impact on business, employers and their employees?

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The Chancellor, Philip Hammond, did commit to working toward ending the public sector pay cap but talk of launching a consultation to expand IR35 legislation will no doubt have left many HR Director/ Manager groaning given the already complex and confused nature of this “off payroll” legislation.

Of far greater concern is the OBR data relating to UK productivity.  Our positive numbers for employment have not translated into a greater level of productivity across the nations workforce.  This may be quite galling for business owners and managers who already might regard themselves as an a-typical UK workaholic.  Perhaps because of, rather than despite, the hours put in our productivity levels have fallen highlighting the need for greater investment in systems, training and support to increase the overall output of UK Ltd.

Here below a summary of the key data:

Personal Tax Allowance will increase to £11,850

Higher-rate threshold to £46,350 from April 2018 

National living wage to rise 4.4 per cent from £7.50 an hour to £7.83 from April. 

Its worth noting that this £600 pay rise for full time minimum wage earners is subject to basic rate tax and national insurance contributions which will reduce this figure by approximately a third.

For the first time in seven years the Lifetime Pensions allowance will rise in line with the consumer price index to £1,030,000 – this will be from April 2018 and is an increase of £30k. 

Maternity and parental leave – to assist with the additional financial pressures of parenthood employees will be able to take a 12-month break from paying into a ‘Save As You Earn’ share scheme from 6 April 2018.  The current maximum break is six months.

Philip Hammond announced that the Government had initiated ‘pay structure modernisation’ talks, specifically the Health Secretary with unions representing the NHS.  This has widely been interpreted as a move to lift the longstanding public sector pay cap which has limited rises to 1% since 2013. 

Private sector IR35 – although not mentioned in Hammond’s speech the “red book” contains details of the government’s move to consult on extending the reformed ‘off payroll’ IR35 working rules into the private sector.  With IR35 already a complex area the move is likely to cause significant technical and practical upheaval for HR departments. 

IR35 rules were introduced to the public sector in April to ensure contractors are paid either through PAYE or as genuinely self-employed individuals. As a consequence of this introduction public sector compliance is increasingly leading to optimism for its reformed application in the private sector to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company.

Investment in skills

  • £20m investment in Digital Skills via distance e-learning courses involving the TUC and CBI.
  • £3m investment towards boosting the uptake of the apprenticeship levy.
  • £20bn investment in new technology funds at the British Business Bank, and to facilitate pension fund access to long-term investments.
  • £34bn to help develop construction skills and fund more jobs in the sector in a further move to support the easing of the housing crisis.

Company cars

  • Employees who charge electric vehicles at work will not face a benefit in kind charge from next year.
  • Company car tax, the diesel supplement will increase from 3 to 4 per cent for vehicles that don’t meet latest emission parameters, from 6 April 2018.
  • The originally proposed fuel duty increases for petrol and diesel scheduled for April has been cancelled.

If you have any concerns or questions relating to the recent budget announcements please feel free to drop us a line…

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