Last week saw the Chancellor deliver the Autumn Statement and there were some points of note in relation to HR and employment matters. We summarise the announcements briefly here:
FROM 1 DECEMBER 2016:
- Employee shareholder status – tax reliefs abolished
Where an employee shareholder arrangement is agreed on or after 1 December 2016, the reliefs previously available in relation to income tax and capital gains tax will not apply.
This type of arrangement was introduced on 1 September 2013 and involves employees agreeing to waive some of their employment rights in return for shares in their employer’s business. The tax reliefs will be abolished from 1 December 2016 and the government also announced its intention to close the employee shareholder status arrangement to new users “at the earliest opportunity”.
FROM APRIL 2017:
- Changes to salary sacrifice benefits
The following will be the only benefits that receive tax and national insurance relief when provided through a salary sacrifice arrangement:
- Enhanced employer pension contributions to registered pension schemes (and pensions advice);
- Childcare benefits (employer-supported childcare and provision of workplace nurseries);
- Cycles and cyclists’ safety equipment provided under the cycle to work scheme; and
- Ultra-low emission cars;
although salary sacrifice arrangements that are already in place will remain protected until April 2018 (or April 2021 for cars, accommodation and school fees).
- National minimum wage rate increases
The national minimum wage and the national living wage will be increased from 1 April 2017 as follows:
- Workers aged 25 and over (national living wage) – from £7.20 to £7.50 per hour;
- Workers aged 21 to 24 – from £6.95 to £7.05 per hour;
- Workers aged 18 to 20 – from £5.55 to £5.60 per hour;
- Workers aged 16 to 17 – from £4.00 to £4.05 per hour;
- Apprentice rate – from £3.40 to £3.50 per hour;
- Daily accommodation offset – from £6.00 to £6.40.
The government also intends to strengthen its enforcement of the national minimum wage with an additional investment of £4.3 million each year.
- Legal support from employer: tax exemption extended to witnesses
Any employee called to give evidence in court will not be liable to tax on legal support received from their employer (whereas currently the tax relief only applies to support received by an employee in defending allegations against them).
- Off-payroll working in the public sector
In all public sector engagements of workers supplied by “personal service companies”, payments will be treated employment income and either the public sector engager or third party intermediary (if any) will be required to account for tax on those payments. This takes effect from 6 April 2017.
FROM APRIL 2018:
- Changes to the treatment of termination payments
As announced in the 2016 budget, employers will have to pay national insurance contributions on termination payments (except for the first £30,000, for which the current exemption from income tax and NICs will remain).
In a change to its proposals to apply income tax to certain “post-employment” and “expected bonus” payments, the government confirmed that income tax will be applied only to the equivalent of an employee’s basic pay for notice which is not worked. However, this will be monitored and if there is manipulation, the government will act.
There was no further mention of measures in relation to termination payments, on which the government has consulted. A consultation response and revised draft Finance Bill is expected on 5 December 2016.
To find out more about the issues raised in this post, get in touch with our employment team or call +44 (0) 161 829 2599.
The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
Image with thanks to Gov.Uk