In the Autumn Budget 2018 the Chancellor announced a number of changes affecting employers:
Minimum Wage Increase
From April 2019 the National Minimum Wage will be increased as follows:
- Employees aged 25+ : £8.21 (currently £7.83)
- Employees aged 21-24 : £7.70 (currently £7.38)
- Employees aged 18-20 : £6.15 (currently £5.90)
- Employees aged 16-17 : £4.35 (currently £4.20)
- Apprentice rate : £3.90 (currently £3.70)
Off Payroll Rules Tightened (IR35)
The IR35 rules were brought in to tackle "disguised employment", where an organisation engages a worker on a self employed basis, through an intermediary but in reality the worker is treated like an employee and should be taxed like an employee under IR35.
From April 2020 the rules in relation to medium and large companies will be tightened up and the responsibility to check whether the individual should pay tax under IR35 will move from the individual to the organisation who is engaging the worker.
Additional detail on the new rules is awaited following further consultation but it is expected that small companies with less than 50 employees will be exempted from the rule change.
Apprenticeship Levy : Co-Investment Rate Decreased
In good news for small employers, the apprenticeship co-investment rate is to be halved.
For employers whose salary bill is not large enough to oblige them to pay the apprenticeship levy (£3 million per annum) they instead share the cost of training and assessing apprentices with the Government. Currently the co-investment rate which must be paid by the employer is 10% of the cost but this will reduce to 5%, with the Government paying the remaining 95%. No date has been announced as yet for this change.
Access to Employment Allowance Restricted
The Employment Allowance provides businesses and charities with up to £3000 off of their employer's National Insurance bill. From the 2020/21 tax year the Employment Allowance will be restricted to businesses with a National Insurance bill below £100,000 in the previous tax year.
Termination Payments to be Subject to Employer's NICs
Further reforms to the treatment of termination payments have been confirmed to be implemented from 2020.
Currently termination payments are not generally subject to the payment of National Insurance contributions, however from 2020 employer's National Insurance contributions will be payable on amounts in excess of £30,000.
For advice on your obligations as an employer please contact me at firstname.lastname@example.org
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The Chancellor opened his Budget 2018 speech by saying it would be “a Budget for hardworking families… the strivers, the grafters, and the carers who are the backbone of our economy.” But what does this mean for small businesses?