Following the delivery of the Autumn budget yesterday by Phillip Hammond, lots of discussion has already taken place about the announcements and accompanying detail. Don’t fancy sifting through it? I have set out my summary of the key points for businesses operating in the recruitment sector to help.
Key announcements to take note of include:
- In April 2018, the national living wage will rise from £7.50 per hour to £7.83 per hour for those aged over 25.
- The government will publish a discussion paper in response to Matthew Taylor’s recent review on employment practices. The paper will consider options for long-term government reform to clarify the employment status tests under our employment law. This announcement should be welcomed, particularly following the recent flurry of status cases and taking into account the comments I have made about employment law in my recent blogs on this topic.
- Not surprisingly, there will be a consultation into whether the IR35 reforms to off-payroll working should be extended into the private sector. This follows the changes introduced for public sector engagements in April of this year, which put the responsibility for determining the tax and national insurance contributions treatment on to the public sector body. Following those changes, some have been expecting a proposed extension into the private sector.
The key question as I see it is, will this consultation be genuine or has the decision already been made (with consultation just ticking the box)?
- There were a range of tax proposals announced. These include:
(a) The VAT threshold for small businesses has stayed the same and will not be reduced in the next two years;
(b) Continued improvements to the guidance for employers on the taxation of employee business expenses, in particular addressing provisions on travel and subsistence and the simplification of the claims process for tax relief on employment expenses;
(c) Measures to improve the administration of reimbursing employee business travel and subsistence, which should include a removal of the requirement to check receipts when reimbursing using benchmark scale rates.
(d) More will be done to tackle employers who misuse the Employment Allowance to avoid paying the correct amount of national insurance contributions. The gist is that HMRC will collect a bond of £3,000 from employers who have a history of misusing the Employment Allowance rules through the setting up of a number of small, artificial companies to claim more Employment Allowance. HMRC will retain the bond if an invalid claim is made by the employer in the future, and return it where the claim is found to be legitimate. This measure will have full roll out from April 2019.
(e) New national insurance contributions measures, which includes the abolition of class 2 NICs and introducing a new class 1A NICS on termination payments over £30,000, is to be postponed for a year, with the measures taking effect in April 2019.
(f) The tax free personal allowance for individuals will rise to £11,850 by April 2018. The higher rate tax threshold will rise to £46,350.
I hope that you find this summary useful. Please do get in touch if you require any legal advice or assistance as a result of the announcements made or otherwise. We are more than happy to help.
The Chancellor says he recognises that small businesses are under great "pressure" at the moment. Therefore, he will not reduce the VAT threshold for small businesses from £85,000, and will bring forward the uprating of business rates based on the CPI inflation index not RPI by two years, saving businesses £2.3bn.