With chancellor George Osborne recently announcing the Conservative government’s 2016 Budget, we decided to round up the changes that will most affect employment and HR.
Osborne was keen to highlight the fact that 150,000 new jobs have been created since his autumn statement, and that a record number of people are now in work – with an employment rate of 74.1% and an unemployment rate of 5.1%.
There were a number of announcements earlier this month that employers and HR professionals should be aware of, including:
Tax cuts for businesses: The chancellor stated that “This is a budget that gets rid of [tax] loopholes for multinationals and gets rid of taxes for small businesses.” This means corporation tax will fall to 17% by 2020, and business rates will fall for SMEs, with the business rate threshold doubling to £15,000. As of April 2017, some 600,000 SMEs won’t be paying any business rates at all.
Tax cuts for individuals: Starting next year, the tax-free personal allowance will increase by around 10% to £11,500, while the higher 40% threshold will jump to £45,000. Those who are self-employed will not have to pay class 2 National Insurance contributions from 2018 onwards.
Redundancy tax: The government has charted plans to add National Insurance taxes onto redundancy payments, meaning it will become more expensive to let staff go.
Personal contractors: There will be a ‘crack down’ on contract workers using personal service companies, and public sector organisations will be held responsible for ensuring all workers and contractors are paying the right amount of tax.
UK infrastructure: Further improvements to the country’s infrastructure are scheduled for the near future, although a start date has not been given. This will include the creation of a Northern Powerhouse, with improvements to the road connection between Manchester and Sheffield and a four-lane M62.
Lifetime ISA: To help young people save for their future, Osborne announced the introduction of a Lifetime ISA for anyone under the age of 40. With an annual limit of £4,000, the government will add £1 for every £4 that an individual puts into the Lifetime ISA. It is not yet clear how this will fit into personal pension savings.
Lucy Bristow can help you keep up-to-date with any employment and HR changes that may affect your business.