Autumn Statement Review 2016
Autumn Statement Review 2016 For Employers
The new chancellor has announced the autumn statement review. We look at this from an employers viewpoint.
National Living wage
A rise in the National Living Wage will come into effect from April 2017. For over 25’s this will increase from £7.20 to £7.50 per hour. For 21-24 years old the rate increases from £6.95 to £7.05. 18-20 years old the rate increases from £5.55 to £5.60, 16-17 years old from £4 to £4.05 and for apprentices from £3.40 to 3.50 per hour.
Employer and employee NI thresholds will be aligned from April 2017 at £157 per week. The maximum cost to businesses from the this change will be an annual £7.18 per employee.
Following consultation, the tax and employer National Insurance advantages of salary sacrifice schemes will be removed from April 2017, except for arrangements relating to pensions, childcare, Cycle to Work and ultra-low emission cars. This will mean that employees swapping salary for benefits will pay the same tax as the vast majority of individuals who buy them out of their post-tax income. Arrangements in place before April 2017 will be protected until April 2018. Arrangements for cars, accommodation and school fees will be protected until April 2021.
Personal Tax allowance
The Personal income tax allowance is set to rise in April 2017 to £11,500 from £11,000, with a further increase to £12,500 by 2020.
The Higher Rate income tax threshold will rise in April 2017 to £45000 with a further increase to £50,000 by 2020. This this may not apply in Scotland as the Scottish Government now set tax rates and these have not yet been announced.
From April 2018 termination payments over £30,000, which are subject to income tax, will also now be subject to employer NICs. Tax will only be applied to the equivalent of an employee’s basic pay if their notice is not worked. The government will monitor this change and address any further manipulation.
The first £30,000 of a termination payment will remain exempt from income tax and National Insurance.
Full details on the Autumn Statement Review 2016 can be found here.
Autumn Statement Review 2016 – Highland Payroll Services