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Employer Impact

A quick summary of all you need to know about the budget 2018 if you are an employer…

 Apprenticeship levy

The Government are halving the cost of apprenticeships for those employers using co-investment. Employers will now have to cover just 5% of the apprenticeship cost with the rest being covered by the government from April 2019. Large businesses will also be able to invest up to 25% of their apprenticeship levy to their supply chain.

National Living Wage and National Minimum Wage Increases

The National Living Wage is increasing from £7.83 to £8.21 per hour. The changes are anticipated to impact 2.4 million workers, increasing an average living wage workers salary by £690 per year, costing an employer £805.92 per year with Employers National Insurance and Employer Pension contributions.

National Minimum Wage will also be increasing;

  • 21 – 24 year olds £7.70 per hour
  • 18 – 20 year olds £6.15 per hour
  • 16 – 17 year olds £4.25 per hour
  • Apprentice rate £3.90 per hour

Termination Payments

The government will be announcing changes to NIC treatment of Termination Payment in the finance bill to be published in November 2018.

Corporation Tax

Hammond has confirmed corporation tax will be reduced to 17% in 2020 as planned and will remain at 19% until then.

 Fuel Benefit Charges and Van Benefit Charges

Fuel benefit charges will increase in line with RPI from April 2019 with van benefit charge increasing in line with CPI.

IR35 / Off Payroll Working

The off payroll working rules will be extended to the private sector, although this will not start until April 2020 to allow businesses to prepare and will only impact large and medium businesses. Further guidance will be issued in Summer 2019. These changes will impact any medium and large business engaging with Personal Service Companies or using Recruitment Agencies that place Personal Service Company Contractors.

Restrictions to the Employment Allowance

From April 2020 the Employment Allowance (a £3000 allowance Employers can offset against Employers National Insurance Contributions) will be restricted to businesses with an Employers NI bill of under £1000,000 in the previous tax year.

Increase in Annual Investment Allowance (AIA)

The chancellor has announced a temporary five fold increase in the AIA to £1 million to help businesses to grow. The changes will impact all qualifying investment in plant and machinery between January 2019 and December 2020.

VAT Threshold

VAT threshold will remain at £85,000 until April 2022.

Business Rates

Small retailers will have business rates cut by a third from April 2019. This will impact retailers with a rateable value of under £51,000 affecting 90% of retailers.

Employee Impact

We’ve discussed the impact for employers but what about your employees….

National Living Wage and National Minimum Wage Increases

The National Living Wage is increasing from £7.83 to £8.21 per hour. The changes are anticipated to impact 2.4 million workers increasing an average living wage workers salary by £690 per year.

National Minimum Wage will also be increasing;

21 – 24 year olds £7.70 per hour 18 – 20 year olds £6.15 per hour 16 – 17 year olds £4.35 per hour Apprentice rate £3.90 per hour

Increased Tax Threshold

Personal Allowance will increase from £11,850 to £12,500 per year making a saving of £130 per year for tax payers in April 2019. There will also be an increase in the higher rate tax threshold from £46,350 to £50,000 from April 2019 which is anticipated to result in 1 million less higher rate tax payers.

Changes to Universal Credit for Working Families with Children

The Chancellor has announced an increase in the Universal Credit Work Allowance by £1,000 from April 2019. This means that 2.4 million households will keep an extra £630 of their income each year.

 

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