The Chancellor of the Exchequer delivered his 2017 Autumn Budget speech to the House of Commons last week.
We set out below the key points that will be of interest to employers and employees.
The Government has confirmed increases to the National Living Wage and the National Minimum Wage.
From April 2018, the National Living Wage (which applies to workers aged 25 and over) will be increased by 4.4% from £7.50 to £7.83. It is estimated that this will benefit over 2 million workers.
At the same time, the National Minimum Wage rates will be increased as follows:
For 21 to 24 year olds - from £7.05 to £7.38;
For 18 to 20 year olds - from £5.60 to £5.90;
For 16 and 17 year olds - from £4.05 to £4.20; and
For apprentices - from £3.50 to £3.70.
A discussion paper is to be published by the Government as part of its response to the Taylor review of employment practices. This will explore the ways in which employment status tests for both employment rights and tax can be made clearer.
The Government has acknowledged that this is an important and complex issue and that any potential changes will need to be carefully considered.
In accordance with its commitment to raise the tax-free personal allowance to £12,500 and the higher rate tax threshold to £50,000 by 2020, the Government has announced the following increases to take place in the 2018/19 tax year:
Tax-free personal allowance to be increased from £11,500 to £11,850; and
Higher rate tax threshold to be increased from £45,000 to £46,350.
The full Budget report published by the Government last week further details several changes that will be made to the taxation of employee expenses (for example, in relation to travel and subsidence expense claims).
IR35 ‘off payroll’ Rules and the Private Sector
The IR35 rules for engagements in the public sector were reformed by the Government in April 2017, with all public sector bodies being made responsible for determining the IR35 status of any contractors providing services to them via limited companies. This was to ensure that those individuals structuring their working arrangements through a limited company but who effectively work as employees are taxed as employees.
The Government has confirmed that whilst there will be no immediate extension of the reforms to the private sector, a consultation will commence in 2018 in relation to this possibility.