Yesterday the Chancellor of the Exchequer George Osbourne announced the 2016 Budget, but what does it mean for Employers?
We’ve outlined the top points impacting payroll.
1 – Increase in Personal Allowance
The tax free personal allowance will increase to £11000 from April 2016 as previously announced. From April 2017 this will rise to £11500, a figure higher than expected. The point at which you will pay higher rate tax will also be increased rising from £42385 currently to £43000 in April 2016 and then £45000 in 2017.
2 – Employers National Insurance on Pay-offs above £30000.
From April 2018 employers will be required to pay National Insurance contributions on pay-offs, such as termination payments, above £30000. Issues have been raised about the negative impact this could have on businesses already in difficult times and needing to make redundancies.
3 – Consultation to Extend Shared Parental Leave and Pay
The government have confirmed that in May 2016 a consultation will run to consider the impact of extending shared parental leave and Pay to working Grandparents.
4 – Removal of Employer – Supported Childcare
Tax free childcare vouchers can currently be provided by employers to reduce tax and NI liability for working parents. From early 2017 the government is introducing tax free childcare to help working parents which is planned to be rolled out to all eligible parents by the end of 2017. As a result schemes for Employer supported salary sacrifice for childcare vouchers will only remain open to new entrants until April 2018. After this point only existing members will be able to use such schemes.
5 – Higher NMW and NLW
The new National Living Wage (NLW) comes into effect next month with all employees aged over 25 entitled to at least £7.20 per hour. There are concerns about some employers not being aware of this increase as changes to NMW normally come into play each October.
Leaked a little earlier than yesterday’s budget the government has announced that the October increase in NMW, which will now apply to 21 to 24 year olds, will be £6.95 per hour from October 2016.
6 – Salary Sacrifice
The government is considering limited the range of benefits that attract income tax and NIC advantages when part of a salary sacrifice. They have commented that the intention of that pension savings, childcare and health related benefits (such as cycle to work schemes) should continue to benefit from income tax and NICs relief through salary sacrifice schemes.
CE Back Office provide outsourced payroll bureau and back office support services. This includes management of PAYE payroll, CIS subcontractor payments and auto-enrolment. Based in Cheshire, they specialise in offering payroll and back office services to business within the care, construction, hospitality and recruitment sectors.