The Autumn Statement 2015: What does it mean for employers?
On Wednesday, the Chancellor of the Exchequer, George Osborne, delivered the Autumn Statement 2015. Although the main focus was on the economy and national security, we have outlined the key features of the Autumn Statement for employers.
- An apprenticeship levy will be introduced in April 2017, payable by employers at a rate of 0.5% of their pay bill. Each employer will receive an allowance of £15,000 to offset against their levy payments, which will mean that employers with a wage roll bill of less than £3million will not have to pay the levy. The Government also intends to increase the number of apprenticeships to 3 million by 2020.
- The plans to scrap working tax credits have been abandoned. Employers were likely to be faced with increase wage demand pressures if it had been introduced. Unfortunately, the plan appears to be to replace the Working Tax Credits with what might be a less generous Universal Credit so the pressure remains looming on the horizon, but is not immediate.
- There will be an increase in funding to expand the Fit for Work service, supporting more people on long-term sickness absence with return to work plans, and for Access to Work, helping disabled people remain in work.
- There will be an increase to 30 hours of free childcare for working families with three and four year olds from September 2017. This will only be available to parents who each work more than 16 hours per week with incomes of less than £100,000 a year. This may lead to requests for increased working hours, particularly from employees currently working below the 16 hour threshold.
- The increases in minimum contribution levels for automatic enrolment pension schemes are being delayed, so that the October 2017 increase from 2% to 5% will now take place in April 2018 and the October 2018 increase from 5% to 8% will now take place in April 2019. This makes far more sense in terms of having the period start from the new tax year.
- The Government also plans to investigate the growth of salary sacrifice arrangements and introduce technical changes to streamline and simply tax rules for employee share schemes.
Surprisingly, the Chancellor did not comment on the Government’s recent consultation into changes to the taxation of employment termination payments. The Government had indicated that it would publish a consultation response document at the time of the Autumn Statement, but this is still awaited.
There was also no announcement on the proposed changes to the IR35 rules, which apply to those who work through their own limited company but would otherwise be regarded as employees. We will monitor when further statements are made on these topics.