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1st December 2016

Autumn Statement Key Points for Employers

On 23 November 2016 the Chancellor delivered the Autumn Statement for 2016, providing for a number of future changes in employment law.

Employee shareholder status tax reliefs are to be abolished. The tax reliefs, in particular for income tax and capital gains tax, associated with employee shareholder status will be abolished for shares acquired by way of an employee shareholder status agreement on or after 1 December 2016. The advantages will continue for those acquired before 1 December 2016.

The following rates will be increased from 1 April 2017:

  • National living wage (age 25 and over) will increase from £7.20 to £7.50;
  • Standard adult rate (age 21 to 24) will increase from £6.95 to £7.05;
  • Development rate (age 18 to 20) will increase from £5.55 to £5.60;
  • Young workers rate (age 16 to 17) will increase from £4.00 to £4.05;
  • Apprentice rate (age under 19 or in the first year of an apprenticeship) will increase from £3.40 to £3.50.

The Government has also announced an investment of a further £4.3 million each year to strengthen the enforcement of the National Minimum Wage.

In respect of termination payments, from April 2018 the £30,000 threshold for exemption from income tax and National Insurance contributions will be retained. Employer National Insurance contributions will, however, become payable on termination payments of over £30,000. The Government has confirmed that income tax will only be applied to the employee’s basic salary if notice is not worked.

In respect of salary sacrifice schemes, from April 2017 the only benefits that will continue to enjoy tax and National Insurance contribution relief if provided through such schemes are:

  • Enhanced employer pension contributions to registered pension schemes (and pensions advice);
  • Childcare benefits;
  • Cycles and cyclists’ safety equipment provided under the cycle to work scheme and
  • Ultra-low emission cars.

Arrangements already in place will be protected until April 2018 or 2021 for certain schemes.

Finally, it has been announced that from April 2017, all employees called to give evidence in court (not just those dealing with allegations against themselves) will not face a charge to tax on legal support subsidised by their employer.

Source: Chadwick Lawrence

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