Autumn Budget 2017 – what employers need to know

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Last Wednesday the Chancellor delivered the first budget since the general election, it was also the first Autumn (as opposed to Spring) budget. Were there any interesting announcements that employers need to know?

The short answer is yes.

A key announcement for employers was that the government would publish a discussion paper as part of the response to the Taylor Review. In July the Taylor Review made a number of recommendations on the issue of employment status including a recommendation that “worker” status be redefined as “dependant contractor” status and that there be additional legislative reform to define the terms more specifically and clearly.

This discussion paper will consider the case and options for reform of the employment status test. The government acknowledged that this is a difficult and complex area and they intend to fully consult stakeholders. This is not an immediate change but will be an important one if it comes about and we will of course keep you updated. 

Another area to be watchful over is the use of Private Service Companies (PSCs) and off payroll working. There has been concern that PSCs have been used inappropriately to reduce an individual’s tax bill by paying the individual through a company rather than as an employee.

In April 2017 this process was reformed in the public sector and in the public sector responsibility for the correct tax being paid now falls on the paying organisation rather than the individual. In the budget the Chancellor announced that the government was looking into the issue in the private sector. It was stated that the government had already commissioned research on this issue and that there would be consultation about it. The research is due to be published in 2018 – so again watch this space for updates.

Other announcements included increases in pay scales and tax thresholds. Firstly there will be an increase in the National Minimum Wage.

From April 2018 the rates will be increased to:

  • Apprentices: £3.70 an hour
  • 16-17 year olds: £4.20 an hour
  • 18-20 year olds: £5.90 an hour
  • 21-24 year olds: £7.38 an hour 

Also from April 2018 the National Living Wage for those aged 25 and over will increase from £7.50 an hour to £7.83 an hour.

Finally, there will be a change to the tax free personal allowance. From April 2018 the amount individuals will be entitled to before tax will rise from £11,500 to £11,850. In addition, the higher rate tax threshold will rise to £46,350. There are also likely to be further rises in the future as the government has given its commitment to raise the personal allowance to £12,500 and the higher rate tax threshold to £50,000 by 2020.

About ArwenMakin_ESPLaw

Arwen Makin

After studying law at Cambridge University, I trained at leading national law firm Mills & Reeve, qualifying into their employment team in 2002. I have extensive employment law experience, gained through advising both employers and employees on a wide range of issues, across an array of sectors – including but not limited to finance, education, hospitality, transport and retail. This diverse experience means I am ideally placed to provide advice in relation to professional conduct and regulatory matters.

I am now a senior solicitor at ESP Law, part of ESP Group – a very different employment law firm and HR consultancy business, with our own in-house legal and HR experts. Taking pride in our reputation for delivering sensible, straight-talking and practical advice – at the same time as being approachable and supportive – I am passionate about the way ESP works with its customers. By building on trusted relationships and providing prompt support at the earliest stage of any issue, we help ensure that sound commercial decisions are taken.

The vision for our business was to deliver an exceptionally personal, yet cost-effective service that truly meets the evolving needs of modern and forward-thinking HR teams and their organisations. I’m lucky to be among a team of very talented employment lawyers who work hard day in, day out, to make this vision a reality.

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