In his 2016 Budget, the Chancellor announced several changes which are of relevance to HR and employment.
- From April 2018, employers will be required to pay national insurance contributions on payments over £30,000. For employees earning over £770 per week (at present, although this figure may increase by then), the employer national insurance contributions currently stand at 13.8%: a substantial increase for employers.
- All payments in lieu of notice and certain damages payments will be taxed as earnings from April 2018.
- The government is promising a consultation on how to implement the extension of shared parental leave to working grandparents in May 2016, and also will be asking for ways in which the current eligibility criteria and notification processes can be simplified.
- The government is concerned about the growth of salary sacrifice schemes (over 30% increase in requests for clearance for such schemes from employers to HMRC since 2010), and the government is considering limiting the range of benefits that can be supplied with income tax and national insurance contribution advantages under such schemes. However, it intends that pensions, childcare and health-related benefits eg Cycle to Work should still be covered. There’s no promise of a consultation to follow.
- A lifetime limit of £100,000 has been introduced on gains exempt from capital gains tax (CGT), which will affect employee shareholders who sell their shares if they have reached the lifetime limit (previously, the entire gain from the sale of those shares would be CGT-free).
- The government intends that under a new apprenticeship levy from April 2017, employers will receive a government payment equal to 10% of their monthly apprenticeship levy contributions that will be available for them to spend on apprenticeship training.
- From April 2017, employers will be denied the NICs employment allowance for a period of one year if they are subject to a civil penalty for employing illegal workers.