On 23 November 2016 the Chancellor of the Exchequer delivered the reported last Autumn Statement. Whilst there were no major surprises, employers should be aware of the following changes:
- The income tax and capital gains tax reliefs associated with employee shareholder status (ESS) will be abolished for ESS shares acquired in consideration of an ESS agreement made on or after 1 December 2016. For ESS arrangements entered into before 1 December 2016, the tax advantages will continue to apply. This is with a view to the scheme being phased out completely in due course.
- From April 2017 the National Minimum Wage (“NMW”) will be increased to:
- £7.50 for adults over 25
- £7.05 for adults aged 21 to 24
- £5.60 Development rate for those aged 18 to 20
- £4.05 for young workers aged 16 to 17
- £3.50 for Apprentices aged under 19 or in the first year of an apprenticeship
- In addition, the Government has pledged to invest £4.3 million each year to strengthen NMW enforcement with specific help for small businesses to understand their obligations in this respect.
- As we reported last month from April 2018, the exemption from income tax and NICs for termination payments up to the current threshold of £30,000 will be retained. Employer NICs will be payable on payments above £30,000.
- There will be a clamp down on salary sacrifice schemes. Employees will continue to benefit from tax savings in respect of pension schemes, childcare vouchers, cycle to work schemes and ultra low emission cars but all others will be subject to the same tax as cash income.
If you have any questions as to how this may affect your business, please contact a member of the Employment Team.