There were a number of announcements made as part of the Autumn Statement last month that are of relevance to employers, which are considered below in brief by Amy Cunningham of Cunningham Legal Limited.
National Minimum/Living Wage
This will be increased from April 2017, as follows.
The National Living Wage for those aged 25 and over will increase from £7.20 per hour to £7.50 per hour. There are also rises for the rates applying to those under 25.
The National Minimum Wage (NMW) will increase:
for 21–24-year-olds — from £6.95 per hour to £7.05
for 18–20-year-olds — from £5.55 per hour to £5.60
for 16–17-year-olds — from £4.00 per hour to £4.05
for apprentices — from £3.40 per hour to £3.50.
The Government also announced additional investment in the enforcement of NMW.
From April 2017, many employee benefits that are currently tax-free are to be taxed. However, enhanced employer pension contributions to registered pension schemes, childcare vouchers and cycle to work schemes will not have their tax status changed.
Employee shareholder status
The income tax and capital gains tax reliefs that come with employee shareholder status (ESS) will be abolished for ESS shares that are granted under an ESS agreement made on or after 1 December 2016.
However, for any ESS shares granted prior to 1 December 2016, the tax advantages will continue to apply.
In addition, it was made clear that the Government intends to abolish ESS status for new schemes completely as soon as possible.
Tax treatment of termination payments
The first £30,000 of an ex gratia termination payment will remain exempt from income tax and National Insurance contributions (NICs) and any payment over £30,000 will be subject to income tax and employer NICs.
Notably, the Government is not at the present time proceeding with its controversial proposal to tax certain “post-employment” and “expected bonus” payments as earnings, so income tax will only be applied to the amount of the employees’ basic pay if they do not work their notice period. Obviously, the Government will continue to monitor this situation.
Last reviewed 16 January 2017