In what has been confirmed as the last formal Spring Budget to be delivered by the Government, this year’s announcement brings mixed news for employees and employers alike. Self-employed individuals face the biggest loss, with an increase in National Insurance Bills, while Class 2 NI payments are set to be abolished, and the National Living Wage increase in April will add an extra £500 er employee per year.
So, what’s really in store for employers and employees?
THERE is much change about this year and businesses need to be prepared to be adaptable and financially savvy, although the news is not all bad. Here are some of the specifics you’ll need to be thinking about:
- AUTO-ENROLMENT: 2017 marks the final year for employer pension auto-enrolment and many small businesses in particular are set to join a pension scheme this year. These auto-enrolled pensions are payable to any employee who is over the age of 22 but under State Pension Age and earns more than £10,000 per year; any employee outside of these boundaries must then be enrolled if they request it. 2017 also marks the final year when necessary contributions are 2% of an employee’s wage, with a 1% contribution from the employer and 1% from the employee. These contributions then rise to 5% (2% employer and 3% employee) in April 2018, before rising again to 8% in April 2019 (3% employer, 4% employee, 1% tax relief). Pensions are an unprecedented additional costs for businesses, and although they benefit employees, employers need to be ready and aware of the potential costs.
- NATIONAL LIVING WAGE: in the Spring Budget, Philip Hammond confirmed that the increase in the National Living Wage from April 2017 will be equivalent to £500 per employee, following a rise to £7.50 per hour.
- PERSONAL TAX ALLOWANCE INCREASE: for employees, the personal tax allowance is rising again for the seventh year in a row to £11,500. According to the Chancellor, this, combined with the National Living Wage increase will make £29m UK employees better off.
- NI CONTRIBUTION CHANGES: Class 4 National Insurance Contributions, specifically affecting self-employed individuals will rise from 9% to 10% this year, rising again to 11% in April 2019, likely affecting2.5millionpeople. Accordingto Hammond, this represents 60p extra per person per week, following his assertion that previously, lower contributions for the self-employed offset a disparity in pension and benefit entitlement between self-employed people and those in employment, which are no longer as prevalent. Class 2 contributions meanwhile will be abolished from 2018.
In other news, a key area of focus for businesses should be on the health and wellbeing of staff. According to figures released from the Office of National Statistics, in 2016, 137.3million working days were lost to sickness or injury, equivalent to 4.3 days per person. Ofthis, 24.8% ofthese days were attributed to coughs, colds and minor ailments, while a further 22.4% or 30.8million related to musculoskeletal problems, including back pain, neck and upper limb problems. Businesses who successfully improve their figures when compared to the national average will reap the rewards by reducing costs and increasing productivity.
Abi Howell, Director
Truly Tailored Recruitment