The Chancellor of the Exchequer yesterday handed down his second Budget of 2015, summarised in our HSF tax briefing here. Points of interest from an employment law perspective include:
from April 2016, there will be a compulsory national living wage for workers of 25 years and older of £7.20 per hour (compared with the national minimum wage of £6.50 an hour currently and £6.70 from October 2015), rising to £9 an hour by 2020; the impact of this will be offset by a reduction in national insurance contributions for small employers; the introduction of a new apprenticeship levy on all large firms to support all post-16 apprenticeships in England, to provide funding that each employer can use to meet their individual needs. The funding will be directly controlled by employers via the digital apprenticeships voucher, and the Chancellor stated that firms that are committed to training will be able to get back more than they put in; consultation will take place on devolving powers on Sunday trading to city mayors and local authorities, potentially allowing them to extend Sunday trading for additional hours within parameters they set; working age state benefits are to be frozen, but this will not apply to statutory maternity, paternity and sickness payments or disability benefits; the cost of certain employee insurances is likely to increase given an increase to insurance premium tax from 6% to 9.5% from November 2015.
The Government will also consult on
- simplifying the tax and NICs treatment of termination payments;
- draft legislation to include almost all Benefits in Kind in the statutory framework for payrolling. Additional reporting requirements for employers payrolling cars will be introduced from April 2017;
- removing tax relief on home-to-work travel and subsistence expenses for individuals employed through an employment intermediary.
The Government will engage with business later this year on how to improve the effectiveness of the existing employment intermediaries legislation (‘IR35’) which is designed to protect against disguised employment. A discussion document will be published after the Summer Budget.
A further target for potential future reform is the growing use of salary sacrifice schemes. The Government has said that it will actively monitor the growth of such schemes and their effect on tax receipts.
Pensions measures are discussed in our ebulletin here.