The Autumn Statement was announced on 23 November 2016 and includes changes that will affect employment law.
National Living Wage and Minimum Wage Increases
Firstly, the National Living Wage (‘NLW’) will increase by 4.2%, from £7.20 to £7.50 per hour from April 2017, giving full time workers a pay rise of more than £500 per year. National Minimum Wage will also rise by 10p per hour for workers aged 21-25 and 5p per hour for workers aged 16-20.
Tax Threshold Increase
The personal allowance will rise allowing employees to earn £11,500 before tax is payable. The higher rate threshold will increase to £45,000 in 2017 and increase to £50,000 by 2020.
Changes to Salary Sacrifice Schemes
From April 2017 the tax and national insurance advantages of salary sacrifice schemes will be removed. Arrangements that were in place before then will be allowed to continue until April 2018 and until April 2021 in the case of cars, accommodation and school fees. This may mean that employers will decide to review the benefits provided to employees as some may no longer be cost effective for them to offer.
Employee Shareholder Status (‘ESS’)
This was a new type of employment status introduced in 2013 whereby employees could be granted shares in the company they worked for in return for giving up certain employment rights including unfair dismissal. There were tax advantages of ESS which will be removed for new arrangements entered into after 1 December 2016, as it is thought they were mainly being used for tax planning purposes by high net worth individuals. It is thought that ESS will be abolished all together in the new future.
For more information please contact a member of our Employment Team on 01279 755777.