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This is the first major economic statement since the Brexit vote and Chancellor Philip Hammond underlined, in the Autumn Statement, a need to prepare the economy to be “match fit” for the transition that will follow the EU vote.
There was a significant focus on infrastructure in particular housing and transport.
In relation to encouraging business growth, Mr Hammond outlined a commitment to ensure that Britain remains the “number 1 destination” for business. A £400m capital fund will be set up to unlock £1bn for growing firms and corporation tax will fall to 17% as planned. It is hoped that this will encourage business growth.
There were also a number of announcements regarding payroll and tax that will affect us in HR.
Tax and national insurance savings made by using a salary sacrifice arrangements will only be allowed on company pensions, cycle to work, ultra-low emission company cars and childcare vouchers. Employees using salary sacrifice for purchases such as mobile phones and computer equipment will no longer be able to benefit from the tax and national insurance savings when buying items from pre-tax salary.
The tax-free personal allowance will rise to £12,500 and the higher rate income tax threshold will rise to £50,000, from its current rate of £43,001.
There will also be changes to the national insurance treatment of termination payments, although these changes will not come into force until April 2018. Essentially, from April 2018, termination payments over £30,000 that are subject to income tax will also be subject to employer’s national insurance contributions. However, the first £30,000 of genuine compensation for loss of employment will remain exempt from both income tax and national insurance contributions.
Finally, it is expected that the national living wage will rise from £7.20 per hour to £7.50 per hour in April 2017. This would mean a pay rise of more than £500 per year for a full-time worker, earning the national living wage. Remember that from April 2017 the national minimum wage will rise in April along with the national living wage.
There are no monumental changes from an HR or employment law perspective as outlined in the Autumn Statement. However, we would suspect that 2017 is gearing up to be a busier year in HR and employment law than perhaps the last few years have been, since the implementation of shared parental leave. Keep a look out over the next few months for our preview of the likely changes in 2017.
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