We briefly round up the key points of interest for employment lawyers and HR from the Budget presented to Parliament on 29 October 2018.
Employer's National Insurance Contributions (NICs) on termination payments over £30,000
The Government recently reformed the rules on the taxation of termination payments. You can read our detailed guide to these reforms here.
One of these reforms was the introduction of an employer's NICs charge on termination payments of £30,000 or more. This had been due to come into force on 6 April 2019. However, this has been delayed by a year to 6 April 2020. This will mean a significant tax saving for employers making large termination payments pre-6 April 2020.
Changes to IR35 for large and medium sized private companies
The Government announced that it intends to reform the off-payroll working rules (known as IR35) in the private sector. This follows the roll-out of reform in the public sector which took effect last year.
From 6 April 2020, responsibility for determining whether an individual/personal service company (PSC) engaged by a third party should be treated as an employee for tax purposes, and therefore, whether employee income tax and NICs should be deducted from payments by the third party to them, will move from the individual/PSC to the organisation, agency or other third party that engages the worker.
This is likely to result in a significant change in practice for a large number of employers, which may wish to look now at how to restructure existing arrangements.
National minimum wage rises from 1 April 2019
The hourly rate of the National Minimum Wage and National Living Wage will rise on 1 April 2019 as follows:
- National Living Wage for 25 year olds and above: rises from £7.83 to £8.21
- The 21 – 24 year old rate: rises from £7.38 to £7.70
- The 18 – 20 year old rate: rises from £5.90 to £6.15
- The 16 – 17 year old rate: rises from £4.20 to £4.35
- Apprenticeship rate: rises from £3.70 to £3.90
- Accommodation offset rate rises from £7.00 to £7.55