Key points from the 2016 Autumn Statement

Chancellor Philip Hammond has delivered the Autumn Statement – it will be his first and apparently his last. There weren’t too many surprises, but what changes do employers need to be aware of?

1  National Living and Minimum Wage rises

As of April 2017, the National Living Wage (the rate for those aged 25 and over) will increase by 30p to £7.50 per hour.

The hourly National Minimum Wage is set to rise as follows:

  • for 21 to 24 year olds –£7.05 (currently £6.95)
  • for 18 to 20 year olds – £5.60 (currently £5.55)
  • for 16 to 17 year olds –£4.05 (currently £4.00)
  • for apprentices – from £3.50 (currently £3.40)

2  Small businesses will be helped to understand minimum wage rules

The government has also said that £4.3 million will be spent on assisting small businesses getting their head around minimum wage rules and cracking down on employers who violate the law by not paying their workers the national minimum wage rates.

3  National Insurance aligned

From April 2017, the government will align the employee and employer National Insurance thresholds at £157 per week. The maximum cost to business will be £7.18 per employee a year.

4  Crack down on salary sacrifice schemes

The Chancellor announced a clamp down on salary sacrifice schemes. A salary sacrifice arrangement is an agreement between an employer and an employee, which allows the employee to give up part of their salary for a non-cash benefit, for example, childcare vouchers. It creates tax savings for employers and employees.

As of April 2017, the majority of salary sacrifice schemes will be subject to the same tax as cash income. There are some exceptions, such as childcare, cycling to work schemes, ultra-low emission cars and pensions.

All arrangements that are in place before April 2017 will be protected for up to a year. Certain long-term arrangements will be protected until April 2021.

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James Tamm

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