Chancellor Philip Hammond is announcing his latest Budget this Monday (29thOct), which should see greater funding for the NHS and is expected to see the “end of austerity”. However, it could all change yet depending on the terms of Brexit.
It appears that there are some rumoured changes that could have an effect on HR and employment law. Here is a round-up of the main points that employers should be aware of:
The Employment Allowance was introduced by George Osborne in 2014 as an incentive for companies to hire more employees. It is essentially a subsidy scheme taking the first £3,000 off every company’s bill for employers’ national insurance.
The allowance costs the Treasury around £2bn a year, so could be in line for cancellation. It has been criticised for not being enough of a subsidy for large employers. However, in recent months the Federation of Small Businesses (FSB) have voiced their support for it.
National chairman Mike Cherry said: “Raising the Employment Allowance to £4,000 would go some way to helping ensure record numbers of people are still in work over the months ahead.”
Pensions tax relief
Philip Hammond recently described the pensions tax relief for higher earners as “eye-wateringly expensive”, so it’s certainly in contention to be reformed.
Currently, higher rate taxpayers can claim a higher level of tax relief (40% or 45% versus 20% for basic rate taxpayers) up to their annual £40,000 allowance on savings.
This allowance could be reduced, or the rate of tax relief for all could be lowered to a flat rate. Either way, it would reduce the £38bn currently being spent on it.
Mental health services
A £2bn real-terms increase in mental health funding is expected to be announced. The commitment should lead to comprehensive mental health support being available in every large A&E department.
According to a government briefing, the new money will ensure that mental health support is available 24/7 – a key priority as people with mental health problems often turn to A&E because support is not available elsewhere.
A staggering 70 million work days are lost each year due to mental health problems in the UK, costing employers approximately £2.4 billion per year.
The Treasury believes a third of people claiming self-employed status as a “personal service company” are actually full employees and should pay more in national insurance contributions.
It is now looking at demanding that firms which use personal service company contractors take legal responsibility for ensuring “off-payroll” contractors stick to the tax rules known as IR35. Employers could have to reclassify their workforce and comply with the new rules as early as April 2019.