Chancellor Phillip Hammond has just delivered his Autumn Statement and there are employment related things you need to know

The borrowing forecast is set to be £122 billion higher between now and 2021 than forecasted in the March Budget and the overall UK debt will also be higher.

However, Chancellor Phillip Hammond described a “robust” job market, highlighting predictions from the OBR (Office of Budget Responsibility) that jobs would increase by 500,000 each year according to the five-year forecast.

He also seems committed to “fiscal discipline” and is focussing on strategic investments to improve the UK productivity gap.

He pointed out the UK’s 30% lag behind both Germany and the US, commenting that it takes a German worker four days to produce what we make in five.

You can read more about this and the March Budget here

In terms of employment, these are the key points so far:

  1. Contractors using personal service companies in the public sector lose tax status – The chancellor announced IR35 tax changes that mean those using personal service companies in the public sector will lose their right to determine their tax status. They will have liability and responsibility to operate payroll and pay the correct taxes to HMRC, which has estimated that around 90% of the 20,000 people who operate as contractors in the public sector will be directly affected.
  2. New productivity investment fund with a focus on innovation and infrastructure – This new fund, currently worth £23 billion, is the chancellor’s means of tackling the productivity gap we have been seeing for some years now. The chancellors aims are to develop a “high wage”, “high skilled” economy.
  3. Employers and employees to pay the same national insurance – The alignment of national insurance thresholds means that everyone will start paying their NI (national insurance) on weekly earnings over £157 from April next year.
  4. National living wage to rise – The national living wage, applying to those over 25, is set to rise to £7.50 from April next year, which will come to an extra £500 a year for a full-time worker. The wage is expected to rise to £9 per hour by 2020.
  5. Personal allowance increase – Tax-free personal allowance will rise to £11,500 from £11,000 next year and will rise to £12,500 by the end of this parliament. The chancellor commented https://realityhr.co.uk/contact-us/that “this will provide a massive boost to low-and-middle-income earners.”
  6. Salary sacrifice benefits – The new regulations mean that certain employee benefits including mobile phone contracts, health checks and gym memberships are going to lose their tax relief status by next April. Pensions, cycle to work, child care and low emission schemes will be exempt. The chancellor commented that the scheme was unfair and said that “Employers and employees will pay the same tax that everyone else does.”
  7. Boost to management skills – The chancellor is funding £13 million to John Lewis Partnership chairman, Charlie Mayfield’s, initiative to boost management skills across the UK. The CIPD and CMI are particularly in favour of this outcome.
  8. No more Shareholder tax relief – Tax advantages linked to employee shareholder status (ESS) which allows employees to give up certain employment rights for workplace share will be scrapped. Hammond commented that they are primarily being used for tax-planning purposes by high-earning individuals.

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