What does the budget mean for employment?

What does the budget mean for employment?

The Chancellor of the Exchequer presented his budget to parliament on 29 October 2018.

Employment is at a near record high and the Office for Budget Responsibility (OBR) forecasts it is set to keep growing

The economy has grown every year since 2010. And is predicted to continue growing in each year of the forecast. The unemployment rate is at its lowest for over 40 years, there are over 3.3 million more people in work since 2010 and the OBR forecasts 800,000 more jobs by 2022

Personal taxation and wages

  • The personal allowance threshold., the rate at which people start paying income tax at 20%, to rise from £11,850 to £12,500 in April – a year earlier than planned.
  • The higher rate income tax threshold at which people start paying 40%, to rise from £46,350 to £50,000 in April.
  • After that, the two rates will rise in line with inflation.
  • National Living Wage increasing by 4.9% from £7.83 to £8.21 an hour, from April 2019.

Apprenticeships

A package of reforms will be introduced to strengthen the role of employers in the apprenticeship programme with one of the main announcements being to halve the co-investment rate for apprenticeship training paid by smaller firms from 10% to 5%.

This reduction in contribution should encourage businesses throughout Kent to invest further in apprenticeships and training of their current staff.

Off-Payroll working in the private sector

The Treasury believe that a third of people claiming self-employed status as a “personal service company” are actually working in the same way as employees and should pay more income tax and national insurance (NI).

Following extensive and prolonged consultation, the government announced plans to reform the off-payroll working rules – known as IR35 – in the private sector from April 2020, with an exemption for small organisations.

Among those affected will be IT contractors, engineers and consultants and the crackdown is the biggest revenue-raising measure in this year’s budget.

Large companies in the private sector will now have an obligation to check whether any contractors they use should pay tax under IR35.

Next steps

If you require advice or support with any of the above or another employment related issue, please do not hesitate to contact a member of the Employment team