Here are some key points from the Autumn Budget 2018 for employers to consider:

  • Personal allowance increased to £12,500 (from £11,850).

  • Higher rate income tax threshold increased to £50,000 (from £46,350).

  • The National Living Wage will increase to £8.21 from April 2019.

  • Change to tax rules for the self-employed.

There is to be no escape (for larger companies at least, and probably all companies in due course) from the dreaded but ultimately expected extension of the IR35 rules (“off-payroll working”) to the private sector. From 6 April 2020, large and medium-sized businesses will have to apply the same rules as are now in force in the public sector. Under the existing IR35 rules in the private sector, if an individual provides his services to an end client through a personal services company (PSC), it is the PSC that must determine whether the individual would, but for the PSC, be regarded as an employee of the end client, and account for PAYE and NICs on payments from the end client if so. Under the new rules, it is the end client who must apply those tests and potentially (depending on whether there are other links in the chain such as an agency) make the PAYE / NIC deductions as necessary. We are promised an improved and refined online “Check Employment Status for Tax” tool from HMRC and significantly expanded guidance for the private sector before the new rules come into force, but companies will need to start thinking now (if they haven’t already) about the individuals they engage off-payroll, how the company will run its employment checks, and the potential impact on the relationships if tax has to be deducted at source.

  • No change yet to NICs on termination payments.

Employers will welcome the further delay to the introduction of class 1A employer’s National Insurance contributions on termination payments. This measure was originally intended to have effect from 6 April 2018 when the new rules on taxing termination payments where there is some unworked notice period came into force, however it has now been pushed back twice and will (unless it is deferred again) come into effect on 6 April 2020.

  • The contribution to the apprenticeship levy for smaller firms will be halved from 10% to 5%.

SMEs will therefore only contribute 5% to the training, as part of a “£695 million package to support apprenticeships”. No fixed date announced.


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Author: Nina Robinson

Director, ESP Law Ltd

Nina is an accomplished employment solicitor with over 10 years’ post-qualified experience at leading UK law firms. Nina initially qualified as a corporate solicitor at Addleshaw Goddard and since 2006 practised employment law exclusively, providing advice to employer customers at both DAC Beachcroft and Ward Hadaway Solicitors. Nina has experience of advising a varied portfolio of employer customers, including retail and restaurant groups, financial services and media industry customers on all employment issues.