The Spring 2017 Budget was announced earlier this month and there are some things which, as employers and business owners, you should know.
Firstly, the National Minimum and National Living Wages will increase as of 1st April 2017.
|Year||25 and over||21 to 24||18 to 20||Under 18||Apprentice|
|October 2016 (current rate)||£7.20||£6.95||£5.55||£4.00||£3.40|
Alongside the scheduled increase to the National Minimum and National Living Wages, the Chancellor also announced that the main rate of National Insurance Contributions (NICs) for the self-employed will increase.
Currently, the self-employed may have to pay both Class 4 and Class 2 NICs:
- Class 4 NICs at 9% are paid on profits between £8,060 and £43,000
- Class 2 NICs are paid on profits of £5,965 or more
From 2018, Class 2 NICs will be abolished. Class 4 NICs will rise to 10% in April 2018 and to 11% in April 2019.
Taken together, only a self-employed person with profits over £16,250 will have to pay more as a result of these changes. This better reflects the fact that the differences in contributory benefit entitlement between the self-employed and employees are now small, following the introduction of the new State Pension in April 2016.
In the summer, the Government will also consider whether there is a case for greater consistency in parental benefits between the employed and the self-employed.
The Chancellor confirmed that the roll out of Tax-Free Childcare will begin from April 2017, and will be rolled out to all eligible parents by the end of the year. This will have an impact on Childcare Voucher Schemes run by employees with the scheme being closed to new entrants from April 2018.
It was also announced that, from April 2018, the tax-free dividend allowance will be reduced from £5,000 to £2,000. This will reduce the tax difference between the self-employed and those working through a company. Typically, general investors will need over £50,000 worth of stocks and shares outside and ISA to be affected.
If you’d like more information on how any of the above announcements may affect you as a business owner, employer or employee, get in touch with one of our team today. Contact Us
Source: GOV.uk, XpertHR