The chancellor has delivered the first Conservative-only budget in almost twenty years and announced a number of employment-related changes. These include:
The introduction of a National Living Wage (not to be confused with the independently recommended “living wage” which is higher) to reach £9 per hour by 2020. The first increment will take effect from April 2016 and will raise the current minimum entitlement to £7.20.
- Devolution of the power to allow Sunday trading in England and Wales for retail workers (the same restrictions do not apply in Scotland).
- Consultation on simplifying the tax and NIC treatment of termination payments, which will affect payments made through COT3 agreements and settlement agreements. Currently employees can be paid up to £30k tax free in certain circumstances on termination. It is proposed that this exemption should be replaced with a system of income tax relief. Related to this is the announcement that public sector termination payments will be subject to a maximum limit of £95,000.
- The government will “actively monitor” the growth in salary sacrifice arrangements.
- A review of the taxable status of self employed earnings to target tax avoidance.
- A commitment to providing 3 million apprenticeships during the current parliament.