Policy News Journal - 2015-16

NICs Employment Allowance. We are also going to see increases in the personal allowance and 40% threshold ahead of those announced in the March Budget.

We are to be ‘back in the black’ by 2019-20 and George Osborne just couldn’t help himself by getting his catchphrase in ‘We should always fix the roof while the sun is shining’. We take that to mean no complacency when it comes to cuts; we are doing alright doing what we’ve been doing so we will keep doing it. A key message for youngsters is to either ‘learn or earn’. From April 2017 a Youth Obligation will be introduced so it will be interesting to see how this impacts apprenticeship take-up. We also had confirmation that from September 2017, working families with 3 and 4 year olds will receive 30 hours of free childcare, double the current offering. We shall see Corporation Tax reduce to a mere 18% by 2020 and once again it is pleasing to hear that fuel duty will again from this year be frozen – ‘Let it go’ Chancellor. A new road tax is to be introduced for brand new cars from 2017 and the funds are to pay for roads, originally what the tax was created for.

And we might just benefit from a reduction in PPI claim calls as the amount that can be charged by claims management companies is to be capped.

The Policy Team will of course do a bit of light reading and digest the 100 plus page Red Budget Book and advise the profession of further details accordingly.

Read on for our summary of the key announcements.

Personal Allowance The tax-free Personal Allowance will increase to £11,000 in 2016-17, £200 more than was announced in the March Budget. This increase has been brought forward by a year as it was due to be increased to £11,000 in 2017-18.

The Allowance will increase further from 2017-18 to £11, 200 and the government’s ambition is still to see an increase to £12,500 by 2020.

Increases to the Personal Allowance since 2010, when it was £6,475, mean that a typical taxpayer will be £905 a year better off in 2016-17.

Higher rate threshold The higher rate threshold, the amount people will have to earn before they pay tax at 40%, will increase from £42,385 (current threshold) to £43,000 in 2016-17. This is one year earlier than was announced in the March Budget.

A further increase to £43,600 will take place in 2017-18. The NICs Upper Earnings Limit will also increase to remain aligned with the higher rate threshold.

National Living Wage From April 2016, a new National Living Wage (NLW) of £7.20 an hour for the over 25s will be introduced, representing a new premium of 50 pence over the current adult National Minimum Wage (NMW) rate of £6,70 (from October 2015). The government’s ambition is for the NLW to increase to 60% of median earnings by 2020, and it will ask the Low Pay Commission (LPC) to recommend the premium rate in light of this ambition going forward. On OBR (Office for Budget Responsibility) forecasts, this means the NLW is expected to reach the government’s target of over £9 by 2020. The combined 50 pence premium with the 20 pence minimum wage increase on the current adult NMW rate will benefit 1.7 million workers and means that a worker currently working 35 hours a week at the adult NMW rate will see their annual salary increase by over £1,200 from April 2016. The LPC will continue to recommend the NMW on the same basis. CIPP comment The Policy Team are relieved this will be introduced from 2016 having spent time to get the new NMW rates on the 2015 fact card! But to the serious business, a new acronym of NLW and with many CIPP members supporting the current voluntary Living Wage over the National Minimum Wage in a survey conducted last year, this announcement should be good news. Certainly those in the ‘House’ thought it was a good idea going by the cheers that drowned the Chancellor out.

CIPP Policy News Journal

25/04/2016, Page 166 of 453

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