National Insurance contributions The government recognises that the new National Living Wage (NLW) may increase costs for some businesses. Therefore on top of other reductions in business tax, from April 2016, the government will increase the National Insurance contributions (NICs) Employment Allowance from £2,000 to £3,000 a year. The Employment Allowance gives businesses and charities a cut in the employer National Insurance they pay. This means, from April 2016, businesses will be able to employ 4 people full time on the NLW and pay no National Insurance at all.
Also from April 2016, companies where the director is the sole employee will no longer be able to claim the Employment Allowance.
CIPP comment Hidden within the Budget ‘red book’ was a comment about salary sacrifice arrangements: that they are becoming increasingly popular and the cost to the taxpayer is rising. The government “will actively monitor the growth of these schemes and their effect on tax receipts.” We would interpret this to mean that the end of salary sacrifice is on their agenda for the future.
Apprenticeships The government has already committed to significantly increase the quantity and quality of apprenticeships in England to 3 million starts by 2020. This goal will require funding from employers so a levy is to be introduced on large UK employers. The levy will support all post-16 apprenticeships in England. The funding will be directly controlled by employers via the digital apprenticeships voucher. Firms that are committed to training will be able to get back more than they put in.
Details including rates and implementation will be set out in the Spending Review.
CIPP comment The devil will of course be in the detail, but with a new levy on large businesses who take on apprentices it will be interesting to see if it has an impact on the skills of our nation in the future. Remember the CIPP can help you employ a payroll apprentice .
Student Loans From the 2016-17 academic year, maintenance grants will be replaced with maintenance loans for new students from England, paid back only when their earnings exceed £21,000 a year. The government will consult on freezing the £21,000 loan repayment threshold for the next 5 years and review the discount rate applied to student loans and other transactions to bring it more into line with the government’s long- term cost of borrowing. CIPP comment Will the removal of the student maintenance grant mean an increase in student loans? Although with a consultation expected on freezing the current £21k threshold over the next 5 years, will it just mean higher value student loans? And also will the Plan 1 threshold of £17,335 be allowed to rise?
Public sector pay The government will fund public sector workforces for a pay award of 1% for 4 years from 2016-17 onwards.
Non-dom status Non-domiciled individuals (non-doms) live in the UK but consider their permanent home to be elsewhere. The UK rules allow non-doms to pay UK tax on their offshore income only when they bring it into the UK.
Permanent non-dom status will be abolished from April 2017. From that date, anyone who has been resident in the UK for 15 of the past 20 years will be considered UK-domiciled for tax purposes.
Also from April 2017, individuals who are born in the UK to parents who are domiciled here, will no longer be able to claim non-domicile status whilst they are resident in the UK.
CIPP Policy News Journal
25/04/2016, Page 167 of 453
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