The CIPP Policy Team has produced a summary of the 2015 Spending Review and Autumn Statement. Also available is a 20 minute webcast which provides an overview of the key announcements from the Chancellor’s statement which will affect employers’ pay and employment processes.
Introduction
The Chancellor managed to keep his speech to just over an hour which was impressive given that this was, for the first time, a combined Spending Review and Autumn Statement. Mr Osborne once again managed to use his catchphrase about “Fixing the roof while the sun is shining” and apparently public services have improved despite spending cuts? Some pleasing news was announced - Britain now has a permanent pothole fund. Also on the good news front, commuters will soon be able to claim compensation from their rail tickets if their train is more than 15 minutes late and annual insurance costs for drivers could fall by £40 to £50 a year. For the payroll profession we were relieved to see that there are no surprise changes to any rates or thresholds, but the 3% diesel supplement on the car benefit charge will not be removed from April 2016 as originally announced. The RTI reporting temporary relaxation that currently exists for micro-employers will not be extended so as planned this will end on 5 April 2016. The Government has stated in the Spending Review and Autumn Statement document , its ambition to raise the UK’s employment rate to the highest in the G7 but whether this will be by creating employment or simply changing employment status has yet to be established. What is clear to us is that there has never been a busier time for those of us who are employed in the payroll profession. The Policy Team will of course do a bit of light reading and digest the 146 page publication and associated documents and announcements and advise the profession accordingly of any further details that come to light. In the meantime read on for our summary of the key announcements. Income tax rates, bands and allowances are unchanged so the Personal Allowance will rise by £400 to £11,000 from April 2016 with the commitment to reach £12,500 by the end of the current Parliament. The Government has also legislated so that when the Personal Allowance reaches £12,500 it must be set at least the equivalent of 30 hours/week at the National Minimum Wage (NMW). This target is achieved for 2016-17 following October’s NMW increase to £6.70. (Note, however, that the Personal Allowance would be below 30 hours/week at the new National Living Wage of £7.20 – a distinction that allows the Chancellor freedom to set the Personal Allowance and NMW where he wants to in future in the knowledge that most adults are affected by the NLW). Most National Insurance (NI) limits and thresholds are linked to the Consumer Price Index (CPI) and so figures for 2016-17 have not been announced yet. The Upper Earnings Limit (UEL), however, is linked to income tax and therefore the increase is known: it increases from £815 to £827. As a result, the Upper Secondary Threshold for Under 21s (UST) and the new Apprentice Upper Secondary Threshold (AUST) also increase to £827. As previously announced from April 2016, the Employment Allowance increases from £2,000 to £3,000. And not forgetting that come 6 April 2016, contracting out of the State Second Pension ends, so NI rebates are no more and their associated categories will no longer be used. National Insurance The 3% diesel supplement on the car benefit charge will not be removed from April 2016 as originally planned. Mr Osborne announced a delay in its removal to April 2021 “in light of the slower than expected introduction of more rigorous EU emissions testing” (and possibly also due to the Volkswagen scandal). Car and van fuel charges and the van benefit charge increase by the Retail Price Index (RPI) each year; the amounts for 2016-17 were announced in associated documents published today. The car fuel benefit charge multiplier will increase by £100 to £22,200 and the van fuel benefit charge will increase by £4 to £598. The van benefit charge will increase by £20 to £3,170. Tax rates and thresholds Income tax Cars and vans
Student Loans
Expansion
CIPP Policy News Journal
25/04/2016, Page 170 of 453
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