Employment and earnings
Government action to reward work and reform benefits has delivered a stronger labour market in the UK, with an employment rate that has risen faster in the UK than in any other G7 country since 2010 making progress towards the government’s goal of full employment. The data for 2015 showed: a record employment rate of 74.1% in Q4 2015 the employment rate of women had risen to 69.1% by the end of 2015, a record high 74% of the increase in employment in 2015 was driven by full-time workers high and medium skill occupations accounted for 92% of the growth in employment in the year to Q4 2015 a strong demand for labour with 767,000 vacancies in Q4 2015, a record high the claimant count fell to a 40 year low in 2015 working age inactivity fell by over 600,000 from 2010 to 2015 This strong employment performance has been accompanied by rising real wages. Earnings growth picked up in much of 2015, with total annual pay rising 2.5% on the year in nominal terms, and 2.3% in real terms. This represents the highest annual growth in nominal and real earnings since 2008. Wages had been rising above inflation for 15 consecutive months by the end of 2015. Living standards, as measured by real household disposable income (RHDI) per capita, are expected to have risen in 2015 at their fastest rate in 14 years, driven by rising earnings and low inflation.
Small businesses
Under the banner of ‘backing small businesses’ the Chancellor outlined several changes in the rates and taxes that business have to pay.
Business rates
Small Business Rate Relief to be set at 100% for premises with a rateable value of £12,000 or less, with a taper relief for those with a rateable value of £12,000 - £15,000. These two measures combined will benefit up to 650,000 businesses and make a saving for each of up to £5,900 in 2017/18. The government will also increase standard business rates multiplier to rateable value of £51,000. This will mean that 250,000 smaller properties will no longer pay the higher rate.
National insurance contributions for the self employed
For the self-employed the abolition of Class 2 rate from April 2018 will be welcomed as it represents an annual tax saving on average of £134. Class 4 NICs will be reformed so that the self-employed can continue building their entitlement to the State Pension and other benefits. The government will set out its plans for the contributory benefit tests in its response to the recent consultation on this reform.
Stamp duty
Stamp duty on commercial properties will become a more progressive tax, with the lowest rate being reduced to 0% for transactions up to £150,000, 2% for transactions between £150,001 and £250,000, and 5% for transactions £250,000 and above. This will mean that businesses will pay the same or less stamp duty than at present. These changes will take effect 17 March 2016.
VAT
The government will increase the VAT registration threshold in line with inflation to £83,000 from 1 April 2016. This will save around 2,000 small businesses from having to register for VAT by the end of the 2016-17 financial year.
CIPP Policy News Journal
25/04/2016, Page 183 of 453
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