As a Payroll Services Provider, we keep a close eye on the budget. Here is a summary of the key announcements that the Chancellor made on Monday 29th October, which will have an impact on pay and benefits.
- Personal Allowances. From April 2019, the tax-free personal allowance will increase from £11,850 to £12,500, while the higher-rate tax threshold of 40% will also rise from £46,351 to £50,000. Both thresholds will remain at the same level throughout 2020 and 2021, and then increase in line with the Consumer Price Index.
- The national living wage will increase by 4.9% from April 2019, rising from £7.83 an hour to £8.21 an hour for employees aged 25 and over.
- Employment Allowance. From April 2020, access to the employment allowance will be restricted to employers with a national insurance contributions bill below £100,000 in the previous tax year. This is targeted to support smaller employers.
- Digital Services Tax. From April 2020, the government will introduce a 2% digital services tax on large organisations, applying to revenues generated from search engines, social media platforms and online marketplaces where activities are linked to the participation of UK users, subject to a £25 million per annum allowance. The tax will only apply to organisations that generate global revenues from in-scope business activities of over £500 million per annum.
- Apprentices. Small employers’ co-investment rate for apprenticeship training is to be cut from 10% to 5%. The government is providing up to £240 million of funding to allow for the halving of the rate.
- IR35. The government will extend reforms to the taxation of off-payroll working, known as IR35, to the private sector from April 2020. This means responsibility for applying the correct taxation for off-payroll workers will move from individuals to the organisation, agency or other third party engaging the worker. Small organisations are to be exempt.
- Pensions’ Dashboard. The government will provide an additional £5 million in funding in 2019-2020 to help bring the pensions dashboard to fruition. It will also consult later this year on the pensions dashboard’s detailed design.
- Pensions Cold Calling. The government will shortly be implementing legislation to make pensions cold calling illegal. It is also due to publish a response to its consultation on pensions cold calling to help protect pension members from pension fraud.
- Defined Contribution Pension Funds. The government will support defined contribution pension funds to invest in growing UK organisations and start-ups through the British Business Bank.
- Research and Development Funding. The government has announced increased investment for initiatives within its Industrial Strategy to improve productivity across the UK. This includes £1.6 billion of funding for research and development.
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The budget, of course, needs to pass through parliament to become law from next April. If you need your payroll outsourced so that you can get on with running your business, please contact us or call us on 0121 422 0550.