National Wages rise… the Budget revealed

The government released the 2017 Autumn Budget this week, which included a few changes that will affect employers and employees.

Wages

The national minimum wage (NMW) and national living wage (NLW) will increase from April 2018.

The NLW, which applies to workers aged 25 and over, will increase by 4% from £7.50 to £7.83.

The NMW rates will be increased as follows:

Tax

In the 2018/19 tax year, the ‘personal allowance’ will be increased to £11,850 and the ‘higher rate threshold’ will be increased to £46,350.

With effect from April 2018, employers who provide charge for employees’ electric vehicles will not incur any benefit in kind charges for such electricity. Separately, the ‘Diesel Supplement’, used where the employer provides the employee with a diesel car which is available for private use, will increase from 3% to 4%.

The government will make several changes to the taxation of employee expenses:

• Self-funded training – the government will consult in 2018 on extending the scope of tax relief for employees and the self-employed in relation to work-related training costs.
• Subsistence benchmark scale rates will be relaxed from April 2019.
• Guidance on the claims process for employee expenses (particularly travel and subsistence) will be improved.

Employment status

The government has acknowledged the complexity surrounding employment status in the field of employment rights and tax. Accordingly, the government will publish a discussion paper exploring the options for longer-term reform in order to make employment status tests for both employment rights and tax clearer.

If you’d like to know more about this topic, see our recent blogs  Employment Status: Modern day gladiators are independent contractors…or are they? and Worker status and the ‘gig economy’: Taxi for Uber?