Autumn Budget 2018: Key issues

In a speech which attracted more attention for its jokes than for its spending policies, Philip Hammond has set out a number of changes of relevance to employment law. 

Here’s what you need to know:

  1. Personal allowance has been increased to £12,500. The threshold at which income tax is payable has been increased from £11,850.
  2. Higher rate income tax threshold has been increased to £50,000. The higher rate of income tax was previously applicable to earnings over £46,350.
  3. Change to tax rules for the self-employed. From April 2020, the government will alter the tax rules for individuals who provide their services to a private sector client via a personal services company. Where the individual has deemed employment status, liability for the operation of PAYE will shift from the personal services company to the end-user client. The change in rules only applies to large and medium sized companies. The government has committed to improving HMRC’s Check Employment Status for Tax tool. It has also indicated that further guidance on determining employment status will be published in due course. 
  4. Increase to National Living Wage. The National Living Wage will increase to £8.21 from April 2019.
  5. No change to NICs on termination payments. The proposal to apply employer NICs to all termination payments over £30,000 has been delayed from April 2019. The change will now be implemented from April 2020.