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Charlotte Williams Solicitor, Veale Wasbrough Vizards
On 8 July 2015, the Conservatives delivered their budget. We have set out below the key employment announcements.
National Living Wage
One of the government's main changes to employment law is the introduction of a National Living Wage. This will be a premium amount on top of the National Minimum Wage (NWM) for workers aged 25 and over. The government's first premium will be set in April 2016 at 50p, increasing the NWM to £7.20.
The government will consult on the simplification of the tax and NICs treatment of termination payments in Summer 2015. The government will consider the report produced by the Office of Tax Simplification (OTS) in July 2014, where the OTS recommended that the current tax exemption for termination payments of £30,000 should be replaced with a new income tax relief that is available in statutory redundancy situations. Under this recommended approach, the new income tax exemption would apply to all payments, regardless of their nature (ie. whether contractual, statutory or otherwise), provided that it is a redundancy situation. Such an approach would appear to reduce the scope for tax relief on termination payments made in non-redundancy situations.
Salary sacrifice arrangements
Given the increasing popularity of salary sacrifice arrangements and their costs to the tax payer, the government has announced it will 'actively monitor' the growth of these schemes and their effect on tax receipts.
The government is also introducing a restriction in pensions tax relief which will affect those whose 'adjusted income' is over £150,000 and who have a net income of over £110,000. The definition of 'adjusted income' adds back in pensions contributions, preventing individuals from avoiding the restriction by exchanging salary for employer contributions. The annual limit on tax relieved pension savings of £40,000 will be tapered to reflect 'adjusted income' over £150,000 from 6 April 2016 and anti-avoidance measures will apply to salary sacrifice schemes set up from 9 July 2015.
The government has announced it will consult on devolving powers to city mayors and local authorities in relation to Sunday trading restrictions. This will include whether mayors/councils should be allowed to decide whether to extend the trading hours available to shops.
In order to fund apprenticeships, the government plans to introduce a levy on big UK employers. This measure is in line with the government's earlier commitment to increase the amount of apprenticeships available by 3 million.
We will keep you updated on all employment law changes as and when they happen.