What does the 2015 Summer Budget mean for employers?
On 9th July 2015, the Chancellor, George Osborne delivered his seventh Budget. It was the first Conservative budget since November 1996.
Here is a summary of his main announcements which affect employers:-
Corporation Tax
Will be cut to 19% in 2017 and 18% in 2020. This is expected to benefit over a million businesses.
National Insurance Contributions
Businesses will have their employer national insurance bill cut by another £1,000.00 from April 2016, as the Employment Allowance rises from £2,000.00 to £3,000.00. The effect of this is that businesses will be able to employ 4 people full time on the National Living Wage and pay no National Insurance for those employees at all.
New Apprenticeships
3 million new apprenticeships are to be created by 2020. This will be funded by a levy on larger employers.
Tax
The personal allowance, at which people start paying tax will rise to £11,000.00 next year. There are plans to raise the personal allowance to £12,500.00 by 2020, so that people working 30 hours a week on the minimum wage do not pay income tax.
Pay – Introducing a new National Living Wage
From April 2016, a new National Living Wage of £7.20 an hour for the over 25’s will be introduced. This is expected to rise to over £9.00 an hour by 2020. An estimated 2.5 million people will receive an average £5,000.00 rise over 5 years.
Public Sector pay increase
Public sector pay is to increase by 1% a year for 4 years from 2016-2017.
Overall the economy grew by 3% in 2014. There is a 2.4% growth forecast in 2015 which is 0.1% lower than predicted in March, followed by 2.3%, 2.4% and 2.4% in the following years. It is anticipated that 1 million extra jobs will be created by 2020.
Glenn Jaques – Director – Employment Law – BRM Solicitors