March 2016 Budget implications for employers
Posted on Thursday, March 17, 2016 by Nadio Granata — No comments
So, what has the Chancellor announced and how does it affect business?
In short, this budget is deemed to be relatively good news for businesses, especially for workers and the self-employed. The following is a snapshot of the 9,000 word report, focused on its impact on employment. Please be sure to check the specific details for yourself.
IR35: The Chancellor used the Budget to target public sector contractors in order to hit his fiscal targets. From 2017, liability for determining whether a contractor falls within IR35 will transfer from their limited company (e.g. Personal Service Company) to the engaging public sector organisation. The government is expected to consult on how this affects recruitment agencies and we will be responding accordingly.
Following previous promises made during the election campaign, Osborne has announced that Class 2 National Insurance Contributions (NICs) will be abolished. Coupled with an increase in personal allowance, these measures come as a real boost to the ever-growing self-employed workforce.
Other tax changes for businesses are:
600,000 businesses will pay no business rates at all while a further 250,000 will pay a lower rate
Corporation Tax will be reduced to 17% from 2020
Termination Payments over £30,000 will be subject to NICs and Income Tax
While the fall in Business Rates and Corporation Tax is a positive step along this road, taxing Termination Payments could cost businesses productivity at a time when they are already experiencing a slowdown.
Education and Disability Employment Reform
The education sector is perhaps the biggest talking point as the Chancellor wasted no time in confirming that all UK state schools will become academies by 2020, giving schools control over their finances. Whilst ostensibly this appears to be a positive move, supposing that autonomy is a good thing, it is important that it is accompanied by an investment in recruitment and retention of the dwindling teacher workforce.
Finally the government will provide more support for disabled people helping to secure employment.
“On balance, this Budget served the self-employed well, but recruiters are likely to be concerned about their tax responsibilities arising from the intermediaries’ reform. The substance of the Chancellor’s Business Tax Roadmap will be greeted with much acclaim by businesses. However, the government’s ambitious plan for infrastructure projects such as CrossRail 2 and HS3 will fall flat without investment in the construction and engineering skills needed to see them succeed,” says Femi Ogunbiyi, policy advisor to the Recruitment and Employment Confederation (www.rec.uk.com).
For more information about recruitment and for free, impartial advise, go to www.stafflex.co.uk
Nadio Granata is Head of Marketing at Stafflex Recruitment, Huddersfield, West Yorkshire. For more information go to www.stafflex.co.uk