Chris Wilkinson from Expert HR Solutions looks at the implications of the 2018 Budget for SMEs. Read on if you want to find out more.
The Chancellor said that Employment Allowance was introduced to incentivise businesses to take on employees. He continued that at a flat rate of £3,000 per employer, it does not provide any real incentive for larger employers, So, from April 2020, we’ll target it at small and medium businesses with an Employer NICs bill under £100k a year.
He said that he had explored all avenues to address the cliff edge effect of VAT registration, but our options are restricted by EU law. As our future VAT regime becomes clear over the years ahead. To give small businesses certainty the threshold will be unchanged for a further two years.
The off payroll working rules known as IR35 are designed to ensure fairness, so that individuals working side by side in a similar role for the same employer pay the same employment taxes. Last year, we changed the way these rules are enforced in the Public Sector. But widespread non-compliance also exists in the private sector. So, following our consultation, we will now apply the same changes to private sector organisations as well but only from April 2020 and we will only apply them to large and medium-sized businesses. Chris comments that it would appear the Chancellor’s definition of medium sized is a business with more than 50 employees.
The minimum contributions from April 2019 to Pensions Auto enrolment schemes will be 3% by the employer and 5% by the employee, assuming the employee is enrolled in the scheme.
At the same time the National Living Wage will rise from £7.83 an hour to £8.21 an hour for workers aged 25 an over, representing an above inflation rise of 4.9%. It was also announced that the minimum wage for other age groups will go up; from £7.38 to £7.70 for 21-24 year olds, from £5.90 to £6.15 for 18-20 year olds and from £4.20 to £4.35 for 16-17 year olds. The statutory rate for apprentices aged under 19 or in the first year of their apprenticeship will increase by 20p an hour to £3.90.
Those businesses with significant road transport costs will be relieved at a further year of freeze on fuel taxes.