On 3rd December George Osborne delivered the 2014 Autumn Statement with at least one eye on next year’s general election.
With the news that tax receipts are down and with roughly 60% of the country’s income tax take being paid by 10% of the taxpaying public, the Chancellor took the opportunity to announce measures to encourage employment and discourage tax avoidance. Some provisions should result in further jobs being created, whilst others should encourage conventional employment over other types of engagement.
Proposals to fund road projects and flood relief should produce extra jobs in construction, whilst ongoing support for science and increased levels of Research & Development relief should provide encouragement for the UK’s knowledge industries.
On a more detailed level, the £2,000 National Insurance break has been extended to households employing care and support workers, which means that from April 2015 the elderly and infirm, financing independent living in their own homes, will be able to pay over £22,000 in salary before Employers’ NIC becomes payable.
At the other end of the age range, to add to the already announced removal of NIC from apprentices under 21 from April 2015, Employers NIC will be abolished in respect of apprentices up to age 25 from April 2016. These moves should make the engagement of apprentices more affordable for many employers.
Having looked at some of the carrots, perhaps a brief consideration of the sticks is in order. Many in the recruitment industry will be familiar with umbrella companies, part of whose ‘magic’ is to pay workers significant tax-free expenses, which eases those workers’ tax burdens. Workers will often be paid travel expenses free of tax for what is effectively home to work travel, whereas regular employees cannot escape tax on such payments. The Government will be consulting ahead of the Budget next year to look at ways in which this tax advantage can be removed from workers engaged via intermediaries. This, along with the reporting requirements for recruitment businesses that are due to come into force in April 2015 and increased vigilance over personal service companies and IR35, may encourage more conventional employment relationships to develop.
If you need advice on how the proposals will affect your business please review our full Autumn Statement summary, and contact us to discuss the points further.