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Now that the dust has settled, here is a brief overview of the recent budget delivered by Chancellor Phillip Hammond relevant to the industry.

  1. The off-payroll working rules (IR35 reform) which were implemented into the public sector in 2017 will be extended to the private sector and will apply to large and medium-sized businesses from April 2020. End clients who receive the labour who are smaller organisations will be exempt and Government intends to use similar criteria to define small businesses as found in the Companies Act 2006 (below).

A company is small if it satisfies two or more of the following requirements;

  • Turnover – not more than £10.2m
  • Balance sheet total – not more than £5.1m
  • Number of employees – not more than 50

2. From April 2020, the Employment Allowance will be restricted to businesses with an Employer’s National Insurance Contributions (“NICs”) Bill of less than £100,000 in their previous tax year

3. The VAT threshold will remain unchanged at £85,000 for a further two years until April 2022

4.From April 2020, Digital Services Tax will be introduced to ensure that online giants pay their fair share of UK tax on sales generated in the UK. The new measure will implement a 2% tax on the revenues of certain digital businesses which are linked to UK user

5. From April 2020, HMRC will be a preferred creditor in business insolvencies and so, will have greater priority to recover taxes paid by employees and customers – this includes VAT, PAYE Income Tax, employee NICs and CIS deduction

6. From April 2019, the National Living Wage Rate will rise again, by 4.9%, from £7.83 to £8.2

7. From April 2019, the National Minimum Wage Rates will rise again;

    • The rate for 21 to 24-year olds will increase from £7.38 to £7.70
    • The rate for 18-20-year olds should increase from £5.90 to £6.15
    • The rate for 16-17-year olds should increase from £4.20 to £4.35
    • The apprentice rate (for apprentices aged under 19 or in the first year of their apprenticeship) should increase from £3.70 to £3.90The tax-free Personal Allowance will rise to £12,500 from April 2019

8. The tax-free Personal Allowance will rise to £12,500 from April 2019

9. The Higher Rate tax threshold will rise to £50,000 in April 2019 meaning 1 million fewer people will pay the higher rate of tax than in 2015/16

10. From April 2020, there will be a new statutory entitlement to two weeks bereavement leave and pay for employees who suffer the death of a child under 18, or a stillbirth after 24 weeks of pregnancy. Employed parents will also be able to claim pay for this period, subject to meeting eligibility criteria

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