INSIGHT: Budget 2016 A Must Read for Employers

Posted on March 22, 2016

A number of measures and changes were announced in this month’s budget that are of interest to employers.

“There are several key changes to employment law coming into force in April 2016, including the introduction of the National Living Wage, financial penalties for unpaid tribunal awards and settlements, new tribunal postponement rules and increases in tribunal compensation limits,” said Head of Employment Susan Mayall.

“Any business believing they are not ready for the changes should get in contact with me to discuss how best we can help them,” she added.

A synopsis of the 2016 highlights are below.

Employers will receive a payment equating to 10% of their monthly apprenticeship levy contributions from the government under the proposed apprenticeship levy. The payment is to be spent on apprenticeship training.
Employers on whom a civil penalty is imposed for employing illegal workers will lose their NICs employment allowance for one year.
Following its announcement that shared parental leave and pay will be extended to working grandparents, the government is to conduct a consultation on the various options for the implementation of this extension to the scheme.
Changes are being considered to salary sacrifice schemes. In particular, the range of benefits on offer through the schemes might be restricted (although this will not affect enhanced employer pension contributions, childcare benefits and health-related benefits). From April 2018, the childcare voucher scheme will be closed to new entrants.
From midnight, March 2016, there will be a restriction on capital gains tax (CGT) relief on all shares issued as consideration for entering into an employee shareholder agreement: the restriction limits the CGT relief on share disposals to £100,000 over the course of a lifetime.

In addition, the Finance Bill 2017 and a future National Insurance Contributions Bill will contain provisions (subject to further consultations) to deal with the following announcements:

Termination payments subject to income tax on amounts in excess of £30,000 are to be subject to employer National Insurance Contributions (NIC) from April 2017. The current £30,000 exemption will be retained and the whole termination payment will be outside the scope of employee NICs;
all payments in lieu of notice and certain damages payments will be taxed as earnings;
the abolition of the foreign service exemption will be abolished.

For further information, contact contact Susan Mayall on 0161 684 6948 or email enquiries@pearsonlegal.co.uk.

Also in this issue of Insight

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