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Increase in National Living Wage

The Government pledge to achieve a national minimum wage of £9.00 by 2020, would appear to be on track. Therefore, the increase to £8.21 per hour from April 2019 is no major surprise and Companies would be wise to plan ahead for the further increase that’s in the pipeline.

Rates overall will increase as follows:

  • 25 and over – from £7.83 to £8.21
  • 21 to 24 – from £7.38 to £7.70
  • 18 to 20 – £5.90 to £6.15
  • Under 18 – £4.20 to £4.35
  • Apprentice – £3.70 to £3.90

Apprenticeship contributions reduced from 10 to 5% for small and medium-sized business

Introduction of the Apprenticeship Levy and changes to contributions in 2017 has led to many smaller businesses moving away from Apprenticeship Schemes, with figures reported by the Department of Education confirming a significant fall in apprenticeship registrations.

It makes sense then that the Government takes steps to rectify this and Chancellor Philip Hammond’s announcement that contributions will be reduced to 5% for small and medium-sized employers will hopefully go some way to encourage businesses to rethink possible training opportunities in the future.

Increase tax thresholds

Whilst there remains some debate about how this will benefit the lowest earning families, the increase in tax thresholds appears to be welcomed by most.

The rate at which people start paying income tax at 20%, will rise from £11,850 to £12,500, with the higher rate income tax threshold, the point at which people start paying tax at 40%, rising from £46,350 to £50,000 in April 2019

Scottish Government Finance Secretary, Derek Mackay, will set out his plan for Scottish tax payers on 12 December 2018.

Introduction of Private Sector IR35 rules

Image result for counting money ukThe IR35 rule has been in place for public sector bodies for some time now and sees self-employed individuals being subject to the same level of tax deductions and employer tax and NI contributions as direct employees.

The Chancellor has set out in his budget the intention to extend the IR35 rule to the private sector from April 2020, albeit with an exemption for ‘small businesses’ (i.e. those that satisfy two of the following rules: turnover not more than £10.2m, balance sheet total not more than £5.1m or less than 50 employees).

This will require businesses to review the way in which contractors are engaged to ensure that they are truly self-employed, focusing on elements such as: mutuality of obligation, exclusivity, right to substitution, structure of fees and overall levels of control.

A further review in this regard will be undertaken in the summer of 2019.


Should you require any further details or wish to discuss any aspect of the above and how it will impact your business, please feel free to contact us on 01942 727 200.