Perhaps the most important change is the increase in taxation of self-employed individuals to reduce the taxation gap between them and their employed counterpartsThe Chancellor used the speech to confirm income tax personal allowances will increase to £11,500 with the higher rate threshold increasing to £45,000 from April 2017. He also repeated the commitment to raise the personal allowance to £12,500 and the higher rate to £50,000 by the end of this parliament.
The most significant employment law initiative was the announcement of return to work support, or “returnships”. The government will be granting £5 million of new funding to the public and private sector to help people back in to employment after a long career break. Whilst this is most likely to affect women who have had a break from work due to family reasons, the support will be available to both men and women.
Employers will also have to get used to seeing T-levels on application forms in the future. From 2019-20, there will be 15 clear career focused technical education routes which double the number of hours of training for 16-19 year olds. The aim of T-levels is to ensure young people have the technical skills to enter in to the workplace.
Perhaps the most important change is the increase in taxation of self-employed individuals to reduce the taxation gap between them and their employed counterparts. The flat-rate Class 2 NICs are being abolished from 2018 but Class 4 NICs will increase from 9% to 10% in April 2018 and 11% in April 2019. Whilst this appears to only affect self-employed individuals with profits over £16,250, a further financial disincentive towards the status of self-employed could result in businesses facing an increase in claims regarding employment status. Although 2017 appears to be the year of employment status, this NI change could result in this issue running on for a number of years to come.
Alongside the Taylor Review in to employment practices, the government will also consider whether there is a need to reduce differences in parental benefits between the employed and self-employed. Similarly, this does not appear to affect businesses but the question of how these will be funded will need to be answered.
With no large employment law surprises in the Spring Budget, employers can breathe a sigh of relief that their current plans are not affected. Going forwards, the main financial changes will be announced in an Autumn Budget with a Spring Statement responding to financial forecasts.
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