The new regulations add a few differences to the current UK lawsThe end of the tax year is usually a very busy time for HR professionals, with the inevitable changes to employment law and policies, and 2017 is no exception!
1. Salary sacrifice tax advantages limited
Benefits received in lieu of pay are often dealt with by way of a salary sacrifice scheme. This can be advantageous to employees, who benefit from the reduced tax and NIC they must pay; however, from 6 April 2017, the benefits available are limited. Arrangements already in place will be protected until April 2018, or April 2021 in some cases.
2. National minimum wage increases
The national minimum wage and the national living wage increased from 1 April 2017 across all age bands, despite having been reduced in October 2016. The new rates of pay are as follows:
National living wage – £7.50 per hour (applies to those aged 25 years and over).
National minimum wage:
£7.05 per hour (21-24 years).
£5.60 per hour (18-20 years).
£4.05 per hour (16-17 years).
£3.50 per hour (for apprentices aged under 19, or those over 19 who are in the first year of their apprenticeship).
3. Statutory family-related absence pay and sick pay increase
Statutory paternity, maternity, adoption and shared parental pay rates increased to £140.98 per week from the week commencing 2 April 2017.
Statutory sick pay increased to £89.35 per week from 6 April 2017.
4. New pensions advice allowance
Those who pay into defined contribution or hybrid pension schemes are now eligible to take a tax-free amount of up to £500 from their pension scheme to redeem against the expense of obtaining financial advice. This pensions advice allowance became effective on 6 April 2017.
Eligible persons will be able to use this service three times; however, there is a restriction of once per tax year.
5. Changes to statutory redundancy pay
When an employer dismisses an employee for redundancy, they are required by statute to pay those who have two or more years’ service a sum of money based on the employee’s weekly pay, their length of service, and their age. The amount paid is subject to a cap on the weekly pay; from 6 April 2017, this cap was increased from £479.50 to £489.00.
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