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The Autumn Budget and its impact on employers

In his Autumn Statement, delivered on the 22nd of November 2023, Chancellor Jeremy Hunt announced a number of changes that will impact employers as follows:

National Minimum Wage (NMW)

From 1 April 2024, NMW will go up across the board. The increase of £1.02 per hour on the national living wage represents a significant increase over the year of £1,800 per employee. Eligibility is also changing with those aged 21 and over being entitled to receive the living wage (formerly 23 and over), meaning an annual pay rise of £2,300 for a full time employee aged 21.

Increases in NMW also tend to have an impact for businesses with employees who are paid only slightly above the minimum rate- employers often face tricky employee relations issues from those employees keen to maintain the pay differential.

Initial figures suggest that approximately 2.7m low paid workers may benefit from these changes, creating a significant cost to business.

For further information on the new NMW rates click here.

National Insurance Contributions

The Chancellor announced that main Class 1 rate for national insurance will be reduced from 12% to 10%. This will take effect from 6 January 2024. This reduction will provide an increase in take home pay for around 27 million working people. The government has estimated that a worker on £35,400 would receive an additional £450 in 2024/25.

Abolishment of Pensions Lifetime Allowance

In the Spring Budget 2023, it was announced that the pensions lifetime allowance would be abolished. The Autumn Statement 2023 confirms that it will introduce legislation in the Autumn Finance Bill 2023 to complete the work and that the effective date to remove the pensions lifetime allowance will be 6 April 2024.

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IR35 – Calculation of PAYE Liabilities in Cases of Non-Compliance

The Government has announced that they will legislate for circumstances where an error has been made in applying the off-payroll working rules.  HMRC will be able to reduce the PAYE liability of a deemed employer to account for taxes paid by a worker and their intermediary on payments received where such an error has been made.

Occupational Health

It was also announced that the government wants to collaborate with employers to assist in preventing their employees from becoming inactive due to ill health.

The supply of high-quality occupational health is critical in helping employees with disabilities and long-term health conditions to stay in work. Following a recent consultation, the Government has said it will meet employers’ requests for clearer guidance and support. An expert group will be established to develop a new voluntary occupational health framework. The Government, alongside assistance from employers, will seek to develop and promote guidelines for best employment practices for employees with health and disability issues.

For further information or if you have any queries, please contact one of our specialist Employment Solicitors.