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The Budget - What's on the Horizon for Employment?

on Friday, 02 November 2018.

The Budget, announced on 29 October 2018, contained some measures which are of interest to employers. We've picked three of the most significant changes for employers and will keep you updated in relation to their progress.

  • Roll out of public sector off-payroll working rules to the private sector in 2020

Intermediaries legislation (IR35) was introduced to tackle the avoidance of employment taxes and National Insurance contributions (NICs) by those who work through intermediaries, primarily their own personal service company (PSC). IR35 originally only applied in the private sector but changes in April 2017 introduced IR35 in the public sector and placed the burden of compliance to the public authority engager, rather than the contractor.

The Chancellor has announced, as expected, that these rules will be rolled out in medium and large business in the private sector in 2020. This is likely to have very significant implications for engagers and contractors alike. We await a detailed consultation next year and will keep you up to date as to progress.

  • National Insurance Contributions (NICs) treatment of termination payments delayed yet another year

From April 2018, various changes were introduced in respect of the taxation of termination payments, including the requirement to treat all payments in lieu of notice as earnings. As part of the same consultation on the reform of taxation of termination payments, it was decided that all termination payments above the £30,000 threshold would be subject to class 1A NICs (employer liability only). Employee NICs were not affected.

This measure was originally to be introduced in 2018 and then this was delayed to 2019. The Chancellor has now announced that the changes shall take effect in 2020. This delay is good news for employers.

  • Changes to the Apprenticeship Levy

The apprenticeship levy was introduced in April 2017 and requires employers with a "pay bill" of more than £3 million to pay the levy at a rate of 0.5% of their pay bill to fund apprenticeships. Broadly speaking, the purpose of the levy is to increase skills in the workforce.

The rules allowed levy paying employers to allocate 10% of their apprenticeship funding to other employers within their supply chain. The Chancellor has announced this will be increased to 25%.

The rate of co-investment for apprenticeship training has also been halved, meaning that employers will now only have to pay 5% of the training costs, with the government meeting 95% of the cost.


For more information, please contact Charlotte Rose in our Employment Law team on 0117 314 5219.