The National Living Wage is to increase from £7.20 to £7.50 in April 2017 representing a 4% "pay rise" for those aged 25 and over. The National Minimum Wage will also rise:-
- 21 - 24 years olds £7.05 p/h
- 18 - 20 year olds £5.60 p/h
- 16 - 17 year olds £4.05 p/h
- Apprentices £3.50 p/h
Also from April 2017 the benefits which attract income tax and NI advantages when provided as part of a salary sacrifice scheme will be limited to enhanced employer pension contributions to registered pension schemes, childcare benefits, cycles and cycle safety equipment provided under the cycle to work scheme, and ultra low emission cars. Arrangements put in place before April 2017 will be protected until April 2018 or, for cars, accommodation and school fees, until April 2021.
Employee shareholder status (ESS), introduced in 2013, allows employees to forego a number of employment protections including protection from unfair dismissal in return for £2,000 of shares in the employer's business. These shares currently qualify for certain income tax and capital gains tax relief. However, following evidence suggesting that ESS has been used primarily for tax planning rather than supporting a more flexible workforce, these reliefs will be abolished for shares acquired in consideration of any ESS arrangement made on or after 1 December 2016. ESS remains open for the time being but the Government has confirmed that it intends to close it to new users altogether "at the next legislative opportunity".
As expected, the Autumn Statement confirmed the current exemption from income tax and NI for termination payments up to £30,000 will be retained but employer NI contributions will be payable on amounts above £30,000 from April 2018. It had previously been suggested that the Government would, for those employees who are paid in lieu of working their notice (even where there is no pay in lieu of notice clause), make all amounts they might have expected to receive had they worked their notice (including bonuses) subject to income tax. However, the Autumn Statement confirmed that income tax will only be applied to an employee's basic pay if their notice is not worked.