In the first Conservative budget in nearly 20 years Chancellor George Osborne set out the new government’s plans for the nation’s finances.
Below we have summarised the key points that will affect PAYE & NIC processing over the next few years.
- The introduction of a national living wage for working people aged 25 or over will be introduced in April 2016, set at £7.20 an hour and rising to £9 by 2020.
- The National Insurance Employment Allowance will increase by £1,000 in April 2016 to £3,000.
- From April 2016, companies where the director is the sole employee will no longer be able to claim the Employment Allowance.
- The tax-free personal allowance will be raised to £11,000 next year (tax code 1100L). After that, the personal allowance will always rise in line with the National Minimum Wage
- The higher tax rate threshold will increase to £43,000 in the 2016/17 tax year from the current 2015/16 threshold of £42,385
- Student maintenance grants will be abolished from 2016, replaced with loans, which people will start to pay back when they earn over £21,000.
While there are no plans to crack down on the salary sacrifice regime, the Budget documents say that the arrangement will be ‘actively monitored’ as they have become increasing popular.
The budget also introduced news that the HMRC funding will increase in order that resources can be allocated towards criminal investigations. They believe that this investment will raise £600million in unpaid taxes and fines by 2020/21.
In addition legislation to modernise the HMRC’s powers to recover tax directly from debtors bank accounts. This could include the acquisition of data from online intermediaries and electronic payment providers as a route to unearth those operating in the hidden economy.