26th April 2016
The 2016 Budget was announced back in March and now the dust has settled. So, what does the new financial landscape look like for businesses? Which of the announcements will have a lasting effect on businesses, HR and Payroll?
Cuts to Business Rates
One of the biggest takeaways from the Budget announcement for small businesses was the cutting of business rates. From April 2017, 600,000 small businesses will no longer have to pay business rates, and a further 250,000 will pay lower amounts. This, according to George Osbourne, could save smaller businesses £6,000 a year. This saving will not only help small businesses grow, but also make it easier for new businesses to get started. And the change also goes some way to easing the burden of auto enrolment pension contributions or higher payroll bills associated with the National Living Wage increases.
Funding for Travel
The Government has committed to investments in both rail and road. It has been announced that an additional £60m has been invested in the High Speed Rail 3 project to cut travel time between Manchester and Leeds. The Crossrail 2 project is also receiving £80m. The Government has pledged investment into motorways across the north of England. By investing in the infrastructure of the country, the Government is looking to make long term change to people’s commutes and travel. These changes can both help or hinder business. Better infrastructure means employees can commute to work easier. However, new found flexibility will mean HR and payroll teams will need to sharpen the pencil when it comes to employee retention, as they could find employees choosing better employment further from home.
Off-Payroll Public Sector Working
In the public sector there are full time workers being treated as self-employed and benefiting from certain tax and NI advantages. From April 2017 public sector workers will only be paid on the payroll or through an agency. This change is designed to prevent public sector workers from taking advantage of the system, while adding more burden onto payroll departments. Savvy payroll teams will offset that additional administrative burden through outsourcing their payroll
Salary Sacrifice for Provision of Benefits in Kind
The government are considering limiting the range of benefits that attract income tax and National Insurance contributions advantages when they are provided as part of salary sacrifice schemes. Currently, workers will still find the core benefits still available:
- pension saving
- health-related benefits
Commentators have noted that many people were worried that the government would attack salary sacrifice schemes as part of their agenda of clamping down on tax avoidance. It is reassuring to see that the core salary sacrifice schemes look as though they will be protected. This is particularly reassuring for millennials, who will find that workplace pension saving schemes will help make up the shortfall from the removal of Serps to supplement state pensions. Payroll and HR teams will need to keep a watching brief to ensure their payroll remains compliant whatever changes may occur
If you’d like to know more about the 2016 Budget, you can get the full Budget summary right here.