- Rise in national living wage
The NLW will increase from £7.20 an hour to £7.50 from April 2017 – a rise of 4.2 per cent for employees aged 25 and over. The minimum wage for 21 to 24-year-olds will also rise, from £6.95 to £7.05 per hour, and the rate for apprentices will increase by 10p to £3.50 per hour.
The changes follow recommendations from the Low Pay Commission, an independent body, but are lower than forecast.
- Alignment of national insurance thresholds
Both employees and employers will start paying national insurance (NI) on weekly earnings of more than £157 from April 2017. The current thresholds for 2016-17 stand at £155 per week for employees and £156 for employers. This change aims to simplify the NI payments for employers, but will lead to a marginal increase in employer costs – the Treasury said this will amount to no more than £7.18 per employee per year.
- Changes to the personal allowance
The tax-free personal allowance will increase from £11,000 to £11,500 in April 2017, and to £12,500 by the end of the current parliament’s term in 2020. The higher-rate threshold will rise to £45,000 in 2017 and £50,000 by 2020. The allowance will increase in line with the consumer price index, rather than the national minimum wage, from 2020.
- End to most salary sacrifice schemes
For help on understanding how these changes will impact your business please contact the ProAktive HR team on 01302 341344.
By Louise Addison Dip Mgmt (Open) Assoc CIPD – HR Business Partner
Some content in this article is taken from www.cipd.co.uk