Presenting his first and last Autumn Statement today (going forward there will be an Autumn Budget and a Spring Statement), the Chancellor, Philip Hammond, announced a series of measures around tax, productivity and for regional growth that are of relevance to the recruitment industry.
The fact the Chancellor did not mention the dreaded phrase “IR35” during his speech does not herald good news.
Buried in the official documents (p.36) is confirmation that the government will push ahead with proposals for off-payroll working in the public sector. Liability for determining whether an individual working via a Personal Service Company is in or out of scope of IR35 will transfer “to the body paying the worker’s company” as of April 2017. As before, these changes only apply to the public sector.
Since the statement this afternoon, HMRC has confirmed to the REC that the draft regulations will be published on 5th December. We will analyse these in full.
The REC is currently working with HMRC to arrange a further meeting to test the next iteration of the digital tool which aims to help make a determination on IR35 status.
The Chancellor also confirmed that they intend to level the playing field when it comes to flat rate VAT schemes. From April 2017, there will be a 16.5 per cent rate – an uplift from the much lower rates we have previously seen used by some. The draft regulations will be published on 5th December and will explain whether existing schemes can be recalibrated to accommodate this uplift, or if they will have to reapply.
It is also worth noting:
NICs for employers and employees will be aligned and paid on earnings above £157 per week. While this may simplify matters, it will lead to additional cost for employers. Insurance Premium tax will increase from 10 per cent to 12 per cent from June 2017. The Chancellor has promised to tackle disguised remuneration schemes for the self-employed, as well as cracking down on other tax avoidance schemes. Government recommitted to raising the personal income tax thresholds to £12,500 and £50,000 respectively by the end of this Parliament.
Productivity & Infrastructure
The good news: the Chancellor announced a £23 billion National Productivity Investment Fund, focusing on housing, digital, transport and research & development. This, alongside a freeze on fuel duty and more infrastructure development means businesses in many sectors from IT to life sciences, logistics to construction should have reason to celebrate.
The Chancellor announced a £23 billion National Productivity Investment Fund, focusing on housing, digital, transport and research & development.
But as we know, the key issue for recruiters right now is access to people. Today’s JobsOutlook underlines this problem, with employers predicting difficulties hiring in STEM industries especially.
Much was made in the press about support for ‘JAMs’ – just about managing families – and the key announcement here was the new National Living and Minimum Wage rates from April 2017:
For workers aged 25 and over, the National Living Wage will increase to £7.50 per hour from £7.20 For 21 to 24 year olds, it will go from £6.95 to £7.05 per hour 18 to 20 year olds will see their wage rise to £5.60 per hour from £5.55 16 to 17 year olds will see wages rise from £4.00 to £4.05 per hour The apprentice rate will change from £3.40 to £3.50 per hour.
Finally, and as requested by employers in a survey published by the REC today, there was a promise to provide greater regional investment to the tune of £1.8 billion. New city deals for Swansea and in Scotland are likely, while there is ongoing consultation on introducing a Northern Ireland corporation tax rate.
You can read the Autumn Statement in full here. The REC will continue to keep members up-to-date as details emerge via the draft regulations.