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The Autumn Statement

The Autumn Statement

Termination Payments

It was confirmed that, from April 2018:

  • ex gratia termination payments will continue to be payable free of tax and Employer NICs up to the current threshold of £30,000;
  • employer NICs will be payable in addition to income tax on payments above £30,000.

In addition, payments equivalent to an employee’s basic pay during their notice period will be taxable, even if the employer had no contractual right to make a payment in lieu of notice.

However, the government seems to have dropped its more controversial proposal to tax certain "post-employment" and "expected bonus" payments as earnings.

Salary Sacrifice

The salary sacrifice regime has been significantly narrowed. From April 2017, the only benefits that will benefit from income tax and NICs relief are:

  • enhanced employer pension contributions to registered pension schemes;
  • childcare benefits;
  • bicycles and cycling safety equipment provided under the cycle to work scheme; and
  • Ultra-low emission cars.

Existing arrangements will generally be protected until April 2018, with an extension until April 2021 in relation to cars, accommodation and school fees.

Employee Shareholder Status

In the immediate term, the income tax and capital gains tax reliefs associated with employee shareholder status will no longer be available for shares acquired in relation to an employee shareholder agreement made on or after 1 December 2016. For employee shareholder arrangements entered into before 1 December 2016, the tax advantages will continue to apply.

For the longer term, it was announced that ESS status will be closed to new users altogether "at the earliest opportunity". We will update on this once more detail is known.

National Minimum Wage

The national minimum wage and the national living wage will be increased from 1 April 2017 as follows:

  • National living wage (age 25 and over) - will increase from £7.20 to £7.50.
  • Standard adult national minimum wage rate (age 21 to 24) - will increase from £6.95 to £7.05.
  • Development national minimum wage rate (age 18 to 20) will increase from £5.55 to £5.60.
  • Young workers national minimum wage rate (age 16 to 17) will increase from £4.00 to £4.05.
  • Apprentice national minimum wage rate (age under 19 or in the first year of an apprenticeship) - will increase from £3.40 to £3.50.
  • Daily accommodation offset - will increase from £6.00 to £6.40.