There are many changes coming into force through the year. Helen Swire outlines the most notable developments
In the Autumn Statement, Chancellor of the Exchequer Philip Hammond announced some far-reaching legislative changes for the UK workforce.
To “tackle the challenges of fiscal sustainability”, Hammond said that from April 2017, the same taxes that already apply to all other benefits will also be applicable to salary sacrifice and benefits-in-kind schemes. Exclusions include ultra-low emission cars, pensions, childcare and cycle-to-work
schemes. Some existing long-term arrangements (such as school fees) will be protected until 2021.
Wages and allowances
The government has confirmed that the tax-free personal allowance for low and middle earners will rise to £11,500 in April, while the National Living Wage will rise to £7.50 at the start of the new tax year. In combination with the lack of salary sacrifice opportunities, this could have a real impact on benefits offerings.
Childcare and family initiatives
After much speculation and many delays, tax-free childcare (TFC) is to be fully rolled out. Once the TFC changes have taken place, an existing voucher scheme will not be open to new joiners.
Adam Hartley, partner and head of employment at law firm DLA Piper, says: “Employees who have childcare costs and are not in their employer’s voucher scheme should assess which regime is likely to be of most benefit and, if appropriate, ensure they join the childcare voucher scheme before the changes take place.”
The apprenticeship levy
Employers with annual payrolls of more than £3m will be subject to an apprenticeship levy from April, which will account for 0.5% of their overall pay bill. There has been some scepticism about the positive impact of the levy. Hartley says: “The system potentially presents significant costs for employers, some of whom may not be able to take full advantage of the apprenticeship funding then available.”
Gender pay reporting
The government aims to bring in legislation by April 2017 making it mandatory for employers of more than 250 employees to publish their gender pay gap by April 2018, with annual data snapshots. Employers need to start preparing for reporting as soon as possible so they are adequately equipped with the right data.
The European Union’s General Data Protection Regulation will come into force in May 2018 – before Brexit takes place. Regardless of the EU exit, employers will still have to make sure they have equivalent provisions in place around their data.
Health insurance and IPT
In the Autumn Statement Hammond announced a further increase – to 12% – of Insurance Premium Tax (IPT), to take place in June. Meanwhile the reduction of the Employment & Support Allowance from April 2017 will affect many group income protection policies.
“There are many benefit design options that will enable employers to offer their staff an income protection benefit that will meet their needs regardless of state provision,” says Group Risk Development (GRiD) spokeswoman Katharine Moxham.
Not before time, pension cold calling is to become a criminal offence – although the industry is sceptical about the degree to which this will reduce scams in 2017.