Chancellor Philip Hammond has delivered the Autumn Budget, announcing changes in Stamp duty, housing, personal taxation and wages but what does it mean for SME’s and employee benefits?
The Chancellor set out clear intentions to makes investments to bridge the skills gap.
totaljobs’ HR Director, David Clift comments:
“Chancellor Philip Hammond’s assessment that ‘backing skills is key to unlocking growth nationally’ recognises the need to bridge a skills gap, and invest in areas outside of London.”
“A greater provision for retraining during working life is another forward-thinking step - and one that is very much in line with the trend that sees millennials more inclined to ‘job hop’ than previous generations.”
“Overall, Chancellor Philip Hammond’s budget has wide-reaching implications for training and employment – and a much-needed strategy to bridging the skills gap.”
The UK economy growth was slashed dramatically from the predicted 2% earlier this year to 1.5%, while productivity is also expected to be lower due to slow wage growth and lacklustre investment.
Peter O’Donnell, CEO of Unum UK says:
“As a nation our financial education and resilience is far lower than it could be and ultimately it’s the UK economy that pays the price.
“Money worries are the biggest cause of stress to the working population and people with debt problems are twice as likely to develop major depression. The only way to break the cycle that causes money worries to result in lost productivity is to make changes at a policy level.
“A comprehensive Government plan is needed to better build the financial capability of UK workers so they can prepare for the risk of being unable to work, while also enabling business to better protect their employees.”
There were clear intentions made for helping first time buyers purchasing homes, with the removal of stamp duty. Although this is a positive move in the right direction David Dodd, Consulting Director at Thomsons Online Benefits, argues more needs to be done by employers to help their younger workers, stating,
“This Budget may prove to be the catalyst that the Lifetime ISA has been crying out for. As Hammond commented, 38% of 25-34 year olds still do not own a home in the UK – yet our research shows that buying a home is a key life goal for over 74% of employees in this age bracket. The removal of stamp duty for first time buyers on homes up to £300,000, coupled with the tax advantages of the Lifetime ISA, should prove a huge incentive for employees looking to save for their first property. Offering access to these benefits provides employers with a valuable opportunity to connect with their employees, and help them take a large step closer to achieving a personal goal. Communications will be paramount in the success of this. Employers need to clearly articulate the dual tax benefits of the Lifetime ISA and the removal of stamp duty through the appropriate channels. Personalised communications aimed at younger, non-home owners can go a long way toward achieving this, while demonstrating care and support for employees.”
Fuel duty for petrol and diesel cars which was set to rise in April 2018 has now been scrapped however existing diesel supplement in company car tax is set to rise by 1%.
James Malia, Director of Employee Benefits, Sodexo Engage comments on the Chancellor’s announcement in the Autumn Budget to increase car tax on certain diesel vehicles stating:
“The Government’s initial determination to avoid penalising diesel car owners has already been forgotten. The Chancellor’s decision to increase car tax on particular diesel vehicles by raising the tax on company cars by 1%, will mean some drivers are certain to end up out of pocket. Although these changes are limited for now, it is just an initial step and people need to prepare for further initiatives to come. It’s important for employers to recognise their responsibilities and offer support to those employees who could face financial issues. By acting now, businesses can help to ease any impact to employees’ financial worries and wellbeing, which could have long-term benefits on productivity. One solution is tax efficient Ultra-Low Emission (ULE) car schemes which could be a popular option for those affected. As our research has found, 1 in 5 employees would like to see car financing options as part of their employee benefits package. Whilst the government focusses on its strategy to reduce the number of diesel cars on the roads, employers have the opportunity to show they really care about their staff and the current issues that they face.”
Peninsula Employment Law Director Alan Price comments on what the changes in national living wage and focus on productivity will mean for employers.
“In the first November Budget for 21 years, Chancellor Phillip Hammond set out a number of initiatives that will affect employers.”
“The Chancellor confirmed National Living Wage will increase from £7.50 to £7.83 per hour from April 2018. All rates of the National Minimum Wage will also increase from next April, in line with the Low Pay Commission’s recommendations. This early confirmation ensures employers have sufficient time to plan for the wage increases, both financially and administratively. Following an increased focus on enforcement in this area, failing to pass on these increases puts employers at risk of being publicly named and shamed or facing financial penalties. Even a one day delay will create liability.”
“Further focus was also given to providing skilled workers for businesses. The government is launching a National Retraining Scheme which will provide workers with the opportunity to re-train during their working lives, ensuring they have the skills for future workplaces. They have also reiterated the commitment to have 3 million apprenticeship starts by 2020 whilst announcing they will review the flexibility that employers have to spend their apprentice levy payments. This could potentially increase the time employers have to spend the levy, or allow more flexibility for group organisations to share their payments, to ensure organisations who pay the levy can spend it in a way that benefits their workforce.”
Interestingly there was little to no mention of pensions in the Budget, which has been met with a proverbial sigh of relief. Alan Morahan, Managing Director, DC Consulting at Punter Southall Aspire adds “Whilst the Chancellor’s budget speech was littered with quips it was light on pension-related content. Many in the pension industry will raise a smile to that. Pensions legislation has been constantly tinkered with so a period of stability has to be welcomed. The increase in the Personal Allowance and Higher Rate Threshold may have implications for auto-enrolment contributions but we await the results of the A-E review which might drive what happens next in the continued roll out of this pension revolution.”