The Chancellor’s summer budget means several changes that will affect employers from April 2016.
1. Introduction of a new compulsory National Living Wage for workers aged 25 and above. Currently, the National Minimum Wage for employees that are 21 years old and over is £6.50 an hour, increasing to £6.70 in October 2015. For those 25 years old and over, this will mean a further increase to £7.20 in April 2016.
2. To assist employers with this additional cost, the new wage will be offset by an increase to the Employment Allowance from £2000 to £3000 per year and Corporation Tax being cut to 18%, a 2% reduction on the current rate.
3. Personal Allowance will increase from £10,600 to £11,000 in April 2016 and to £11,200 in April 2017.
4. The basic rate limit will increase from £31,785 to £32,000 in April 2016 and to £32,400 in April 2017.
5. The higher rate threshold will increase from £42,385 to £43,000 in April 2016 and to £43,600 in April 2017.
6. From April 2016 companies where the director is the sole employee will no longer be able to claim the Employment Allowance.