The main points to be noted by employers from Budget 2016 announced by Chancellor George Osborne are:
• The personal tax allowance will increase by £500 from £11,000 to £11,500 from April 2017
• The higher rate tax threshold will increase to £45,000 from April 2017
• Termination payments over £30,000 which are subject to income tax currently from April 2018 will be subject to Employer National Insurance Contributions (NICs)
• Class 2 National Insurance Contributions for self-employed people will be scrapped from April 2018
• The range of benefits that are subject to income tax and National Insurance Contributions are going to be examined by the government with the aim of limiting the range of benefits subject to income tax and NIC. It is the view of the government that such benefits such as the pension saving, childcare and schemes such as the Cycle to Work will still continue to benefit from the relief of income tax and NIC when provided through salary sacrifice agreements.
• A new discount rate for employers contribution to the unfunded public service pension schemes is set at 2.8% and in 2019-20 employers will have to pay higher contributions into the scheme as a result.
• The rate of tax on loans to directors and participators will increase by 7.5% to 32.5% in April 2016.