[UK] Employees, employers and the Chancellor's Autumn Statement

After a difficult and bumpy time for many, employers and employees alike will no doubt have been hoping for some respite from the chancellor today (November 22) in his Autumn Statement. So, what to make of it?

In summary, employees will no doubt be happy with some of the measures but employers would be justified in viewing the statement in less positive terms. 

The two main measures impacting employees are:

• a cut in the rate of employee NIC to 10% from January 2024; and
• a rise in the National Minimum Wage to £11.44 from April 2024. 

During the longest cost of living crisis in decades, employees will undoubtedly welcome these measures. However, with regard to the NIC cut, many may see this in the wider context and conclude that the chancellor is simply giving with one hand only to take with another. How come?

Income tax and NIC thresholds are frozen until April 2028. This means that, with wage inflation, more people are paying tax for the first time and more people are paying tax at a greater rate. In short, the tax burden on employees is rising substantially over the coming year and the 2% may be viewed as a drop in the ocean. 

For employers, there was no such generosity. Employers, also facing increasing employer NIC costs via the previously announced, will continue to pay employer's NIC at existing rates. Also, whilst welcome by employees, the rise in the National Minimum Wage will add to employer’s costs.

In short, employer's costs are set to rise substantially over the coming years and there was nothing in the Autumn Statement to alleviate this. 

There is also likely to be an impact and extra pressure on payroll to implement the NIC changes correctly. From past experience, payroll will know that having two different NIC rates during one tax year can throw-up some unwanted anomolies.

Employers will no doubt want to speak with their payroll teams and payroll providers as soon as possible.

Ultimately, many will conclude that this was a reasonable budget for employees but not for employers.

Author: Lee McIntyre-Hamilton

Lee has over 23 years of experience in international mobility, expatriate tax and employment tax. He works with a diverse range of international organisations, from small owner-managed businesses to large multi-national corporations and non-profit organisations.  Lee delivers coordinated, joined-up global mobility tax, international social security and payroll advice across many territories globally. He is a published writer on international tax matters, notably the Tiley & Collinson UK Tax Guide.

Contact Lee: lee@globalpayrollassociation.com

After a difficult and bumpy time for many, employers and employees alike will no doubt have been hoping for some respite from the chancellor today (November 22) in his Autumn Statement. So, what to make of it?

In summary, employees will no doubt be happy with some of the measures but employers would be justified in viewing the statement in less positive terms. 

The two main measures impacting employees are:

• a cut in the rate of employee NIC to 10% from January 2024; and
• a rise in the National Minimum Wage to £11.44 from April 2024. 

During the longest cost of living crisis in decades, employees will undoubtedly welcome these measures. However, with regard to the NIC cut, many may see this in the wider context and conclude that the chancellor is simply giving with one hand only to take with another. How come?

Income tax and NIC thresholds are frozen until April 2028. This means that, with wage inflation, more people are paying tax for the first time and more people are paying tax at a greater rate. In short, the tax burden on employees is rising substantially over the coming year and the 2% may be viewed as a drop in the ocean. 

For employers, there was no such generosity. Employers, also facing increasing employer NIC costs via the previously announced, will continue to pay employer's NIC at existing rates. Also, whilst welcome by employees, the rise in the National Minimum Wage will add to employer’s costs.

In short, employer's costs are set to rise substantially over the coming years and there was nothing in the Autumn Statement to alleviate this. 

There is also likely to be an impact and extra pressure on payroll to implement the NIC changes correctly. From past experience, payroll will know that having two different NIC rates during one tax year can throw-up some unwanted anomolies.

Employers will no doubt want to speak with their payroll teams and payroll providers as soon as possible.

Ultimately, many will conclude that this was a reasonable budget for employees but not for employers.

Author: Lee McIntyre-Hamilton

Lee has over 23 years of experience in international mobility, expatriate tax and employment tax. He works with a diverse range of international organisations, from small owner-managed businesses to large multi-national corporations and non-profit organisations.  Lee delivers coordinated, joined-up global mobility tax, international social security and payroll advice across many territories globally. He is a published writer on international tax matters, notably the Tiley & Collinson UK Tax Guide.

Contact Lee: lee@globalpayrollassociation.com