Summer Budget 2015 - what it means for payroll
By Neil Wilson
Yesterday’s budget was the first all-Conservative one since 1996, with the Government clearly setting out its stall for the next year. George Osborne’s stated aim was to give the UK a payrise, cutting taxes where possible and placing the burden of responsibility onto employers and away from the state by reducing the welfare cap and introducing a national living wage.
With this being the case, there are some things for anyone involved in payroll processing to get their heads around, so here’s the changes that will need to be accounted for.
- A National Living Wage for over-25s will be compulsory from the start of the next tax year (April 2016). This will be £7.20 an hour, going up to £9.00 an hour by 2020 with details to be outlined in future budgets.
- The Personal Allowance is due to rise to £11,000 next year.
- The Higher Rate tax threshold will rise to £43,000 for 2016.
- The National Insurance Employment Allowance for small firms will be increased to £3000 from 2016.
- From next year companies where the Director is the sole employee will no longer be able to claim Employment Allowance.
- Public sector pay rises will be capped at 1% for four years.
- The rules relating to non-doms are changing. From 2017 people born in the UK to UK-domiciled parents will not be able to retain non-dom status if they leave and then return and take up residency in the UK. In addition, people who have resided in the UK for 15 of the last 20 years will pay full UK tax.
All in all, these changes are nothing out of the ordinary for payroll people and many of them will have been predicted some time ago. It’s safe to assume that the Personal Allowance will move upwards in line with the minimum (now rechristened ‘living’ wage) on an annual basis and that the higher rate threshold will move upwards too. It’s highly unlikely that you’ll be affected by the changes to the rules governing non-doms but it never hurts to be aware!