National living wage to rise to ￡7.50
This week's Autumn Statement revealed that the national living wage will rise to ￡7.50 per hour from April 2017.
The new rate will apply to workers aged 25 and over, and will mark the first rise in the new statutory minimum rate since it was introduced in April 2016, at ￡7.20.
In Philip Hammond's first Autumn Statement as Chancellor and the first since Theresa May came to power as Prime Minister, he promised the Government would be committed to "fiscal discipline" and would make strategic investments to improve the UK's productivity gap.
He said: "Raising productivity is essential to deliver the high-wage, high-skill economy we want."
He pointed to the UK's 30 percentage point lag behind Germany and the US, claiming this meant "in the real world, it takes a German worker four days to produce what we make in five; which means, in turn, that too many British workers work longer hours for lower pay than their counterparts".
Regarding the job market, he described it as "robust", pointing to predictions from the Office for Budget Responsibility (OBR) that the number of jobs would increase by 500,000 each year over the course of its five-year forecast. "Every UK nation and region saw a record number of people in work," he said.
Other key announcements included:
- The national insurance employer threshold and employee threshold will be aligned from April 2017, meaning that both employees and employers will start paying national insurance on weekly earnings above ￡157.
- The personal allowance for tax will increase to ￡11,500 in April 2017, and will be ￡12,500 by the end of Parliament, with the threshold for higher-rate tax to be ￡50,000 by the end of the term.
- From April 2017, those who access employee benefits will pay same tax as everyone else, although some salary-sacrifice schemes, such as childcare and cycle-to-work schemes, will be excluded.
- The tax advantages of employee-shareholder status will be abolished after suggestions it has been misused by "high-earning individuals".
- New penalties will be introduced for those who enable use of tax avoidance schemes.
However, shadow Chancellor John McDonnell called for the Government to offer a "real living wage" over and above the 30p rise announced.
Information gained from XpertHR