Mini-Budget | Employment Law Update
Kendal Hulme, our Head of Operations, provides a legal update for September 2022. She discusses the mini-budget announcement and how it may affect employers.
How will the new Prime Minister and the mini-budget affect employers?
On September 5th former Foreign Secretary Liz Truss successfully won her battle to become the new Prime Minister. In a post pandemic climate of rising inflation, cost of living crisis, threat of recession and global unrest we can expect the new PM to focus on rebuilding the economy which in part has already been set forth in the mini-budget announced 23rd September 2022.
Mini-Budget
Truss has already set the wheels in motion to reverse a number of previously announced measures as part of the Governments aim to support individuals and businesses due to the cost-of-living crisis.
To summarise the Mini budget’s effect on employers and employees:
- The Energy Bill Relief Scheme that was granted to all households will be offered in similar form to businesses.
- Jobseekers and Benefits. The government is further encouraging jobseekers to fill vacancies in order to boost the economy. Consequently, in the case of those not fulfilling their appropriate job seeking obligations, there will be a reduction in benefits.
- Reversing Health and Social Care Tax Levy – From April 2023 the levy will be cancelled as a separate tax.
- Industrial action legislation. Minimum service levels are to be introduced in respect of strike action to ensure it’s not impossible to get to and from work. Legislation will be implemented making it a requirement that trade unions put meaningful pay offers to a member vote, therefore minimising strike action to only when negotiation breaks down.
- New investment zones to be introduced. If an employer hires a new employee within one of these zones, then the employer will be exempt from National Insurance contributions on the first £50,000 earned by that employee.
- Income Tax cuts. From April 2023 we’ll see a reduction of 1% to the basic rate of income tax reducing it from 20% to 19%. The additional rate of income tax (45% for earnings over £150,000) will be removed (the higher rate will now be 40% and basic rate will be 19% from April 2023). National insurance contributions (the increase in contributions and new rates) have been cancelled from 6 October 2022.
- The IR35 Off-Payroll tax rules will be repealed. As a result, this will impact the self-employed and/or consultants, or those engaging contractors from April 2023.
- Removing Bankers Bonus Cap. Initially implemented so that a bonus could be limited to twice the banker’s salary. However, this will be cancelled.
If you would like to discuss the mini-budget and how they may affect your business, or you would like to know more about how we can help you, get in contact with our team of experts today.
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