Employment Law Highlights in Budget 2013
This year’s Budget delivered by George Osborne, Chancellor of the Exchequer, was light on employment law changes (probably because the last 12 months have been very busy with a raft of reforms) but here is a summary of employment-related aspects of the 2013 Budget:
- The proposed “Employee Shareholder” system will be in operation as soon as September 2013, with the additional proposal by the Budget that the first £2,000 of share value will be free from income tax and National Insurance. However, the House of Lords vetoed yesterday (20 March) the legislation so the government will need to restructure the model to get it past the peers for a second time. Watch this space!
- From 2014-15 this concept of employee ownership (if it gets past the House of Lords) will attract more government funds, and a capital gains tax relief will also be introduced from 2014 where an employer sells a majority shareholding and converts it into an employee-ownership structure.
- A bonus for businesses and charities will be the introduction from April 2014 of an “employment allowance” giving them a £2,000 reduction in employer’s National Insurance contributions.
- Not great (but not unexpected) news for the public sector, with the (average) 1% cap on pay increases extended for another year to 2015-16.
- From April 2015 the UK rate of corporation tax will be just 20%, the lowest in any developed country – designed to attract businesses to the UK and promote growth and jobs.
- From Autumn 2015 a new tax-free childcare scheme will be introduced which will offer 20% off childcare costs up to £1,200 per child as long as both parents are working but both earn less than £150,000 per annum. This will replace the existing childcare voucher scheme.
- A year earlier than anticipated, the income tax personal allowance will be raised to £10,000, much to the delight of the Liberal Democrat coalition partners.