UK: The key employment changes in the Budget

IR35 reforms – The off-payroll working rules currently applying to the public sector will be extended to large and medium-sized businesses in the private sector from April 2020. IR35 aims to combat tax avoidance by workers supplying their services to clients via personal service companies (PSC). In 2017, the off-payroll working rules were introduced in the public sector. This resulted in the onus of determining whether IR35 applies being transferred from the PSC to the public authority client. Either the client or the agency who pays the PSC for the worker’s services must then make payroll deductions of tax and National Insurance Contributions from the fees it pays to the PSC.

Termination payments – The introduction of employer Class 1A NICs on termination payments over £30,000 is delayed until April 2020. This change will increase the cost of large termination payments so employers will welcome the delay in implementing this new rule.

National Minimum Wage and National Living Wage – From April 2019 the national living wage will increase to £8.21 and the 21-24 year old rate to increase to £7.70, subject to Parliamentary approval.