Employment-related changes from April 2017

There are changes coming from April 2017 that employers need to be aware of. Depending on your type of business and the people you employ some will impact you more than others.

Here we have a round-up of the changes most likely to affect SME’s and their employees.

National Minimum Wage and National Living Wage

From April 2017, the national minimum and the living wage (for over 25’s) are set to rise. These rates are the lowest per hour rate you can pay to an employee.

Category (current rate) New Rate:

  • Age 25 and over  (£7.20) £7.50
  • Age 21 to 24 (£6.95) £7.05
  • Age 18 to 20 (£5.55) £5.60
  • Age under 18 (£4.00) £4.05
  • Apprentice (£3.40) £3.50

Since April 2016 employers were required to pay employees aged 25 and over the National Living Wage. This is an amount based on a % of median income; it was not legally enforceable before this date.

Living Wage

On top of these legally enforceable figures there is the voluntary “Living Wage”. This is an independently calculated figure that is based on the rate required to actually cover the things that employees and their families need to live. It is also applicable to all employees over 18 rather than just those over 25 as younger employees still experience the same costs of living.

The figures are £8.45 nationally and £9.75 in London. It is not currently mandatory but many employers are opting in and committing to reward their employees this rate, as they feel it is better for the individual, the business and for society. The investment that a growing number of employers have made has seen a higher rate of retention, lower absence rates and better recruitment experiences.


Apprenticeship Levy and Funding

Large employers will already be aware of the new levy coming into force from April 2017. Employers with wage bills over £3 million will have to pay a levy of 0.5% of their pay bill in order to fund apprenticeships. This is intended to not only encourage those employers to then access that investment by actually taking on apprentices, but also to assist with funding of apprenticeships for smaller employers.  The way that employers access Apprenticeship funding (of up to 90% of training costs) is changing from May 2017.

Apprenticeships remain an important part of the UK workforce and shouldn’t be dismissed on the initial understanding required to enable them. Check out our previous news post on Apprenticeships and you will see how valuable they are to the new employees coming into the workforce. Once you are clear on how they could benefit your SME and you can get your head around the structure and obligations of having an apprentice you can move forward with confidence.


Personal Allowance

An individuals personal allowance before income tax is paid will raise to £11,500 and the higher threshold at £45,000. Two new allowances will be introduced both at a £1k, one for income from a rental property and one for selling goods and services.

Business rates

If you are a SME that occupies a property with a rateable value of £12,000 or less you will not have to pay any business rates from April 2017. There are reduced rates for those valued at between £12,000 – £15,000. For small businesses occupying properties with a rateable value below £51,000 you will be able to take advantage of the small business multiplier of 46.6p rather than 47.9p.


Salary Sacrifice Schemes

The schemes being enjoyed by employees are set to start changing from April 2017. Pension, childcare and cycle to work schemes remain unaffected but many will be abolished from this April.  There is a helpful table of impacted schemes here: http://www.enjoybenefits.co.uk/how-the-2017-salary-sacrifice-changes-affect-you/

Make sure you and your finance teams are aware of these new rulings and are best prepared to budget and plan for the changes smoothly.