By David Manning - Manager, Blockchain & Crypto Team While the title might seem dramatic, it is certainly the sentiment you will find across the array…
John Endacott – Head of Tax
From a tax point of view there was not much to take from the spending review announcements. Clearly, the sheer scale of the deficit for 2020/21 tells its own story and is clearly not sustainable.
Whilst all the talk is of tax increases in the future, it was interesting to see that the personal tax allowance, higher rate threshold, and national insurance limits and thresholds are all being indexed in line with the September consumer price index figure.
On business rates, the multiplier has been frozen for 2020/21 and there is the potential for further relief from business rates to be introduced in the New Year. So, there is prospect of some continued support for the high street and other bricks and mortar businesses in our region.
All the focus seems to be on spending with specific support for a number of places in our region including Plymouth, SE Dorset and a new town deal for Torquay.
Some interesting extra spending on HMRC which includes £1 billion on the UK customs system and £146 million to extend the rollout and operation of Making Tax Digital (MTD) for VAT, for businesses below the VAT threshold and for Income Tax Self-Assessment businesses and landlords with income over £10,000.
Steve Ashworth, Tax Director, Employer Solutions team
Despite rumours in the press of a pause on additional rises in the national living and minimum wages, as part of today’s spending review, the Chancellor has announced further rises in both minimum wage rates. National living wage will increase by 2.1% from April 2021, rising to £8.91, with similar percentage rises for the various national minimum wage rate bandings.
Additionally, the Chancellor has confirmed that the age at which an employee will be entitled to the national living wage will decrease from 25 years old to 23 years old.
Today’s measures build on the announcement made during the March budget for minimum wage to rise to two thirds of median earnings by 2024. The concerns I had for employers at the time of the budget announcement apply equally to today’s announcement. Continual above inflation increases in the minimum wage risk employers unintentionally paying employees below minimum wage and increases the net of non-compliance.
With penalties for non-compliance at 200% and the likelihood of being named and shamed, employers will increasing need to pay more attention to their minimum wage compliance, which may have previously been taken as a given.