Autumn Statement

Senior Associate, Claire Hollins discusses the key employment announcements included in the autumn statement from 22 November.

1. Back to work plan

The Back to Work plan aims to support over one million individuals with long-term health issues or disabilities, who have been unemployed for a long time. The aim is to enable individuals to either enter, or re-enter the workforce. Examples of help include:

1. Universal support: This will be extended to those people who may have long-term health issues, including grants for training and/or employer adjustments.
2. Occupational health: The Government will establish an expert group to develop a voluntary framework to set out the minimum level of occupational health intervention that employers could adopt to help improve employee health at work.
3. Fit note reform: The Government will explore end-to-end reforms of the fit note process to support more people resuming work after a period of illness. A consultation will be launched in 2024 by the Government on wider reforms to support people returning to work.
4. National insurance contributions

• From 6 January 2024, Class 1 employee national insurance contributions will be reduced from 12% to 10%;
• There will be an extension of the national insurance contribution holiday for veterans in their first year of civilian employment until 5 April 2025;
• For the self-employed, Class 2 national insurance contributions will be abolished; and
• From 6 April 2024, the main rate of Class 4 self-employed national insurance contributions will be reduced from 9% to 8%.

With 6 January 2023 fast approaching, employers should be making changes to their payroll systems to comply with these changes to ensure that these are in place for the January payroll.

3. National minimum wage

New rates have been announced, with effect from 1 April 2024, together with a change to the threshold of being eligible for the highest rate:

• Over 21’s (currently over 23’s): £11.44
• 18 to 20: £8.60
• 16 to 17: £6.40

It is imperative that employers ensure that they pay the correct rate as there are penalties for non-compliance as well being publicly named and shamed for paying the incorrect rate.

4. IR35

Legislation is expected to allow HMRC to reduce the PAYE liability of a deemed employer in the event of incorrect tax treatment of an individual as self-employed. This will allow a set off for certain taxes already paid by the worker. Employers will need to pay the difference between what is due under PAYE and what the contractor company has already paid to HMRC.

These changes will take effect from 6 April 2024 but will be back-dated to apply to errors arising from 6 April 2017.