Partner Article

Autumn Statement 2013 reaction: Employers

The Chancellor has closed his red box for another year, and so in this edition of Baker Tilly’s weekly round-up of the most important tax news, we give our thoughts and opinions on Autumn Statement 2013.

With much more work to be done to repair the UK economy after the worst financial crisis for many generations, and an election to be fought in 2015, there’s a wide range of tax proposals to give relief where it’s felt to be due and impose extra taxes on others.

The trend of reducing business taxes to boost the economy is set to continue, with the burden of taxes paid by individuals increasing to reflect this. As a result, the “bottom” 30% and the “top” 10% of UK households will be worse off in 2014/15, with the middle 60% unchanged or better off.

A jobs tax when they are about to be abolished, but a contribution to future State pension entitlement when they are not, National insurance contributions have an uncertain place in the tax arena.

These examples of the Chancellor’s varying terminology indicate how eroding the link between contributions and benefits has clouded their role. Nevertheless, their structural link to the benefits system means that they can be used to influence behavioural change more subtly than can the tax system.

For example, because age is relevant to national insurance contributions liability, it is relatively straightforward to implement the abolition of the employer’s contributions in respect of those employees under 21 who will earn less than the upper earnings limit from April 2015. Coupled with the £2,000 employer’s NICs allowance from April next year, could this be the nudge that smaller employers are looking for in order to afford a junior employee?

There is also to be HMRC funding for apprenticeships. So, will these changes trigger sufficient growth in the number of jobs to cater not only for new entrants to the jobs market, but also to accommodate those who have seen their State pension dates move further ahead?

This was posted in Bdaily's Members' News section by Baker Tilly .