This morning (23 September 2022), Chancellor of the Exchequer, Kwasi Kwarteng, set out his mini budget. Some of the measures outlined are likely to have an impact on both employers and employees, and give rise to important considerations for the next 12 months.
In a nutshell…
- All businesses will be granted a similar price guarantee to that announced for households under the soon to be introduced Energy Bill Relief Scheme.
- The government will be seeking to encourage jobseekers to fill vacancies to benefit the economy and will be reducing benefits for those not fulfilling their job-seeking responsibilities.
- In respect of strike action, minimum service levels will be introduced, and legislation will be implemented to require trade unions to put pay offers to a member vote and ensure strikes only happen when negotiation breaks down.
- New investment zones will be introduced. If an employer hires a new employee within one of these zones, then the employer will not pay any National Insurance contributions on the first £50,000 earned by that employee.
- The tax system will be reviewed with planned increases to be cancelled – including corporation tax (remaining at 19%), national insurance contributions (the increase in contributions and new rates have been cancelled from 6 October) and income tax (the higher rate will now be 40% and basic rate will be 19% from April 2023).
- The IR35 tax rules will be reformed which will n impact those who are self-employed and/or consultants, or those engaging contractors
- The cap on bankers’ bonuses, which limited bonuses to twice the banker’s salary level, is to be abolished.
What does this mean for employers?
Employers should keep a watchful eye on upcoming reforms. The Government are focusing on rebuilding the economy and as a result are reversing a number of previously announced measures. The reforms set put in this mini budget represent part of the UK growth plan and a move to support individuals and businesses in light of the cost of living crisis.