The HR Impact of the Autumn Budget 2022

The recent announcements by Chancellor Hunt focused on tax and a major U-turn on announcements made by the previous Chancellor Kwarteng. We look at the HR impact of the Autumn Budget 2022 and what you need to know.

Autumn Statement summary

The following points from the Autumn Statement will have an impact on employers, payroll teams and business owners:

  • Income Tax and National Insurance – the threshold for income tax and national insurance contributions (NICs) will be frozen from April 2023 until April 2028. The personal allowance is £12,570 and the higher rate threshold is £50,270. In addition, the 45% income tax rate will be paid on income over £125,140, which has reduced from £150,000.
  • Dividend Allowance – the allowance for dividends will reduce from £2,000 to £1,000, and then again to £500 in April 2024.
  • Living Wage – the “national living wage” will increase in April 2023 by 9.7% to £10.42 per hour.
  • Capital Gains Tax – in April 2023, the annual exempt amount for capital gains tax (CGT) will reduce from £12,300 to £6,000. There will be a further reduction to £3,000 from April 2024.
  • Electric Vehicles – if you have an electric company car or fleet vehicles, you will need to pay road tax from April 2025. Also, the benefit-in-kind rates will increase by 1% after April 2025 for the following three years.

Repeal of IR35 Rules

In October, Chancellor Jeremy Hunt announced that the repeal of the widely criticised IR35 rules would not be going ahead. The off-payroll working rule ensures contractors, who would otherwise have been considered employees of a company, pay similar tax and NI contributions. IR35 still places the responsibility on employers to take reasonable steps to prevent tax evasion by checking a contractor’s employment status. HMRC will be issuing further guidance in due course.

Other employment news for 2022

Along with the recent announcements, employers should be aware of the following changes that have come into force this year, regarding trade union action and diversity and inclusion.

Crackdown on Trade Union action

  • Temporary Staff to replace striking members

As of July 2022, the law permits employers to replace their striking workers with temporary staff. Prior to this change, it was unlawful for businesses to replace their striking workers with temporary staff.

Diversity and Inclusion Roles in the Civil Service

The Civil Service Diversity and Inclusion Strategy 2022 is a declaration by the government to attract, retain and invest in its talent pool. The aim is to ensure a diverse workforce for the civil service. This means the civil service will recruit from a pool including individuals from:

  • Various geographical locations
  • Ethnic minority backgrounds
  • Those living with disabilities
  • Different social backgrounds

The proposal seeks to implement a zero-tolerance approach to discrimination, bullying and harassment. In addition to the new proposals, the civil service aims to review its existing policies and investigations, aiming to improved decision-making and policymaking. When it comes to company policies in the private sector, a robust diversity and inclusion strategy is highly recommended. If you need advice, we can review your policies and procedures.

Do you need HR advice?

Overall, the latest Budget has been better received than the previous one. If you need further advice on the impact of any points discussed in this article, Jude Read-HR provides expert Retained HR Support. We also offer Ad-hoc HR Advice and HR Consultancy for more complex matters. As your dedicated HR Advisor, we can also liaise with your trade unions.

Do you need advice on a HR matter? Please get in touch for a friendly, no-obligation chat to find out how we can support your business.

 

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