Budget 2020 analysis: Employer taxes

The MHA Moore and Smalley tax specialists have made an analysis of the announcements made by the Chancellor the first Budget of the decade. In this blog we review the changes to employer taxes.

National insurance

The somewhat generous increase in the National Insurance Contribution (NIC) free threshold for employees does not apply to employers. Employees now benefit from a NIC-free amount of £9,500, whilst for employers, the threshold has increased from £8,632 to £8,788.

The rates of NIC remain unchanged.

From 6 April 2020, the Business Employment Allowance will increase from £3,000 to £4,000. The employer’s NIC bill is reduced by this amount. However, this allowance is now available only for employer’s with an NIC bill of £100,000 or less.

Termination Payments

From 6 April 2020, NIC will be payable on termination payments such as golden handshakes and payments in lieu of notice.

National Minimum Wage

The national living wage rate will be increasing to £8.72 for those aged over 25 from 1 April 2020.

Those aged 21 to 24 will be on £8.20, those aged 18 to 20 £6.45, and those aged under 18 £4.55. The minimum wage for apprentices aged under 19 or over 19 but within the first year of the apprenticeship will be £4.15.

Statutory Sick Pay

Statutory sick pay (SSP) has increased from £94.25 to £95.85. It is paid by employers and can be paid for up to 28 weeks.

Normally sick pay begins when the employee has been off work for more than 4 days in a row, including non-working days. However, statutory sick pay will now begin payments from day 1 of leave and will be available to all those who have been advised to self-isolate by a doctor.

Businesses with fewer than 250 employees will be able to reclaim SSP from HMRC.

For advice on the Budget 2020 announcement, please contact a member of our tax team.