Spring Budget 2024: Employers
Employers will see this as an election year budget – votes are the goals. Employers will welcome the further reduction in employee NICs which will put more money in employees’ pockets. Is it too late to impact pay reviews?
The Non-Dom tax system is finally targeted for reform. The system and the related Overseas Workday Relief (OWR) play a key role in attracting global talent to the UK. The delinking of taxation and remittances is welcome although transition arrangements will need careful review.
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Incentivising work and attracting global talent
Author: Dinesh Jangra, Partner, Workforce Advisory
It was no surprise to hear the Chancellor announce the main rate of employees Class 1 National Insurance Contributions (NICs) will be reduced by another 2% from April 2024. The reduced main rate of 8% should save employees up to £450 in NICs over the course of the next tax year. Putting more money in employees’ pockets will be welcome by both employees and employers and help employers manage inflationary wage pressures.
Unlike the previous in-year NIC reduction (January 2024) the new change takes effect from the start of the tax year and will ease the burden on payroll software providers and payroll managers on updating and testing their systems for changes. The employer secondary rate of NICs at 13.8% remains unchanged and still keeps salary sacrifice arrangements as beneficial.
On the international side we finally see in sight the end of the Non-Dom system as we know it. The system and the related Overseas Workday Relief (OWR) play a key role in attracting global talent to the UK. Over time the benefits of the Non-Dom system have been reduced – the timeframe it can be technically and practically available have already been eroded.
The new proposed system is shorter, four years only, but in some ways is simpler doing away with the link to complex remittances. OWR relief too will be more accessible thanks to the same change.
As always, transition issues will need to be carefully managed and will peak complexity for many employers and employees alike.
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Press coverage
- Revealed: the winners and losers of Jeremy Hunt’s Budget - The Telegraph
- Live blog of Budget 2024 - Evening Standard
- UK Chancellor announces non-dom reform and National Insurance cut - eprivateclient
- Live blog of Budget 2024 - Yahoo Finance
- Spring Budget 2024: Green industry funding and windfall tax extensions - Portfolio Adviser
- Chancellor should raise tax thresholds, say accountants - Accountancy Daily
- Mind your head (room)! What could we expect in next week's Budget? - Accountancy Age