So the budget has come and gone and it appears a more positive one than perhaps many were expecting. Of course, there are the specific tax cut and funding cheery notes, so we can drink a little cheaper and the hard hit leisure, retail and hospitality sectors get a boost, to hopefully bring the cost of a UK holiday back down (This was an expensive summer!).
So, what is the key area we would like to pick out, for business and personal alike?
The increase in the living wage to £9.50 per hour. A jump tied to the rise in the cost of living. Paired nicely with the recent National Insurance (NI) increase, to provide some additional tax income for the government, potentially at the expense of the businesses burdened with fitting these costs. However, this is great news for those employees that get a bit more each year, to cover the growing cost of living.
What We Think:
It seems like the rise in the minimum wage has been called for, with spiralling inflation and the NI increase is one way to skin the cat, of growing care need across the UK. It still doesn’t do much for the affect on the wage bill, for many businesses.
So, in the wake of little changes in the day-to-day tax rulings, apart from the already planned increases. What can businesses and employees do to make themselves more efficient?
Salary Sacrifice is the most obvious source of relief here and something that business and employees often are not aware they can utilise.
The simple act of changing the personal portion of contributions to your workplace pension scheme to a salary sacrifice arrangement, effectively reduces your salary by the portion of those contributions, reducing the new 15.05% NI contributions.
Employers can perhaps offer their staff salary sacrifice and offer to pay some or even all of the saved employer NI contributions, into their pension as an extra benefit to them.
Employees, perhaps ask your employer if they would allow salary sacrifice and if they will give you some or all their NI savings.
Please contact Avidan Last, Head of Fusion Financial to discuss any of the points raised in the article. Alternatively, for any other queries, please get in touch with us.
