From April 2017 employees participating in salary sacrifice schemes, in which an employee gives up part of their salary for a non-cash benefit with both the company and worker paying less tax, will be abolished. Most medium and large organisation offer salary sacrifice schemes, which may include gym memberships and mobile phone deals. This is likely to affect lower paid workers the most. Child care, ultra-low emission cars and cycling to work will not be affected. There is some limited comfort with any arrangement in place before April 2017 being protected until April 2018.
Mr Hammond also announced changes to the income tax threshold, which will increase to £11,500 in April 2017. The government will increase the higher rate income tax threshold to £50,000 by the end of the Parliament.
The National Living Wage to rise will increase from £7.20 an hour to £7.50 from April 2017.
Employer and employer NI thresholds will be equalised at £157 per week from April 2017.
Employers are advised to contact their accountant to discuss how these changes will affect their business in advance of the changes. You are also advised to speak to your employment lawyer regarding updates to employment contracts to reflect any changes to salary sacrifice schemes.