Yesterday, Chancellor of the Exchequer, Philip Hammond, announced the details of his 2017 Autumn Budget; his first Budget since the General Election. Detailing how the Treasury would be providing the Welsh Government with an additional £1.2bn in funding, there was certainly a lot of information to digest. However, key themes included transport, regional growth plans as well as taxation and wages.
Having a substantial impact on the world of recruitment in particular, we at RSW thought we would shed some light on the changes, focusing on how employers and employees will be impacted.

Tax thresholds

Philip Hammond also shared the news that the personal allowance and higher-rate tax threshold will rise; changing to £11,850 and £46,350 respectively.

‘When we came in to office the personal allowance was £6,475 per year from April we will increase the personal allowance to £11,850 per year and the higher rate threshold to £46,350,’ he said.

At present, people have a personal allowance of tax-free income up to the amount of £11,500. After this, a 20% basic rate of income tax applies to earnings between £11,501 and £45,000. Between £45,001 and £150,000 income tax is placed at 40% and at 45% for those earning over £150,000.

From 2015, the personal allowance has been linked to the national minimum wage, ensuring workers on the national minimum wage working up to 30 hours per week did not pay income tax.

National Living Wage

Introduced in July 2015 by George Osborne, the compulsory national living wage is the lowest wage which can legally be paid to employees aged 25 or over; adjusted every April. This will now rise from £7.50 per hour to £7.83 per, coming into force as of April 2018. However, its reasons are about just more than keeping employees happy.

According to the chair of the Low Pay Commission, Bryan Sanderson, the hope was to increase the income of those below the age of 25.

“For young people aged between 18 and 24 years old, Commissioners judged that economic conditions warranted larger percentage increases,” Sanderson explained.

“There have been ongoing improvements in their employment and unemployment position, and their earnings have been growing faster than those of workers aged 25 and over for three years.”

What does this mean for Recruiters?

Here at RSW, we work with a diverse range of Welsh businesses, offering honest, ethical recruitment services across the region. While this change does mean more outlay for businesses offering National Living Wage, it is one of legal obligation that our agency upholds.

By 2022, Hammond predicts that an extra 600,000 people would be in jobs, meaning the next few years should be rather busy! So, if you are looking for a job or some support with recruiting for your company, be sure to get in touch.