New thresholds announced in Autumn Budget to affect payroll from April 2018

There were a number of changes announced in the Autumn Budget on 22 November 2017 in relation to pay and tax, which will affect payroll from April 2018 onwards. These changes range from a rise in the basic rate of income tax to an increase in the National Living Wage (NLW).

Chancellor Philip Hammond announced a rise in the basic rate income tax threshold to £11,850 and an increase in the higher rate threshold to £46,350, while the National Living Wage will go up to £7.83 from £7.50.

In addition, Mr Hammond said he would delay implementing a series of National Insurance Contribution (NIC) policies by one year and confirmed that the Government will no longer proceed with an increase to the main rate of Class 4 NICs from nine per cent to 10 per cent.

There were a number of changes around vehicles too, although fuel duty was frozen again for the eighth year running.

The existing benefit-in-kind (BiK) tax supplement of three per cent will rise to four per cent from April 2018.

Mr Hammond also confirmed that HM Revenue & Customs (HMRC) will clarify the law so that employers who charge their electric vehicles at work will not face a BiK charge once the changes have taken effect.

In addition, the first-year vehicle excise duty (VED) rate for diesel cars that do not meet the latest emission standards, will go up by one band. However, the Chancellor was clear that the VED measure will only apply to cars.

As he announced the measure, he promised that “no white van man or woman will be hit” by the move, which will fund a new £220 million Clean Air Fund to provide support to the implementation of local air quality plans.

At The Fish Partnership, our payroll team can manage all of the necessary changes to your payroll so that your employees’ pay is accurately adjusted in line with any changes. For more information about our payroll services, please contact us.