Following the Spring Budget announcement (15th March) by Chancellor Jeremy Hunt, there is a clear focus on getting people back to work to drive the economy. It demonstrates that the Chancellor has indeed listened, and is addressing the issues of recruitment and retention that are facing so many SME business owners.
We have summarised the key points for employers to be aware of from an HR perspective.
Support for working parents
A number of childcare reforms to support working parents, or those returning back to the workplace, were announced.
Funding for free nursery places is set to rise to £288m. Employed parents of 9-month to 3-year-old children will be awarded 30 hours of free childcare by September 2025. Parents will need to work a minimum of 16 hours a week to qualify.
This will be introduced in phases to different age group categories. This is because a significant increase in demand on childcare providers is expected, and it is a sector which is currently under resourced.
Funding has also been awarded to primary schools to provide wraparound care from 8am to 6pm through breakfast and after school clubs. This still leaves the question about what happens in holiday times.
Support for disability and long-term sickness
The Chancellor has announced the removal of work capability assessments. This will support those on long-term sickness or with disabilities by taking away barriers which prevent them getting back into work, whilst ensuring financial benefits are not lost.
In addition to this, a new voluntary employment scheme will be funded in England and Wales. The “Universal Support” scheme will help those with disabilities and health conditions to find suitable roles. This will be detailed in a white paper shortly.
More occupational health support will also be introduced. This will help employees with long-term sickness conditions such as mental health, musculoskeletal issues and cardiovascular conditions that can keep them out of work. The need for funded support and better availability of these services, particularly for SMEs, has been acknowledged. This will help both individuals and business owners before employees leave the workplace.
Over-50s apprenticeships
The Chancellor has also announced significant investment into programmes to help attract the over 50s back to work, for those wishing to take up a new career.
Changes to pensions tax
The current cap on the amount of money workers can gather in pension savings before having to pay a lifetime allowance tax sits at £1.07million. This limit will be scrapped to ensure highly skilled and highly paid workers are not leaving the workplace early due to the tax system.
Similarly, to encourage the workforce to build pension pots and stay in work longer, the annual allowance for tax-advantaged pension contributions will increase from £40,000 to £60,000.
Tax considerations
It has been confirmed that a rise will go ahead for corporation tax in April. This is set to increase from 19% to 25% for businesses with over £250,000 in profits.
The Chancellor has also introduced a new policy which will initially run for three years, called “full capital expensing”. This will allow companies to deduct business investment in technology and machinery to decrease taxable profits. This significant tax break for businesses is costed at £9bn to the Treasury.
Support for cost of living
There will be more support for employees to help with the cost of living. Funding was also announced for specific sectors, such as leisure centres and charities, to help manage increasing energy bills and costs.
Although this announcement appears generally positive for SME employers, and many of these measures will be welcomed, there is more clarity needed to fully understand the impact of some of these changes and how they will be implemented. We will be closely following developments and when we get more detail we will share this. If you have any questions about how the Budget announcements might impact your business, please get in touch.
