Autumn Statement 2022: What Does It Mean for Recruitment?
On Thursday 17th November 2022, Chancellor Jeremy Hunt delivered his Autumn Statement in the House of Commons. This was seen as a way to hopefully calm the concerns to the financial markets from the Mini Budget from the previous Chancellor, as well as tackle the rising cost of living and hopefully tame inflation.
TBOS shares our feedback on the Autumn Statement 2022…
National Living Wage
- The National Living Wage will rise from £9.50 per hour to £10.42 per hour from April 2023
This increase in the minimum wage will drive up the cost of temporary/low-paid staff members and will give workers an annual pay rise worth over £1,600 to a full-time worker. This will drive up clients’ costs and agencies will have to recalculate their rates accordingly.
- The Employment Allowance will be retained and will rise from £4,000 per annum to £5,000 per annum until March 2026
This allowance will help agencies reduce their Employers National Insurance contributions, due to the increase in the Employment Allowance.
- The reduction in Dividend Tax by 1.25% was reversed by the Chancellor earlier in the month so Dividend tax rates will remain the same from April 2023
- The Dividend Allowance will be cut from £2,000 per annum to £1,000 per annum from April 2023. This will reduce further to £500 per annum from April 2024
The reversal of the drop in Dividend tax was disappointing for company owners, and the cut in the annual allowance will mean that Shareholders who receive dividends will have to pay slightly more personal tax than they are currently (around £87.50 per annum).
- The reduction in Income Tax reducing from 20% to 19% in April 2023 was reversed by the Chancellor earlier in the month
- The income tax personal allowance, higher rate threshold and main national insurance thresholds will be frozen until April 2028
- The scrapping of the 45% additional income tax band was also reversed by the Chancellor, and the threshold at which the 45% rate becomes payable has been reduced from £150,000 to £125,140 from April 2023
With the freezing of the personal allowance and higher rate threshold, it will mean that as wages increase, workers can expect to pay more tax on their salaries. Also, with the reduction in the 45% threshold, it will mean that for earners over £150k will have to pay additional taxes amounting to over £11k.
- The reduction in Corporation Tax from 19% to 25% from April 2023 was reversed by the Chancellor earlier in the month
By increasing the Corporation Tax for companies, it will mean there is less dividends to distribute to shareholders and companies will be seen as paying their fair share of taxes.
- The reform of IR35 from April 2023 was reversed by the Chancellor earlier in the month
When this was originally announced by Kwazi Kwarteng, there was lots of talk in the recruitment industry as to what this would involve, with many recruitment agencies looking forward to making the process of placing contractors easier to manage. However, the reversal means that the Client and the Agency will still
have to take responsibility for the IR35 status of the placement and ensure the candidate is paid accordingly.
- Nearly two-thirds of properties will not pay more business rates next year
This is welcome news for recruitment agencies paying business rates on their office spaces, with many spaces benefiting to the tune of £14bn over the next 5 years.
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