Contributed by IoD East of England
The newly-announced spring budget offered plenty of reassurance for businesses, and it also contains some good news for their employees, who will soon see their pay packets boosted by various rises. And with national insurance (NI) relief on the cards for the self-employed, it looks like there is something for (nearly) everyone this time around.
A rise to minimum wage.
With plans to raise the national living wage to at least £10.50 an hour by 2024, the government aims to bring it into line with 1/3rd of median national earnings. This April, the current £8.21 hourly minimum wage rate will rise to £8.72 for those over 25. For those under 25, the rate will be £8.20, although 18-20 year olds will get £6.45. This equates to a 6.2% pay rise, which will put an extra £1000 per year into the pockets of the lowest paid workers in the UK.
Although this raise will be welcomed by the estimated 2million workers in the UK who fall into this category, it is important to note that it does not apply to self-employed people. Current estimates suggest that around half of self-employed adults earn less money than the national living wage.
National insurance threshold raised.
National Insurance is taken directly from your pay-packet if you are an employee. This money contributes towards your state pension and various other benefits, such as maternity pay. With the announcement that the current NI threshold of £8632 will be raised to £9500, the government claim they are giving 31 million people a tax cut, which works out at an average of £104 a year each.
This will also apply to self-employed workers who currently pay the lower rate of NI, although their annual savings will work out slightly lower, at around £78.
Chancellor Rishi Sunak stated these changes to the living wage and NI will benefit those who work full time on the minimum wage by around £5200 a year more than they did ten years ago.
Support during the coronavirus situation.
Even before the budget was unveiled, the government had already announced that statutory sick pay would be made available for all employees from day one, rather than day four, as it had been previously. In the budget, it was then announced that any sickness pay costs caused by coronavirus related absence would be covered by the government for up to 14 days.
Although self-employed people are not eligible for sick pay, the government has announced further plans to support them should they become sick. They will now be able to claim immediate Employment and Support Allowance from day one of their illness, rather than day eight, as it currently stands.
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