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Employment law update on the 2013 Budget

Posted on 25th March 2013
New legislation

George Osborne's budget on 20 March, from an employment law perspective, did not reveal too many surprises but continued with existing themes and ideas even if some do not have much merit.

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Employee shareholder status

The Chancellor of the Exchequer appears to be the only person who thinks this idea has any merit. Even on the day of the budget, the House of Lords voted against this proposal and its removal from the Growth and Infrastructure Bill. As we explained in a previous article there are lots of reasons why this idea should not be introduced: see our article on Employee Shareholder Contracts.

The budget speech gave the following revised proposals for "employee shareholder" employment status:

  • Assuming the House of Commons reverses the House of Lords vote, employee shareholder contracts will be implemented on 1 September 2013. Previously the date was April.
  • In addition to the existing capital gains tax exemption, on disposals of employee shareholder shares there will be no income tax charge.
  • The first £2,000 worth of employee shareholder shares will be free from income tax and NICs.

Sickness absence

A new tax exemption of up to £500 for health-related benefits paid for by employers is to be introduced. To qualify the new independent health and work advisory service must recommend the benefit to help an employee's return to work.

NICs employment allowance

From April 2014 all businesses and charities will have an allowance of £2,000 each year that will be set off against their employer Class 1 secondary NIC contributions. This allowance will be managed via the HMRC real-time information system.

Disguised employment via LLPs

In Spring 2013 government will consult on measures to remove the presumption of self-employment for partners in limited liability partnerships. Apparently there is a problem of some partners benefiting from disguised employment.

2013 Budget | Executive summary

If you really want to read more about the budget - perhaps because you did not attend a breakfast seminar hosted by an accountant or, like me, you can't bear to watch the BBC news anymore with its new and very distracting background (why do away with a static backdrop? Having people continually walking past infers nothing; the BBC should retrieve the old news studio!) - you can read the Treasury's Executive Summary.  

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