New UK laws introduced in April that could affect your finances
7th April 2017
New laws coming into force this week could have mixed effects on your finances, according to an article in The Independent. The changes, including a minimum wage increase and amendments to pension laws, will affect people of all ages in the UK.
Minimum wage increase
As of this week, the minimum wage will increase by 30p to £7.50 for those aged 25 and over. While this is a positive step, younger workers between the ages of 21 and 24 will only see an increase of 10p per hour, making their new wage £7.05. Those aged 18-20 will only receive a 5p increase, with their wage sitting at £5.60 per hour. This small increase is echoed in the wages of under 18s, with the 5p increase taking the hourly wage from £4 to £4.05.
Former Chancellor George Osborne previously promised a raise in the minimum wage and rebranded it the ‘National Living Wage’ in 2015. However there is still a long way to go to reach the target of £9 per hour by 2020. Charities and campaign groups have criticised the existing pay, claiming the wage needed for an acceptable standard of living in the UK is £8.45 per hour and £9.75 per hour in London. Those in legal jobs should be aware of these changes over the forthcoming years.
A recent report by charity Living Wage UK revealed 93% of employers paying the Living Wage said their business has benefited from paying their staff enough to live on. Katherine Chapman, director at the charity, said: “Our 3,000 strong network of accredited Living Wage employers are going above and beyond the statutory minimum wage rates, ensuring the lowest paid members of staff earn a wage that’s good enough to live on. This research demonstrates that paying the real Living Wage is not only the right thing to do, but it also makes good business sense.”
People planning their retirement will be able to withdraw up to £1,500 from their pension pots tax-free to pay for financial advice. From this week, people can claim £500 tax-free allowance for employer-funded pension advice in addition to the existing Pensions Advice allowance.
According to a recent government announcement, the changes mean people can withdraw £500 on up to three occasions from their pension pots tax-free to put towards the cost of pensions and retirement advice. Economic Secretary to the Treasury Simon Kirby, said: “Pensions and savings decisions are some of the most important a person will make during their lifetime. This allowance will help people get the vital financial help they need to plan for their retirement.”
Immigration skills charge
A new levy on companies that employ non-EU workers is coming into force this week. The charge means companies will have to pay £1,000 per employee per year for every non-EU worker they employ. The charge will not apply to PhD-level jobs or to international students who are switching from student visas to working visas but could potentially apply to EU workers after the Brexit process is complete, according to the article.
When the levy was proposed in 2016, it met opposition from other parties, including the Liberal Democrats and the Institute of Directors (IoD). Seamus Nevin, head of employment and skills policy at IoD said: “Charging £1,000 for each EU worker would hit businesses who are dependent on skills from abroad. The UK needs these companies to do well if we are to make a success of Brexit. We urge the government to reconsider this proposal.”
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