Spring Budget 2023: Key items to note for employers

Scott McFarlane

Scott McFarlane

Employer Services Senior Manager

The Government has clearly laid out in the Budget that “Employment” is a key pillar as part of their long-term growth strategy, and are focussed on:

  • supporting more people in to work
  • helping them work more
  • preventing them falling out of work

The Government wants to partner with employers to help people manage transitions and overcome barriers to work, so that they can continue to progress and thrive in the workplace. Of course, the layman could interpret that as “get a job, work harder and longer and retire later”. That aside, whilst the Budget introduces a number of measures to assist certain worker groups to fill the job market, it is really unknown what the impact to employers will actually be longer term. The measures announced in the Spring Budget are aimed at assisting the following groups:

  • long-term sick and disabled
  • welfare recipients
  • older workers (or “more experienced workers” as the Chancellor phrased it)
  • parents – looking after their family or home is a key reason for inactivity in the job market

In terms of the impact of what has been announced, we will need to wait and see, as much of the employer interaction will be considered as part of consultation and calls for evidence in the first instance. These are as follows:

Consultation on increasing occupational health coverage

The Government will consult on increasing occupational health provision by UK employers, including regulatory options, boosting the supply of occupational health professionals, and kitemarking to indicate the quality of occupational health provision.

Consultation on occupational health tax incentives

The Government will consult on options to increase investment in occupational health services by UK wide employers through the tax system.

Occupational Health SME Subsidy Pilot

The Government will expand a subsidy pilot scheme to support small and medium-sized businesses in England with the cost of purchasing occupational health services.

Strengthening employment rights

The Government is supporting Private Members Bills that provide a day one right to request flexible working and grant specific groups protections or leave entitlements, including enhanced redundancy protection for pregnancy, family leave, carer’s leave, and neonatal care leave. In addition, the Government is supporting bills to ensure that all customer tips go to staff and all workers are given the right to request a contract with more predictable hours.

Call for Evidence on informal flexible working

The Government will bring forward a call for evidence to launch in Summer 2023 on informal and ad hoc flexible working. The aim being to better understand informal agreements on flexible working between employees and employers.

This is all positive for employees and time will tell what employers will be required to do and how they can support. Their key question will no doubt be - at what cost? The Autumn Statement confirmed measures that showed the big challenge for many employers will be ensuring they can keep up with the general increasing costs of employment, alongside ensuring that compliance is not otherwise impacted, and they will likely be quietly wondering if this could add to those requirements.  Let’s watch this space.

Additional measures noted:

There were also a few other issues mentioned in today’s Budget that may be of interest, as follows:

Taxation of new social security benefits

The Government is introducing a new power to enable the tax treatment of new payments, or new top-up welfare payments, introduced by the devolved administrations, to be confirmed as social security income.

Taxation of Scottish Government Carers Support Payment

The Government will clarify the tax treatment of the Scottish Government’s Carer Support Payment as taxable as a social security income. The Carer Support Payment was announced by the Scottish Government on 7 February 2023.

Delivering agent access to payrolling Benefits in Kind

As part of the Government’s long-term strategy to simplify the tax system for taxpayers and their agents, the Government will deliver IT systems to enable tax agents to payroll Benefits in Kind on behalf of employers. This will help to reduce burdens on employers and enable agents to support their clients more effectively.

Helping ease immediate labour supply pressures

The Migration Advisory Committee (MAC) was commissioned to undertake a rapid Shortage Occupation List (SOL) assessment for the construction and hospitality sectors. This was ahead of the full review of the SOL which concludes later in 2023. The Government has accepted MAC’s interim recommendations to initially add five construction occupations to the SOL prior to Parliament’s summer recess, although the occupations to be added have yet to be announced. The Government has also confirmed that the SOL will be regularly reviewed, based on recommendations received from the MAC in order that the legal migration system is quicker and more responsive.

A full review of the SOL to be undertaken by the MAC was recently announced and is due to be published later this year. The SOL lists occupations where there is a shortage of suitable skilled labour in the UK and where it is sensible to fill those shortages with migrant workers through a skilled work visa. Occupations on the SOL provide some dispensations within the immigration rules and makes it easier for employers to access migrant workers. This review is due to conclude in Autumn 2023 and although this may not help to alleviate the pressures of labour shortage in the short term, we can work with our clients across the sectors to submit responses as part of the call for evidence requested by MAC in carrying out this review.

Making it easier and more attractive to do business in the UK

The Government will simplify business visitor rules from Autumn 2023. This will include expanding the rate of short-term business activities that can be carried out in the UK for up to six months and reviewing permitted paid engagements. Additionally, the Government will consider further enhanced provisions linked to negotiations with trade partners, including a wider range of activities.  

This is a positive announcement from the Government and although it is not clear whether this simplification is targeted on the immigration perspective only, we would hope that any simplification is applied to other compliance obligations (e.g. payroll, social security, tax).

Get in touch

Read the rest of our Spring Budget analysis on our Budget Hub, and for more information or to discuss any of the announcements, please don't hesitate to get in touch with me at Scott.McFarlane@jcca.co.uk or your usual Johnston Carmichael contact.

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