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Pre-Budget Report 2009: Summary of employment tax changes

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9th Dec 2009
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  • National Insurance thresholds and rates unchanged for 2010-11. (PN02 and PBRN 01)
  • LEL which determines access to state pensions and other contributory benefits will rise from £95 per week to £97 per week from April 2010. This has no impact on contributions as none are payable until the earnings threshold (£110 per week) is reached. (PN02 and PBRN 01)
  • The announcement made in the 2008 PBR of increases in NIC from April 2011 has been revised to make the increase 1% instead of 0.5%. The same increase will apply to both employer and employee contributions, so a total increase of 2% will apply to those drawing salary from their own company. The resulting rates will be : Employee main rate 12%, employee rate over upper limit 2%, Employer rate 13.8%, Class 4 main rate 9%, class 4 rate over upper limit 2%. (PBRN 01)
  • From 2011 the earnings threshold and lower profits limit for class 4 will rise to eliminate the effect of the change on those with income of no more than £20,000. The increase will be £570 per annum. (PBRN01)
  • Bank payroll tax of 50% will apply to bonuses paid by banks after the time of the Chancellor’s announcement unless the amounts and entitlement were contractually fixed before the announcement. See technical summary article. (PBRN02)
  • Salary sacrifice and flexible benefit schemes which provide tax free meals at works canteens are to be terminated from April 2011. The tax free benefit in kind of free or subsidised meals will only be available to those outside of salary sacrifice and flexible benefit schemes, where the benefit is made available to all staff on a routine basis. (PBRN25). PKF's Philip Fisher has warned this could be the first shot in a wider crackdown on flexible benefits and salary sacrifice schemes.
  • Company car benefits will increase again from April 2012, when the separate rule for QUALECs (Qualifying Low Emission Cars) will be abolished. From April 2012 cars emitting no more than 99g/km will attract a benefit charge of 10%, with increases of 5g/km producing a 1% rise in the tax charge, up to a maximum of 35%. Most drivers will therefore see an increase in their tax charge in 2012 as a result. (PBRN26)
  • Electric cars which are provided to staff as a benefit in kind will be taxed at 0% from April 2010 for five years. Such cars currently attract a benefit in kind of 9% of the list price. (PBRN27)
  • Electric vans which are taxed as a benefit in kind will similarly be subject to a £0 charge from April 2010, a reduction from the charge of £3,000 applying to all other vans. (PBRN28)
  • The fuel benefit charge for company cars is calculated by applying the relevant percentage applicable to the car to a base figure which is currently £16,900. This will increase to £18,000 from April 2010. The fuel benefit charge on a company van will also increase from £500 to £550 on the same date. (PBRN29)
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By User deleted
10th Dec 2009 14:38

It's come to this

So now the Chancellor really is planning to take food out of the mouths of people in the private sector to feed the forever hungry public sector. Hard-Working families will now pay more to feed themselves. Nice!

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