Whilst Budget 2010 offered little in terms of significant tax changes many previous announcements were confirmed and will shortly take effect.
From 6 April 2010 higher earners will be affected by the 50 per cent tax rate for income over £150,000 and the gradual removal of the personal allowance once income exceeds £100,000. This is in addition to the ‘anti-forestalling’ rules potentially restricting higher rate tax relief on pension contributions for those with an income in excess of £130,000.
Paul Bloomfield, Tax Specialist at WEALTH at work comments, “We are working with many of our corporate clients in responding to the tax changes by providing communication, education and one to one technical guidance. Those employees with a base pay in excess of £70,000 are commonly being identified as requiring support; the value of cash bonus, unapproved share awards, taxable benefits together with any personal income mean the various thresholds could be exceeded”.
Many more employees will be affected by the Chancellor’s decision to freeze both the personal allowance and the basic rate tax band for 2010/2011 in addition to the forthcoming 1 per cent increase to national insurance in April 2011.
Jonathan Watts-Lay, Director at WEALTH at work also comments, “In response to the tax changes many of our corporate clients are seeking to ensure that employees make optimal use of the financial related benefits available to them particularly those via salary sacrifice resulting in cost savings for both the company and its employees. More flexible savings options are also being considered in particular for those higher earners likely to be impacted by the removal of higher rate tax relief on their pension contributions from 2011.
WEALTH at work is a specialist provider of financial education and strategic investment planning to a number of the UK’s largest companies. To learn more about communicating the implications of the budget and providing employees with access to the relevant technical support or the provision of alternative savings methods, contact us on 0800 028 3200 for a complimentary consultation.