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Further amendments to recent tax changes will cause confusion for employees
11th December 2009
The Pre Budget Report announced this week proposed further amendments to the ‘anti-forestalling’ legislation, designed to restrict the opportunity for increasing pension contributions ahead of the proposed removal of higher rate tax relief for high earners in 2011. Employer pension contributions must now be included when calculating income against the £150,000 threshold. In addition a new £130,000 income limit is effective from 9 December 2009 meaning that many more employees will be impacted.
This, together with the freezing of the personal allowance and income tax bands, mean that almost all employees will effectively pay more tax not just those higher earners affected by ‘ anti-forestalling’ rules, the removal of personal allowance and the 50% income tax rate. The 1% increase to national insurance in 2011 will further reduce employees take home pay.
Paul Bloomfield, Tax Specialist, WEALTH at work comments, ‘Many more employees are now affected by these significant tax changes. All employees will need to be made aware of how they can assess their position and so avoid an unexpected tax bill’.
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