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Autumn Statement 2013

5th December 2013

The Chancellor has today announced the pre-budget statement.  Within the statement, it is proposed that the measures included are intended to be fiscally neutral in that tax increases will be matched by tax cuts.

As an employer, it is important to consider the changes that have been proposed to come into effect in 2014/2015.

Income Tax

  • From 6 April 2014 the Personal Allowance will rise to £10,000.
  • The basic rate tax band will reduce to £31,865.
  • The higher rate tax band will increase to £118,135 (£150,000 – £31,865).
  • The additional rate tax will not change and will continue to apply to anything above £150,000.
  • From 6 April 2015 a new transferable tax allowance will be introduced which will allow married couples and civil partners to transfer £1,000 of their income tax Personal Allowance to their spouse or civil partner.  The allowance will be increased in proportion to the Personal Allowance.

State Pension Age

The Chancellor confirmed that State Pension Age will rise to age 68 in the mid-2030s and then 69 in the late 2040s. This change will affect individuals currently aged 49 and under. Going forward, the State Pension Age will increase in line with the improvement in life expectancy.

What your employees should consider

  • As individuals will have to work longer before they receive their State pension they should consider increasing their pension contributions in order to build up additional pension savings to enable them to retire before the State pension is payable.

State Pension

In October 2015 the government will introduce a new class of voluntary NIC (National Insurance Contributions) to allow current pensioners and employees who reach State Pension age before 6 April 2016 an opportunity to boost their income in retirement.

What your employees should consider

Although it is a bit early, employees should review the terms of buying additional benefits when further details are made available.

ISA

From 6 April 2014 the new ISA limit will be £11,880, of which up to £5,940 can be paid into a cash ISA.

So what hasn’t changed?

  • Pension contributions will continue to receive full tax relief
  • Tax free pension commencement lump sums up to 25% are to remain unchanged

 To ensure you understand the impact of the autumn statement 2013, please  contact us.

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