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By Liam - Friday, April 17th, 2009
Not the most exciting subject for a Friday afternoon, but from the start of the current financial year on 6 April 2009 it has been mandatory for employees to issue the new A4 P45s to departing employees. More details about obtaining the new forms can be found here http://www.hmrc.gov.uk/employers/updated-p45.htm
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By Sarah - Monday, November 24th, 2008
So we all see the news and the news is that the economy is in dire straits. We hear unemployment is rising to an all time high and we at PJH see the front line in redundancies, lay-offs and the like. Employers are taking action to preserve their position and the biggest cost is head count.
Put this in context and then think well how can we kick start the economy? I know lets increase NI contributions by 0.5% for employers and employees. That way we can really put people off employing new starters and convince everyone a reduction in head count is not necessary. Mmmn maybe not!! Okay so it is coming in April 2011 and not 2009 but I don’t think this is going to solve the Country’s unemployment rates.
You can see all the Government’s proposals here and let us have your thoughts on the NI issue!
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By Liam - Wednesday, September 10th, 2008
Following the very popular decision to remove the starting rate (10%) tax band earlier this year, it has now been announced that most employees’ tax codes will change this month. More information is available from HMRC here. In short, most employees paying tax at Basic Rate will get a £60.00 gift in their September pay packet because their personal allowance will increase by £600.00, meaning they pay no tax on this amount (a saving of 20% of £600.00 = £120.00, £60.00 of which will be paid in September and the rest in £10.00 installments monthly for the rest of this tax year). However, employees who pay tax at higher rate will see no change as the increase in personal allowance is offset by a reduction in the higher rate threshold which applies after £34,800 (formerly £36,000) of income after the personal allowance, effectively meaning tax is paid at 40% sooner than it would otherwise have been.
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By Philip - Monday, June 16th, 2008
The tax free allowance on termination for employees has been stuck at £30k for as long as I can remember. There has been no annual upgrading of this allowance as there has been for, say, redundancy payments or unfair dismissal compensation. This means that the concept of fiscal drag applies as inflation degardes the value of £30k year on year.
What prompts this post is a little clause in this years Finance Bill (section 49 to be precise) which amends section 291 of the 2003 Income Tax Act to ensure that the Mayor of London and Members of the GLA receive a tax free payment when they are relieved of their offices by a (no doubt) grateful electorate.
Is there any reason why Ken Livingstone should be paid his £69k tax free, when lesser (or greater) mortals would pay £15,600 tax on the same redundancy payment.
If you look at it logically, MPs and Mayors have greater job security than the majority of the population, the majority of the population are a notice period away from unemployment (say 12 weeks), MPs are a parliamentary term away from unemployment (say 5 years) or a lifetime (if they happen to occupy a safe seat).
Surely those who govern us don’t have one rule for them and another for us? I’ll have to dig out my old copy of Animal Farm to remind myself that equality means one thing for the governors and another for the governed.
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By Liam - Friday, April 11th, 2008
As reported here, the basic rate of income tax was cut by 2% (from 22% to 20%) last Sunday. The starting rate for income tax also disappeared last Sunday so no pay is taxed at 10% any more. This will cost most employees £223.00 per year as £2,230 of their pay will be taxed at 20% instead of 10%.
As well as tweaking income tax, national insurance had a bit of “fine tunning” too. This took the form of the upper earnings limit increasing by £100.00. This means that employees pay national insurance at 11% on £100 more of their income per week than they did this time last week. That means an employee earning £40,400.00 per year (or more) will pay £10.00 more national insurance per week (yes, £10.00 more not £11.00 because employees still pay 1% national insurance above the upper earnings limit). That’s £520.00 more per year!
So, an employee on £40,400.00 per year has saved £654.70 in income tax (2% of £40,400.00 less starting rate allowance of £2,230.00 less personal allowance of £5,435) but pays £223.00 more in income tax because of the abolition of the starting rate and pays £520.00 more national insurance. So, an employee on a salary of £40,400.00 is now £88.30 worse off following the “tax cut”! This ignores fiscal drag on the personal allowance too!
Employer’s national insurance has not changed significantly as the upper earnings limit is irrelevant to employer’s national insurance (which remains at 12.8%) - employers pay national insurance on all earnings above £105.00 per week and do not benefit from a reduced rate on higher tiers of pay.
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By Philip - Wednesday, July 25th, 2007
Remember the Beatles and Taxman
(if you drive a car, car;) - I’ll tax the street;
(if you try to sit, sit;) - I’ll tax your seat;
(if you get too cold, cold;) - I’ll tax the heat;
(if you take a walk, walk;) - I’ll tax your feet.
Well following a long legal case ending up in the House of Lords, we do not need to add an extra line to the song,
(if your spouse draws dividends from a Limited Company)-I’ll tax that as your income
Yes I know it’s not quite up there as a lyric with John and Paul’s but thankfully the extra line in the lyric will not be necessary as the House of Lords has ruled that wives who draw dividends from a Limited Company should have those dividends taxed as their own income rather than their husband’s, where both spouses own the share capital of the limited company. Quite right too! Read about it here.
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