Autumn Statement January 2012
Posted date: 20 December 2011
Brad Chick assesses George Osborne’s Autumn Statement and its impact on payroll and benefits.
The Chancellor George Osborne delivered his Autumn Statement on 29 November 2011, which concentrated on further cost cutting and infrastructure investment. However, it also confirmed payroll measures that had already been made public.
Income Tax
Personal Allowances have increased, but the threshold for Higher Rate tax has been reduced by the same amount so that no one currently paying this rate will benefit from the increase. George Osborne reaffirmed the Government’s intention to increase the Personal Allowance to £10,000 during the life of the current Parliament, but this will be phased in.
National Insurance contributions
The rebates for Contracted Out Money Purchase Schemes are withdrawn from 6 April 2012. Employees previously paying contributions under table letters F, G and S will pay contributions under tables A, B and J respectively.
The rebates for Contracted Out Salary Related Pension Schemes will be reduced from 1.6 per cent to 1.4 per cent for employees, and from 3.7 per cent to 3.4 per cent for employers. The contribution rates for table A will remain unchanged. The rates for table D will be revised for payments made on or after 6 April 2012, please see the table.
The Lower Earnings Limit and the Primary and Secondary Thresholds for National Insurance contributions will increase, but the Upper Accrual Point and Upper Earnings Limit remain unchanged.
Public sector pay
The Chancellor stated that following the current two-year pay freeze for public sector workers, wage increases for the following two years will be capped at an average of one per cent per year.
Osborne also intends to ask independent pay review bodies to consider how public sector pay can be made more responsive to local markets. The consultation will report by July 2012. It will apply to all pay review body workforces, with the exception of doctors, dentists, the armed forces, and the judiciary. Some public sector bodies already use locally adjusted rates rather than national pay scales.
State Pension Age
In addition to changes already announced, the Government will increase the State Pension Age (SPA) from 66 to 67 by 2028, in a move it anticipates will save around £60 billion. The increase will be made between April 2026 and April 2028. Plans to increase the SPA to 66 have already been brought forward to 2020.
| Bands of taxable income | ||
| 2011-12 £ per year | 2012-13 £ per year | |
| Basic Rate - 20 per cent | 0-35,000 | 0-34,370 |
| Higher Rate - 40 per cent | 35,001-150,000 | 34,371-150,000 |
| Additional Rate - 50 per cent | More than 150,000 | More than 150,000 |
| Personal Allowances | ||
| 2011-12 £per year | 2012-13 £per year | |
| Age up to 64 | 7,475 | 8,105 |
| Age 65 to 74 | 9,940 | 10.500 |
| Age 75 and over | 10.090 | 10,660 |
| Income limit for under 65 Personal Allowance | 100,000 | 100,000 |
| Income limit for over 65 Personal Allowance | 24,000 | 25,400 |
| Contribution rates for table letter D | |||||
| Up to LEL | LEL to PT/ST | PT/ST to UAP | UAP to UEL | Over UEL | |
| 2010/11 | |||||
| Employee's | Nil | -1.6 per cent | 10.4 per cent | 12 per cent | 2 per cent |
| Employer's | Nil | -3.7 per cent | 10.1 per cent | 13.8 per cent | 13.8 per cent |
| 2011/12 | |||||
| Employee's | Nil | -1.4 per cent | 10.6 per cent | 12 per cent | 2 per cent |
| Employer's | Nil | -3.4 per cent | 10.4 per cent | 13.8 percent | 13.8 per cent |
| National Insurance contribution bands | ||
| Weekly thresholds | 2011-12 | 2012-13 |
| Lower Earnings Limit (LEL) | £102 | £107 |
| Primary Threshold (PT) | £139 | £146 |
| Secondary Threshold (ST) | £136 | £144 |
| Upper Accrual Point (UAP) | £770 | £770 |
| Upper Earnings Limit (UEL) | £817 | £817 |
Brad Chick is Senior Trainer at Payroll Alliance
- Issue:
- January 2012
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