The Chancellor delivered his Autumn Statement to Parliament on 5th December and the main announcements which will affect HM Revenue & Customs (HMRC) customers are highlighted below and will take effect from 6th April 2013 to be implemented for the tax year 2013 -14.
Income Tax Rates
Income tax basic rate limit and personal allowance 2013-14 - the basic rate limit will be set at £32,010 and the income tax personal allowance for those born after 5 April 1948 at £9,440 for 2013-14. These amounts supersede the corresponding amounts announced at Budget 2012.
Income Tax Allowances
The biggest change here is that up to and including 2012-13, the amount of an individual's Personal Allowance depends upon their age. From 2013-14, the amount of an individual's Personal Allowance depends upon their date of birth
Class 1 National Insurance Contribution rates 2013-14
The table below illustrates the changes in the employee thresholds:
The table below illustrates the changes in the employer thresholds:
You can find out more information regarding these changes here.
The government has introduced a new law to make it easier for people to save for their retirement. It requires all employers to enrol their workers into a qualifying workplace scheme if they are not already in one. Employers will gradually enrol all eligible workers into workplace pensions between 2012 and 2018 based on the number of employees.
Employers have to automatically enrol workers who:
- Are not already in a qualifying workplace pension scheme;
- Are at least 22 years old;
- Are below state pension age;
- Earn more than £8,105 a year; and
- Work or ordinarily work in the UK (under their contract)
Employers' duties will be introduced gradually over the following five years, and will be based on the employer's size.
In the government’s response to the consultation on revision proposals for the automatic enrolment earnings trigger and the qualifying earnings band, they have proposed to lay a draft Revision Order before Parliament in the New Year which specifies the following rates and are more aligned to payroll thresholds:
- £9,440 for the automatic enrolment earnings trigger;
- £5,668 for the lower limit of the qualifying earnings band;
- £41,450 for the upper limit of the qualifying earnings band.
The Order will require approval from both Houses before the regulations can be made. The intention is that it will come into force on the 6th April 2013.
The government has stated in their response that these proposals do not necessarily mean that the automatic enrolment figures will be aligned with thresholds in future years so there will still be a mandatory annual review rather than a pre-determined strategy.
You can find out more information regarding the legislation here.
Universal Credit is a new single payment for people who are looking for work or on a low income. Awards of Universal Credit, which replaces other tax credits, such as Working Tax Credits, will start during the 2013-14 tax year. Prior to the national roll-out, Work and Work and Pensions Secretary Iain Duncan Smith has announced that Universal Credit will go live in the Greater Manchester and Cheshire region in April 2013. Some good news for those who will be eligible to claim Universal Credit, your payment that you receive will be exempt from income tax.
You can find out more information about Universal Credits here or here.
High Income Child Benefit Charge
In our October newsletter we advised that there was going to be a change to the child benefits. As from 7 January 2013 these changes are now in effect so we wanted to update you once again of what these changes are.
In effect it means that any taxpayer with income above £50,000 in a tax year who receives Child Benefit, or whose partner receives Child Benefit, will be liable to incur a new income tax charge.
Approximately one million taxpayers will be affected by the charge, out of the eight million taxpayers who currently claim Child Benefit.
A taxpayer will be liable to pay the charge if any of the following apply to them:
- they have an individual income of more than £50,000 in a tax year and receive Child Benefit, or
- if they have an individual income of more than £50,000 in a tax year and live or lived with a partner receiving Child Benefit, or
- where partners each have individual incomes of more than £50,000 and one partner is receiving Child Benefit, the partner with the higher income will be liable to pay the charge.
You can find out more information regarding these changes to child benefits here