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Autumn Statement – 2011
Wednesday, November 30th, 2011
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The Autumn Statement on 29 November 2011 focused on the economy and the reducing growth forecasts as a result of European and Global influences. For payroll professionals, there were few surprises in the Statement. Whilst there is another change on the way in respect of the State Pension Age, even this cannot be said to be a really unsurprising announcement.
We have reproduced the major payroll-related topics and will be expanding on these next week, where appropriate.
State Pension Age
Pain for anyone under the age of 52 – after the Pensions Act 2011 gave the green light to accelerate state pension age increases to 65 for women from 2018, 66 for men and women by September / October 2020, now we are told that it will be accelerated further to 67 between April 2026 and April 2028. This increase was initially going to happen in 2034.
State Pension
This has been increased in line with the ‘triple guarantee’ protection it enjoys – i.e. the higher of 2.5%, average earnings or CPI. The basic State Pension and Pension Credit will increase by £5.30 to £107.45.
Seed Enterprise Investment Scheme (SEIS)
The Government consulted on ways to generate new business investment following an announcement at Budget 2011. As a result, the Seed Enterprise Investment Scheme (SEIS) will be effective April 2012, which will allow anyone investing up to £100,000.00 in a new business to be entitled to tax relief at 50%. The investment will be capped at £100,000.00 for individuals.
Employment Law
Although already announced, the Autumn Statement confirmed:
- Qualifying period for unfair dismissal to increase from one to two years from April 2012
- All potential claims to the Employment Appeals Tribunal will have to be lodged through ACAS first
- A Rapid Resolution scheme will be introduced to speed up straightforward Tribunal cases
- ‘Call for evidence’ confirmed on the effectiveness of the TUPE Regulations, with a view to formal consultation in 2012
- ‘Call for evidence’ on reducing the 90-day consultation criteria in redundancy situations
- Mr JusticeUnderhillwill review the Employment Tribunal Rules of Procedure whilst the Government will review the effectiveness of judges sitting independently in unfair dismissal cases
- The Government wants to explore the role of mediation in the dispute resolution process. Large retail sector organisations will be asked to share their expertise with smaller counterparts
- Employment Tribunals are to be given powers to levy penalties on employers who are found to have breached employment rights
- A template compromise agreement wording will be established, which may be used by employers. Further, these are to be renamed ‘settlement agreements’
- The concept of ‘protected conversations’ will be introduced which will allow employers to settle workplace issues with employees, subject to consultation
- ‘Calls for evidence’ on two proposals
- ‘no-fault dismissals’ for micro employers with fewer than 10 employees
- The move to an easier dismissal process
- Review of the Agency Workers Directive in 18 months, ensuring employers’ arrangements are kept as simple as possible
- A loophole in the Public Interest Disclosure Act 1998 will be closed to prevent workers whistleblowing about breaches in their own work contract
- The current 17 National Minimum Wage Regulations will be consolidated into one set, simplifying the current arrangements
- CRB checks to be universal with an immediate online checking service from 2013
- Government to consider the independent review of sickness absence by Dame Carol Black and David Frost CBE and respond in 2012 – see Further Information
- Government publication of a report looking at 16 EU Directives with a focus on reducing the burden for UK business. One of these is the Working Time Directive
CPI Inflation
Consumer Prices Index (CPI) inflation is used to uprate ‘most tax rates, allowances and thresholds and the uprating of benefits and public sector pensions’. The Office for Budget Responsibility (OBR) emphasises the importance of the difference between CPI and RPI inflation and the Autumn Statement confirmed that it will be the September CPI inflation rate that will be used (5.2%). Of course, this was always the Government’s intention, however, the OBR state that the high rate has contributed to the overall gloomy forecast. The Chancellor did announce that the couple and lone parent parts of the Working Tax Credit would not be uprated by inflation next year and the planned £110.00 increase in the child element of Child Tax Credit would not take place.
Personal Allowance
As part of the agreement between the Coalition parties, it had already been announced that the long-term intention was to increase the Personal Allowance to £10,000.00. HM Treasury have confirmed that they are not in a position to make a commitment to progress this increase. The OBR’s forecast confirms that 2012/13 will see the personal allowance as £8,105.00, projected to increase to £9,215.00 in 2016/17.
Tax Allowances, National Insurance Rates and Thresholds
Taxable Income
|
Band |
2011/12 |
2012/13 |
Change |
|
|
£ |
£ |
£ |
|
Basic Rate (20%) |
0 – 35,000 |
0 – 34,370 |
-630 |
|
Higher Rate (40%) |
35,001 – 150,000 |
34,371 – 150,000 |
+630 |
|
Additional Rate (50%) |
Over 150,000 |
Over 150,000 |
0 |
Income Tax Allowances
|
|
2011/12 |
2012/13 |
Change |
|
£ |
£ |
£ |
|
|
Personal Allowance |
|||
|
Under 65 |
7,475 |
8,105 |
+630 |
|
65 – 74 |
9,940 |
10,500 |
+560 |
|
75+ |
10,090 |
10,660 |
+570 |
|
Married Couple’s Allowance |
|||
|
maximum |
7,295 |
7,705 |
+410 |
|
minimum |
2,800 |
2,960 |
+160 |
|
Income Limit for under 65 Personal Allow’ |
100,000 |
100,000 |
0 |
|
Income Limit for age-related Allowance |
24,000 |
25,400 |
+1,400 |
|
Blind Person’s Allowance |
1,980 |
2,100 |
+120 |
National Insurance Contributions (Class 1)
Employee Thresholds
|
Weekly |
2011/12 |
2012/13 |
Change |
|
£ |
£ |
£ |
|
|
Lower Earnings Limit (LEL) |
102 |
107 |
+5 |
|
Primary Threshold (PT) |
139 |
146 |
+6 |
|
Upper Accrual Point (UAP) |
770 |
770 |
0 |
|
Upper Earnings Limit (UEL) |
817 |
817 |
0 |
- Contributions percentages remain unchanged at 12% on earnings above the PT up to an including the UEL and 2% on earnings above the UEL
- COSR rebate is 1.4% on earnings above the LEL up to an including the UAP. COMP rebate is abolished on 05 April 2012
- Married Women’s Reduced Rate remains at 5.85%
Employer Thresholds
|
Weekly |
2011/12 |
2012/13 |
Change |
|
£ |
£ |
£ |
|
|
Lower Earnings Limit (LEL) |
102 |
107 |
+5 |
|
Secondary Threshold (ST) |
136 |
144 |
+8 |
|
Upper Accrual Point (UAP) |
770 |
770 |
0 |
|
Upper Earnings Limit (UEL) |
817 |
817 |
0 |
- Contributions percentages remain unchanged at 13.8% on earnings above the PT
- COSR rebate is 3.4%% on earnings above the LEL up to an including the UAP. COMP rebate is abolished on 05 April 2012
Other National Insurance
|
2011/12 |
2012/13 |
Change |
|
|
£ |
£ |
£ |
|
|
Class 2 |
|||
|
Weekly Rate |
2.50 |
2.65 |
0.15p |
|
Small Earnings Exemption (pa) |
5,315 |
5,595 |
+280 |
|
Class 2 Special |
|||
|
Share Fishermen |
3.15 |
3.30 |
+0.15p |
|
Volunteer Development Workers |
5.10 |
5.35 |
+0.25p |
|
Class 3 Weekly Rate |
12.60 |
13.25 |
+0.65 |
Statutory payment rates for 2012/13 have not been announced as at the time of publication. These will be published as soon as we are aware of them.
Further Information
- HM Treasury – Autumn Statement Speech
- HM Treasury – Autumn Statement Press Release
- HM Treasury – Autumn Statement Documents
- HM Treasury – Tax and National Insurance Thresholds and Rates
- OBR – Economic and Fiscal Outlook and Supporting Documents
- DWP– Health at Work – an Independent Review of Sickness Absence
