RPI and CPI September 2013Wednesday, October 23rd, 2013
On 15 October 2013, the Office for National Statistics (ONS) announced the Consumer Prices Index (CPI) and Retail Prices Index (RPI) figures for the year to September 2013. These are:
- CPI 2.7%
- RPI 3.2%
September’s CPI and RPI indexes are significant figures from professional point of view:
Income tax thresholds would normally be revised annually by reference to the September CPI value. However, it has already been announced that the Finance Bill 2014 will uprate the Personal Allowance to £10,000, for people born after 05 April 1948 for 2014/15. CPI inflation will then be used to uprate the Personal Allowance from 2015/16 onwards.
The September CPI will be used to determine:
- the Class 1 Lower Earnings Limit (LEL)
- the Class 1 Primary Threshold (PT)
- the rate of Class 2 NICs for self-employed people
- the rate of Class 3 ‘voluntary’ NICs
- the Class 4 Lower Profits Limit (LPL), above which, Class 4 NICs become payable by the self-employed
The Class 1 Upper Earnings Limit (UEL) and the Class 4 Upper Profits Limit (UPL) are aligned to the income tax Higher Rate threshold, i.e. the Personal Allowance plus the Basic Rate threshold. These will all be confirmed by the Chancellor in the Autumn Statement in December 2013.
The UK Basic State pension rises in line with the ‘triple lock’, meaning it will increase by the higher of:
- September CPI, or
The September 2013 CPI was 2.7%, therefore, according to the rules; this should mean that the BSP increases by this percentage.
For students who enrolled on courses starting on or after 01 September 2012, interest paid on their loans will be at least in line with the September RPI.
The CPI rate is also used to determine the increases to State benefits. However, as announced in the Autumn Statement 2012, the Chancellor said that most benefits will be uprated by only 1% for the 3 years beginning April 2013.