September 2008 enews - Introduction...
This month we update you on the long
awaited tax rebate for employed basic rate taxpayers.
We also include our usual round up of news.
Please browse through this month’s articles using the links
below and contact us if any issues or questions arise.
Extra take home pay
CBI forecast
Temporary exemption on Stamp Duty Land Tax
Fake HMRC emails
Change to benefits system
NMW rates to rise
HSE don’t ban this, that and the other
Proposed strict new jobs list
For many employed individuals who are
checking their payslip this month it should include a welcome
bonus of a £60 reduction in their income tax deduction. The
reason for this is the increase in the personal allowance which
finally took effect for paydays from 7 September. Don’t expect
the bonus each month as the effect for October onwards will be a
reduction in tax of £10 a month!
However not everyone will see the benefit
as higher rate taxpayers, although benefiting from the increase
in their personal allowance, will be paying more tax at the
higher rate of 40% due to a change in the higher rate
threshold.
As has been widely reported the increase in
personal allowance from £5,435 to £6,035 means that the majority
of basic rate taxpayers will be £120 better off for the current
tax year. The increase is designed to compensate those taxpayers
who were worse off following the removal of the 10% starting
rate of tax from non-savings income.
HMRC published some guidance for both
employers and employees on the changes and this can be found
using the link below.
Please get in touch if you require any
clarification of the new rules.
CBI forecast
A CBI forecast has predicted a ‘shallow
recession’ during the final part of 2008 and that growth in the
economy in 2009 will be the lowest since 1992.
The CBI’s latest economic forecast has
revised its growth predictions for 2008 and 2009 due to the
sharper than expected slowdown over the first half of this year.
Their forecast takes into account the impact of weak consumer
demand, high energy and commodity prices and the effects of the
credit crunch.
Richard Lambert, CBI Director-General,
said:
"Over the past year our forecasts for
economic growth have been shaved lower and lower as the UK
economy continues to struggle with the twin impact of higher
energy and commodity prices and the credit crunch. Growth in
2009 will be feeble at best.
Having experienced a rapid loss of momentum
in the economy over the first half of 2008, the UK may have
entered a mild recession that will hopefully prove short lived.
This is not a return to the 1990s, when job cuts and a slump in
demand were far more prolonged.
The squeeze on household incomes and
company profit margins from higher costs will begin to ease as
the price of oil moves downwards and, although the credit crunch
will be with us for some time, conditions are set to improve
later in 2009.”
Ian McCafferty, CBI Chief Economic Adviser,
said:
"We now appear to be in a mild recession
which will run to early next year. The outlook remains very
uncertain, but we do not expect the falls in output to be
prolonged, and should start to see signs of a recovery in the
second half of 2009.”
In a move to help the property market and
first time buyers, Alistair Darling has introduced a Stamp Duty
Land Tax (SDLT) exemption or holiday for purchases of
residential property from 3 September 2008 to 2 September 2009
(inclusive). The exemption effectively raises the current nil
rate band of £125,000 (£150,000 in disadvantaged areas) to
£175,000 for the period of one year only.
The effect of this increase is that where
residential property is bought or leased (for in excess of 21
years) costing not more than £175,000, no SDLT will be payable.
SDLT continues to be payable at 1% on property from £175,000 to
£250,000 before the percentage rises.
The transaction must still be reported
using the relevant return form SDLT1 even though no SDLT is
payable.
HMRC are warning taxpayers that they are
aware of a high number of emails being sent out offering a tax
rebate. The warning confirms that HMRC do not email taxpayers
advising them of tax rebates or invite them to complete an
online form to receive a rebate.
The advice goes on to say that anyone
receiving such an email should not visit the website contained
within the email or disclose any personal or payment
information.
From 27 October 2008, in a change to the
benefits system, Employment and Support Allowance (ESA) will
replace the current state benefits (Incapacity Benefit and
Income Support) which are paid to individuals on incapacity
grounds. The new ESA will initially only be payable to new
claimants.
According to government guidance
“… the principle of Employment and Support
Allowance is that everyone should have the opportunity to work
and that people with an illness or disability should get the
support they need to engage in appropriate work, if they are
able”.
Existing Incapacity Benefit or Income
Support claimants will initially continue to receive their
existing benefits, so long as they satisfy the entitlement
conditions.
The change to the benefits system will have
some implications for employers with the issue of a new SSP1
form. This form is used where an employee has reached their
maximum entitlement to SSP. The changes to SSP1 are designed to
make it quicker to complete, as less information has to be
reported for benefit claims starting on or after 27 October
2008.
Another form the SSP1L (Leaver’s statement
of SSP), which is currently given to employees who leave within
8 weeks of claiming sick pay, will be discontinued from 27
October 2008.
National Minimum Wage (NMW) rates are set
to rise from 1 October 2008. The increased rates will be as
follows:
Adult rate (workers aged 22 and over) will
increase to £5.73 (from £5.52)
Development rate for 18 - 21 year olds will
increase to £4.77 (from £4.60)
Young people’s rate for 16 - 17 year olds
will increase to £3.53 (from £3.40)
The Health and Safety Executive (HSE) are
keen to dispel the myth that they are responsible for banning
‘this, that and the other’.
They claim that there have been many
reports of HSE and health and safety law, being responsible for
banning all sorts of things including flip flops, knitting in
hospitals, school sports days and even cuddly toys attached to
dustbin vans.
According to the HSE they have banned very
little outright, apart from a very few high risk exceptions, for
example asbestos. They do however want to stress that sensible
risk assessment principles should be followed.
HSE are encouraging anyone who encounters a
‘ban’ to check before believing it.
The UK Border Agency is proposing to
introduce a new list of shortage jobs in order to better target
migration at the needs of British businesses. The proposed list
would reinforce the selective approach of the new points based
system.
The recommended shortage occupation list is
designed to introduce a larger set of work categories but would
see the number of individual positions open to migrants reduced
by 30%.
The Migration Advisory Committee (MAC), an
independent panel of economists, was asked to review the current
shortage occupation list. The recommendations will be tested
before publishing the final list in October.
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