Tax and Pension update

Attended a presentation hosted by Morgan McKinley and Spofforths.

Tax update in the light of last week's budget
Key points new to me:

1. Although the 'big company' tax rate will drop from 28% to 26% in Apr 11 and then gradually down to 23% by Apr 2014, the small company rate will reduce to 20% and stay there.
2. Written down allowances (WDAs) will be 20% for 11/12 (special rate pool 10%) but will fall to 18% from 2012/12 (special rate pool 8%).
3. Research and Development (R&D) threshold reduced to £10k (need to see more about definitions).

Pensions changes

presented by Philip Wise

1. Govt to introduce 'auto-enrolment' pensions.  This means that employers will be required to set up pension schemes and enrol all employees into them. The employer must make a contribution and the employee must make a contribution. There is a default scheme called NEST, or the employer may pick a private scheme.
2. The scheme is to start in July 2012 for voluntary adopters. As the current timing stands, large companies or those employing over 800 people are due to start October 2012 to October 2013. Companies employing fewer than 50 people will be staggered over the period July 2014 to February 2016. It was though considered likely that the dates may slip.
3. The contributions will be phased in also. Up until October 2016 employee contribution will be 1% and the employer contribution will be 1%. Between October 2016 and October 2017 the contributions will be 3% for employees and 2% for employers. After 2017 it will be 5% of employees and 3% for employers. The scheme will apply to all jobholder under the pension age, aged over 22, who earn more than £7,475 and this includes part-timers.
4. The employers is required to enrol all employees and re-enrol them every three years. Employees may opt out, in which case they would not have to pay their contribution and the employer would not have to pay his contribution.
5. The employer is specifically banned from discouraging membership of the scheme - for example offering extra salary for employees to opt out. The employer is also specifically banned from giving advice, for example, concerning whether to opt out.

1.5 hours CPD